T

he cooperation agreement the Investment Coordinating Board (BKPM) signed with the country’s largest bank, Bank Mandiri, on Tuesday is a rather strategic move given the strong synergy between the two institutions in promoting investment.

 As Indonesia’s largest bank, Bank Mandiri has several big advantages in helping the BKPM promote investment throughout the country, including an extensive branch network and strong economic research and business departments, which monitor and analyze business opportunities in the various industries.

The economic research department analyzes the prospects and challenges in various industries as part of the bank’s risk management, while the business development department studies investment opportunities to support its lending operations. Hence, Bank Mandiri is able to help investors explore business opportunities in various sectors in the provinces. As all investment ventures also need loan financing, the investment promotion program also helps Bank Mandiri expand its lending operations.

Therefore, Bank Mandiri’s vast corporate customer base and the BKPM’s corporate data bank complement each other, both in guiding investors to promising business opportunities and in matchmaking domestic and foreign investors in joint ventures. But the cooperation with Bank Mandiri will be more effective if the BKPM continues to educate regional leaders on the vital importance of investment to create jobs, which will in turn generate wages and purchasing power to buy goods and services to stimulate the economy.

Regional leaders should be convinced that economic growth is the best freeway to get elected and reelected, but growth cannot occur without investment. Only such awareness will prompt regional leaders to enact business-friendly bylaws, policies and programs and expedite business licensing. Effective bylaws create structures of expectations that guide businesspeople to make reasonably accurate predictions within an acceptable range and to manage the contingencies and risks of complexity within a market economy.

Especially now as provincial governors, regents and mayors have to compete in direct elections, economic performance that directly benefits the people is surely the most effective means of gaining voter support. This means that job creation will be the most important yardstick in measuring the performance of a regional chief executive.

 Further down the line, business-friendly local administrations will contribute greatly to national economic growth because most of the country’s abundant natural resources such as forests, agriculture, fisheries, mining and tourist attractions are located mostly in the provinces and regencies.

Past is the time when most local administrations, euphoric about their newly gained power after the launch of local autonomy in 2001, simply flexed their muscles to grab a bigger share of the wealth from their natural resources and resorted to the easy, unsustainable ways of raising revenues by squeezing companies with additional levies.

 We look forward to seeing regional administrations compete with each other to attract domestic and foreign investment as they are fully aware that it is private investment that creates jobs and in turn generates wages and purchasing power for the people to power the wheels of the economy.