Hotli Simanjuntak, Banda Aceh – The investment climate in Aceh remains mired by stumbling blocks that have hampered economic acceleration despite foreign and domestic investment this year increasing from last year.
Licensing and the implementation of sharia often cause investors to reconsider investing in Aceh. "The issue regarding the implementation of Islamic sharia impacts on the realization of foreign investment in Aceh," said Aceh Promotion and Investment Board (BIPA) head Iskandar.
The Aceh provincial administration, through BIPA, has made strenuous efforts to convince investors to invest capital in Aceh. BIPA has coordinated with various stakeholders, including city administrations and district level administrations, to help spur economic growth in Aceh.
It also initiated a joint commitment to improve the image of Aceh and inputting data on impediments and issues faced by the business world to seek immediate solutions.
"Media reports regarding the implementation of Islamic sharia also has implications on Aceh's image on the investment stage, especially for foreign investors," said Iskandar.
Iskandar acknowledged that BIPA was currently facing issues in promoting Aceh as a suitable place for investment, such as uncertain regulations and licensing as well as an unfriendly attitude to foreign investors.
"Consequently, we have coordinated with stakeholders, including officials from the regency to village levels to be more responsive to investment in Aceh," said Iskandar. "The issue regarding the implementation of Islamic sharia impacts on the realization of foreign investment in Aceh."
Among the most promising investment opportunities in Aceh are those in the tourism and mining sectors. Aceh boasts various tourist sites, which can be managed and promoted as part of a tourist destination nationally to spur rapid economic growth.
"The implementation of sharia in Aceh actually could be an opportunity to draw visitors if it is packaged in an interesting manner, because many visitors wish to know about the implementation of sharia itself," said Iskandar.
Based on the first quarter investment report this year released by BIPA, Aceh's investment value has risen this year compared to the corresponding period last year from Rp 969,35 billion (US$84 million) to Rp 1,44 trillion this year.
"Aceh has experienced an increase of 32.77 percent in domestic and foreign investment value in the first quarter of this year compared to last year," said Iskandar.
This growth has ranked Aceh among the six biggest for domestic investment value in Indonesia. Jakarta is ranked top with an investment value of more than Rp 8.2 trillion.
In the first quarter this year, domestic investment was still higher compared to foreign investment, especially in the power and gas sectors, while foreign investors still contributed the most to the mining sector, with the main players being from Canada and Singapore.
Aceh's slow economic growth is influenced by stagnant growth in the private sector, as virtually all economic sectors are fully supported by the state and provincial budget.
"As of now, development and economic activities in Aceh originate from two fund sources – the state and provincial budgets – while the investment is limited to a few sectors," said Aceh Central Statistics Agency (BPS) head Hermanto.
Hermanto said that the province managed to achieve Rp 1.5 trillion in investment in the first quarter of this year. The investment funds, he went on, were contributed by the energy sector, which was from the Peusangan hydro power plant (PLTA) in Central Aceh which accounted for more than Rp 900 billion.
"The energy sector plays no part in raising the labor-intensive economic factor and does not affect absorb a large number of workers, like the agricultural and mining sectors," said Hermanto.
The Aceh provincial administration has applied the Qanun Acara Jinayat, a sharia-based criminal code that stipulates rules and punishments governing behavior according to Islamic law. The qanun applies to all people in the province, including non-Muslims.
So far, Aceh has four qanun: One on religious affairs, worship and religious symbols; one on khamar (the consumption of alcohol); one on maisir (gambling), and one on khalwat (affectionate contact between an unmarried couple).
According to Qanun No. 14/2003, all sharia offenders will be caned a minimum three times and a maximum nine times or are required to pay a fine of between Rp 2.5 million and Rp 10 million.