'Legal certainty is vital, but implementation is key'

The Jakarta Post , Jakarta | Thu, 11/02/2006 11:27 AM | Business

Andi Haswidi and Tony Hotland, The Jakarta Post, Jakarta

The European Business Chamber of Commerce in Indonesia (EuroCham) says that the country's infrastructure program is realistic, but suggests that the government not only focus on providing legal certainty but also on expediting implementation.

""One of the reasons why the first Infrastructure Summit was unsuccessful was because the legal framework did not exist,"" EuroCharm vice chairman Juergen D. Lagleder told The Jakarta Post at the ""Infrastructure Conference and Exhibition 2006"" in Jakarta on Wednesday.

Lagleder suggested that while providing the necessary legal framework was imperative for attracting investors, building up program-implementation capacity would be the key to success.

The government held its first infrastructure summit last year, offering a total of 91 projects worth $22.5 billion. Only nine deals were clinched, however.

During the ongoing summit, the government has put 10 ""model"" projects worth US$4.4 billion on the table. In addition, it is also offering 101 other potential projects worth about $14.7 billion.

""I think the government is really taking it seriously now. They have reduced the number of projects from 91 previously to only 10 projects this time, all of which are already at an advanced planning stage. These 10 projects are quite realistic,"" he said.

""The government has to succeed this time because the ten projects will serve as models for future projects,"" he said.

As for legal certainty, Lagleder said he was confident that a number of bills needed to support investment in the infrastructure sector, such as the investment, tax and labor bills, which are now being deliberated by the House of Representatives, would be passed by the beginning of next year.

Lagleder, who is also the president director of PT Siemens Indonesia, said that EuroCham's main aim was to establish and develop specific industry-based and transversal working groups for Indonesia. Currently, the chamber had eight groups and one of them was devoted specifically to Indonesian infrastructure issues.

""We are helping the Ministry of Finance with capacity-building,"" the head of the EurCham's trade section Andreas Julin said. ""Implementation is key. Therefore, the government has to train people. You need to work in teams and you need to be aware of what global best practice is.""

Julin said that European investors had the ""know-how"" and had faced similar challenges in providing infrastructure in their own countries.

""In facing these challenges, we have become the world leaders in providing innovative state-of-the-art solutions. So here you have showcase companies that can provide solutions to Indonesia's infrastructure problems,"" he said.

Regarding legal certainty in cases where the interests of local businesses were involved, Indonesian Builders Association (Gapensi) chairman Agus G. Kartasasmita said the government had to provide a detailed list of the infrastructure projects being offered during the conference and ensure that general concerns, such as regulation and security, were addressed.

""Consistent regulations and security have always been the key problems. Investors want to be here for the long haul and they want to be able to forecast their profits. Thus, they require consistent regulations and long-term security for their projects,"" he said. He added that the ten projects being offered at the conference were quite realistic

""We hope that small and medium-sized firms can be involved in these infrastructure projects,"" he said after meeting with Vice President Jusuf Kalla.

That way, he said, local construction firms could grow and contribute more to the state in taxes.

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