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Jakarta Post

Power supply shortage still major problem for foreign investors

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Tue, June 16, 2015   /  09:19 am

Power shortages remain a major obstacle for investors doing business in Indonesia, despite the government'€™s efforts to establish numerous power plants in the past several years, according to findings from the Investment Coordinating Board (BKPM).

In addition to the lacking power supply, difficulties encountered by investors attempting to acquire land from local people also hampered business activities, although the government promised to simplify land acquisition procedures, BKPM said.

The findings were made June 9-12 during the agency'€™s four-day field trip to nine investment projects in West Java and Central Java.

 '€œWe have identified potential problems that could hamper the investment projects,'€ BKPM chairman Franky Sibarani told reporters on Monday.

Furthermore, BKPM reported that Cemindo Gemilang, which works on cement projects in Lebak, Banten, along with Rayon Utama Makmurm, which works on rayon fibers in Sukoharjo, Central Java, are among the large investors that face power supply problems.

'€œThe Cemindo Gemilang cement project is now under construction, and the company aims to finish construction in September if it receives a power supply from the state electricity company [PLN],'€ Sibarani said.

To ensure an adequate power supply, Cemindo Gemilang is also now building 1 x 60 megawatt power supply for its own use, he said.

Early last month, Joko '€œJokowi'€ Widodo launched his ambitious plan to build power plants to produce 35,000 MW of electricity.

The 35,000 MW program for Indonesia is expected to be realized within the next five years in 240 places across Indonesia.

The program will require an investment of Rp 1.1 quadrillion (US$83 billion). The program is expected to propel the industrial sector as 60 percent of the program'€™s components are expected to be locally made.

The previous government also built a dozen larger-scale power projects that provided an added power supply of more than 10,000 MW.

Besides the power supply problem, the investment board also found that land acquisition and licensing hampered investments in the nine projects it visited.

'€œWe got some complaints about the duplication of licensing regulations,'€ Sibarani added.

Kukdong Apparel Batang faced land acquisition problems as the land it used for expanding its textile factory is not in line with the Batang provincial special planning bylaw (RTRW).

Previously the institution claimed that it had solved a number of problems that could potentially hamper investments through its program to remove bottlenecks to boost investment growth.

The problems settled are mainly connected to the misuse of permits, land acquisition, opposition from locals, raw materials, export bans and cooperation contracts.

Franky Sibarani said the institution would coordinate with PLN and related ministries to solve the existing problems faced by investors.

'€œWe will try to solve those problems in order to smooth out investment projects,'€ he said, adding that despite the problems, the investment projects were still running.

According to Sibarani, the investors in the nine projects visited by the agency pledged to invest up to $3.8 billion in a wide range of business activities; they may be able to absorb more than 10,000 workers, with more than Rp 10 trillion of export value a year. (ind)

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