Benget Simbolon Tnb., Jakarta – Most regencies and municipalities are still lagging in creating attractive investment conditions five years after the regional autonomy law gave them greater power to manage their economic affairs.
The poor investment climate was shown in the latest annual survey conducted by the Regional Autonomy Watch (KPPOD), in cooperation with the Asia Foundation and USAID.
The survey, made to assess the performance of regions last year in improving the investment climate, found the average investment competitiveness score of the regencies and municipalities was only 6.04, far below the maximum score of 9.
"Overall, this survey found that the investment competitiveness of regencies/cities in Indonesia is still unsatisfactory," said KPPOD, a non-governmental organization specializing in research on regional autonomy implementation.
Its findings will be a sharp wake-up call to the central government, which is trying to secure US$426 billion in investment by 2009 to forge higher economic growth and create more employment.
Investment competitiveness was assessed based on five factors accorded varying degrees of importance: Security, politics and sociocultural interests accounted for 27 percent; local economic potential (23 percent); labor (18 percent); physical infrastructure (17 percent) and institutional considerations (15 percent).
According to the survey, the major weaknesses of the regions are found in institutional and labor factors. Their average competitiveness ratings were low in these two areas, at only 5.43 and 5.38 respectively.
Last year, the KPPOD surveyed 228 regencies and municipalities as compared to 214 regencies/municipalities in 2004. There are 440 regencies/municipalities in Indonesia. Based on the latest survey, Batam municipality in Riau Island province and Gianyar regency in Bali were recognized as the best investment destinations after receiving the highest average scores in all five categories.
There are five other regencies and five other municipalities which received the KPPOD investment award as winners in each of the categories.
For security, politics and sociocultural factors, the honors went to Maros regency in South Sulawesi and Denpasar municipality in Bali.
For the economic factor, the winners are East Kutai regency and Samarinda municipality, both in East Kalimantan.
Pangkajene Island regency in South Sulawesi and Kediri municipality in East Java came out on top for labor.
Maros regency in South Sulawesi and Balikpapan in East Kalimantan were selected for institutional considerations.
For institutional factors, Barru regency in South Sulawesi and Sawahlunto municipality in West Sumatra won.