Many Dutch investors shun Indonesia

The Jakarta Post, Jakarta

Promising sources of Dutch investment end up in other Asian countries due to legal uncertainty, a Dutch-Indonesian businessmen association executive said.

Chairman of the Indonesian-Netherlands Association Irwan M. Habsjah said Monday many European investors, particularly from the Netherlands, remained concerned about the difficulty of interpreting regulations and foreseeing legal outcomes, as well as poor infrastructure and red tape -- especially the lengthy application process for business licenses.

Irwan said, Dutch investors were picking Vietnam, Cambodia and Bangladesh after learning about these drawbacks.

He said local bylaws often contradicted national laws especially in the area of foreign investment, confusing investors, he said at a business seminar.

Agreeing with Irwan's statement, Indonesian ambassador to the Netherlands Junus Effendi Habibie said at the seminar it was time to make the investment climate in Indonesia more hospitable to Dutch investors and all foreign interests doing business in the country.

To deepen bilateral economic cooperation with the Netherlands, the Indonesian and Dutch governments will enter into a comprehensive partnership agreement some time next year, he said.

The CPA would facilitate cooperation in areas including bilateral mechanisms, international affairs, stability and security, economic and sustainable development, and culture, said Habibie.

According to data from the Investment Coordinating Board (BKPM), Dutch direct investment peaked at $1.15 billion in 2000. In 2006 it was at its lowest level -- $35.2 million, down from $472.4 million in 2005.

During the first six months of this year, Dutch investment commitment reached a total of US$140.8 million.

On trade, the report said, Indonesia's exports to the Netherlands reached $1.4 billion in the January-July period, a 3.8 percent increase from $1.3 billion in the same period last year. Meanwhile, its imports fell by 18.2 percent to $264 million from US$323 million in the same period.

Indonesia's exports to the Netherlands include palm oil, coconut, electronics, furniture, woods and footwear.

Imports from the European country include electronics and telecom equipment, airplanes, petroleum oil, machinery parts, hydrocarbon products, perfumes, plastics, paper, milk products and cosmetic kits. (nkn)