Being one of the few global economies to book positive growth amid the financial crisis, Indonesia has become more attractive to global investors looking for new markets.
Nevertheless sluggish progress in public administration reform, particularly at the level of regional government, could seriously hamper efforts to make the most of this leverage, a senior government official says.
"There's a lot of foreign representatives coming to my office, for example from Geneva, Switzerland, which means that they see that we are growing. Their chance to invest in Indonesia is now," Edy Putra Irawadi, deputy to the coordinating minister for the economy, in charge of industry and trade, said last week.
Indonesia's economy in the first quarter of 2009 grew by 4.4 percent from a year earlier, according to the Central Statistics Agency (BPS), just below the growth rates of China and India, while developed country economies contracted, plunging to minus growth rates, due to the crisis.
Edy said the main concern of foreign investors was Indonesia's rigid bureaucracy, which he said the government was trying to address.
"They *foreign investors* have asked me about the bureaucracy here. I said, for the public service we now have the National Single Window *NSW*, which becomes a guide for exporters and importers. Now we also have a presidential regulation on one-stop integrated services *PTSP*," he said.
He added, PTSP had not been fully implemented, particularly in the regions, where many officials were still working under the old rules.
The World Bank has said Indonesia can recover faster from the global economic crisis by accelerating institutional reforms, as one of the government's main weaknesses is that lengthy and slow bureaucratic procedures cause delays in implementation of government spending intended to spur economic growth.
Slow progress in the reform of the bureaucracy was not only affecting inward foreign investment but also domestic investment, including government expenditure plans.
As of May, government spending was only 27 percent of the expected figure set for the whole year in the 2009 state budget, despite the fact that the country clearly needs a boost from government spending to back up private consumption, the economy's main driver, which is still forecast to slow down somewhat.
Edy said Indonesia had a lot of attractive sectors, including those in infrastructure, foods and energy.
To attract investors here, State Minister for Administrative Reforms Taufik Effendy is in the process of designing guidelines to prevent government officials, particularly in regional government administrations, from issuing regulations that may hamper investment.
