The Jakarta Post , Jakarta | Fri, 10/09/2009 1:55 PM | Business
State-owned bank PT Bank Mandiri announced on Thursday its commitment to allocate up to Rp 12 trillion (US$1.27 billion) in loans to finance investment in Papua and West Papua provinces.
“We are committed to increase the annual value of loans by 10 times to between Rp 8 trillion and Rp 12 trillion,” said Mandiri president director Agus Martowardojo on the sidelines of the Papua Investment Day in Jakarta.
Mandiri hosted the two-day event, which ended on Thursday, to promote investment opportunities in the two provinces to its clients.
Eighty five potential investors and representatives from 11 state-owned enterprises attended the event, as well as the Indonesian Chamber of Commerce and Industry (Kadin) and provincial governments.
Agus added that the bank had made far fewer loans in Papua than it had the potential to, despite operating in the province for more than four decades.
“Our data show that investors from China and Saudi Arabia are major players in the two provinces,” Agus said.
“We do not want our local investors to be left behind.”
In 2008, realized domestic investment reached Rp 5.7 trillion in Papua and Rp 7.6 trillion in West Papua, while foreign investment totalled $5 billion in Papua and $206 million in West Papua, Agus said.
The event highlighted that a lack of basic infrastructure, redundant government bureaucracy and minimal fiscal incentives to minimize investment risks hampered the interest of domestic players.
Papua Governor Barnabas Suebu said the province needed Rp 200 trillion to finance infrastructure projects.
“The problem is the high cost of transportation and materials. As a result, domestic investors are not eager to invest in Papua,” Suebu said.
He added that giving fiscal incentives or “tax holidays” to businesses was a must – a measure that could only be taken by the central government.
Arifin Panigoro, founder of energy company Medco Group, said processing business permits in the province was an arduous task.
“In Papua, it is so difficult to get permit letters. We hope the government will resolve this problem,” Arifin said.
Kadin chairman Mohammad Hidayat said the fastest way to increase domestic investment in Papua and West Papua was for the central government to remove corporate taxes while improving coordination with regional governments.
“If not, the situation will not improve, even in the next ten years. To build Papua, we have to think outside the box. The finance minister plays an important role here,” he said. (naf)