Approximately 40 percent of  total foreign investment came from Singapore, followed by the Netherlands with 11 percent, Japan with 6 percent, South Korea with 5.8 percent, the UK with 3.4 percent and the rest from other countries.

The Investment Coordinating Board (BKPM) says the main factor behind this poor performance was the state of the global economy and the time-lag between investment commitment and disbursement, reflecting complicated procedures.

In a bid to simplify and speed up bureaucratic procedures, the board has been given the legal authority to take over official functions from 15 other government departments, for example in the issuing of permits and licenses, targeting to slash the time needed to complete such procedures from 70 days to 40 days.

The administrative reform program to do this is now nearing completion, BKPM chairman Gita Wirjawan said.

“We have completed the process for the delegation of authority from 13 ministries, the last two will be signed on Wednesday,” he said Tuesday night.

The board has launched a so called One Stop Shop (PTSP) for all business licensing procedures at all its regional branches and an electronic licensing and information service (SPIPISE) -- also known as the National Single Window for Investment (NSWi).

“So far, the SPIPISE has only been implemented in Batam. The rest of the regions will soon follow,” Gita said.

The new electronic system, he said, has two benefits: bypassing complicated procedures and document handling for investment procedures while facilitating that investors need not be present in Indonesia to deal with all the licensing process, but can also complete key procedures online.

“This year we expect total investment value to pick up between 10 and 15 percent,” he said.

Sofyan Wanandi, chairman of Indonesia’s Employers Association (Apindo) which also often serves as a point of liaison for foreign investors, praised the progress of the investment reform agenda.

“If the plan goes well, it will be very useful, but we haven’t actually felt the benefit of the electronic system because it’s new,” he commented briefly.

The progress of reform in business licensing services, Gita said, was in line with the momentum of Indonesia’s improving economic fundamentals, which has led to the improvement of the country’s sovereign risk ratings.

Fitch Ratings upgraded Indonesia’s long-term foreign and local currency ratings on Monday to BB+ from BB, one level below investment grade, citing the country’s resilience in the global financial crisis.

Fitch says Indonesian companies are likely to benefit from improved profitability and external debt leveraging following recovery from  the Asian financial crisis and favorable relationships between local firms and affiliated parent companies.

Moody’s Investors Service on Jan. 21 maintained its Ba2 rating for Indonesia, while Standard & Poor’s raised the outlook on its BB- rating for the country to BB+ on Oct. 23. S&P’s rating is three levels below investment grade, while Moody’s is two levels below investment grade.

“There is no reason for us not achieving investment grade within the 24 to 36 months ahead, especially if we see the [improved] trajectory of our economic growth,” Gita said.

Wiwig Santoso, head of treasury at Bank DBS Indonesia, said the Fitch Ratings upgrade had been expected by many market participants.

“We expect the pending pipeline of investment projects to materialize, on top of the already projected investments.” Wiwig said.

He added that although the corporate credit spread for Indonesia is still relatively high, the spread on Indonesian assets do offer a lucrative return for investors.

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