The investment Coordinating
Board (BKPM) encouraged a special electricity rates policy for labor-intensive
industries in order to improve product competiveness in the Asian region. Head
of BKPM, Franky Sibarani, on Friday (March 6), said that the policy was
necessary because the cost of the minimum wage, as labor-intensive industries
contributed 20%-25% of production costs. He said that the results of
labor-intensive industry investor forum and BKPM study show that if electricity
cost can be reduced, the competitiveness of labor-intensive industries will
increase.
For comparison, the electricity industries in Indonesia
outside peak hours reached USD 0,060 per kWh. While, electricity tariff in
Vietnam is USD 0,038. BKPM proposes special rates for labor-intensive
industries outside peak hours, so it can compete with Vietnam. Franky added
that is party would send letter to the relevant ministries and institutions in
order to coordinate the proposal. He hopes that the government could soon issue
special electricity tariff policy labor-intensive industries, to encourage more
investment in labor-intensive industries. Previously, the businesses also have submitted
a similar proposal.
Based on BKPM reports, foreign direct investment (FDI)
that flows to Indonesia from January 1 to February 27, 2015 reached USD 2.7
billion. It consisted of USD 1.26 billion of investment in labor-intensive
industries, USD 1.16 billion import substitution, USD 216 million
downstreamization of agriculture (cocoa, rubber, and CPO), and USD 10 million
electricity. Meanwhile, the relevant criteria to determine foreign investor
level is based on the level of seriousness, he explained that BKPM has three
categories, namely serious, interested, and prospective. He described that the
criteria of serious, interested, and prospective. He described that criteria of
serious investors is that they have met several times with the BKPM marketing
officers in Indonesia and have visited the location to be used for their
investment projects.
In addition, foreign investors must have a local partner
as a work partner in Indonesia and have a clear business plan. At least they
already know what is needed, ranging from land size, employment, production
capacity, machinery imports, and the percentage of product exports. While,
those included in the criteria of interested investors are those that have met
with marketing officers in Jakarta, but only once and still consider the
constraints for running business.
Regarding prospective investors criteria, he explained
that investors who are in this category usually still in the stage of
“capturing” by BKPM market-representative offices in some countries (IIPC) and
the Indonesia Embassy. For 2015-2019, BKPM is targeting a total number of
principial license (IP) of IDR 5,864 trillion of foreign investment to meet the
target of investment to meet the target of investment realization of IDR 3,500
trillion.
On
the same occasion, Franky also noted that BKPM will provide investment guarantees
for the existing investors in water industry following the removal of Water
Resources Act. He said that the government had agreed that companies who
already have a license (including Groundwater Permit/SIPA) and already in
operation, can still operate as usual until there is a new regulation. He
remained the existing investors in the water-based industry not to feel
anxious. The government, in this case BKPM and other related ministries, agreed
to continue to support investors who have entered and made investment. New
regulations to provide legal certainty to investors are being prepared. (E)
Business News - March 11, 2015
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