Riau scraps bylaws to lure investors

November 12, 2007

Fadli and Rizal Harahap, The Jakarta Post, Pekanbaru

In an effort to attract more investment, the Riau administration has scrapped two bylaws at the province level and five other bylaws issued by the administration.

In the short term, the move will decrease the province's regional revenue, but over the long term the region will reap advantages from the bold decision, the administration said.

Tiolina Pangaribuan of Riau's Promotion and Investment Board said the revoked bylaws generally concerned retribution and licensing.

"The bylaws were deemed in conflict with the higher regulations. Most importantly, we believe the bylaws placed unnecessary burdens on investors, thus slowing down the region's investment momentum," she told The Jakarta Post on Thursday.

She said the annulment of those bylaws would improve the business climate of Riau by providing investors with a more efficient business environment.

The revoked bylaws include a 2000 bylaw on road retribution targeting vehicles with non-Riau license plates, and a 2000 bylaw on retribution regarding liquid waste disposal.

The five revoked regency-level bylaws include a 2000 bylaw on a plantation owner's obligatory contribution to the Kampar regency, a 2000 bylaw on water retribution in Dumai city and a 2000 bylaw on retribution imposed upon vehicles that unloaded cargo in Indragiri Hilir regency.

These seven revoked bylaws are part of a total 22 bylaws the Riau administration has submitted to the Home Ministry since 2002 for evaluation and assessment. In several separate decisions, the Home minister said the seven bylaws had been found in conflict with higher laws or regulations.

"Those bylaws weren't pro-business, and that's why we revoked them," Riau Governor Rusli Zainal said at the Riau Investment Summit (RIS) held last Thursday.

The event was evidence of his administration's commitment to pursuing a pro-business development policy, he said.

At the two-day RIS, the Riau administration offered eleven investment opportunities with a total value of US 2.4 billion.

By the end of the RIS, the Riau administration had signed a number of memorandums of understanding with investors on seven high-profile projects.

The projects included the $27 million joint investment with China's Euro Cap Corp. to develop an artificial lake tourism resort in Rumbai, and a $530 million joint investment with PT Sari Bangun Persada and China's G & G group to construct a toll road connecting Pekanbaru and Dumai.

The Riau administration also signed an agreement with PT Tirta Cisadane to build a water treatment plant in Tanjung Buton Industrial Zone.

"We have carried out a feasibility study in the area and the results suggest that the planned water plant will be one of Indonesia's biggest facilities in terms of capacity and production," PT Tirta Cisadane director Timothy Wan Ullok said.

He declined to reveal the investment value of the project.

"Hopefully, all of them will not end up as mere (memorandums of understanding), but turn out to be concrete projects that will surely benefit the people of Riau," Tiolina said.