[Kabar-indonesia] Salim Group's US$3 billion deal in India slammed

[Joyo at aol.com]

The Straits Times (Singapore)
Saturday, August 12, 2006

Salim Group's $4.7billion deal in India slammed

The money should have been used for local projects,
say Jakarta politicians

Salim Osman, Indonesia Correspondent

IN JAKARTA - THE decision by Indonesia's Salim Group
to invest billions of dollars in an infrastructure
project in the Indian state of West Bengal has angered
many here who say the money could have been used for
the country's own infrastructure projects.

That the decision was announced just as President
Susilo Bambang Yudhoyono was about to leave for
Malaysia and Singapore to win over investors for
infrastructure projects in the country has irked them
even more.

'Why invest in another country when Indonesia is in
need of investments to ease unemployment pressures and
boost economic growth?' asked Mr Dradjad Wibowo, a
member of the parliamentary commission on investment
and taxation.

The Salim group, which built the Batam Industrial Park
with Singapore, is Indonesia's largest conglomerate.

Last week, it inked a deal with two partners for a
massive infrastructure project in the Marxist-ruled
Indian state that could cost as much as US$3 billion
(S$4.7 billion) and includes the construction of a
highway, a township and two special economic zones.

The deal itself was not widely reported in Indonesia
but politicians took up the issue nevertheless because
of the size of the investment.

Mr Dradjad, of the National Mandate Party (PAN),
expressed regret that the Salim Group had decided to
invest abroad at a time when the country needed funds
for infrastructure development.

'The company has made its money in this country.
Hence, I think it is morally obliged to pay back by
investing in the country. But of course we can't force
them,' he said.

He then alluded to the assistance that the government
was said to have provided to one of the group's
businesses, BCA bank, at the height of the country's
monetary crisis in 1998.

Economist Sri Adiningsih of the Gadja Mada University
in Yogyakarta said the investment raised eyebrows
because it was in infrastructure, an area where
investment is needed in Indonesia.

'People here will accept it if the investment is in an
area that is not available in Indonesia,' she said.

Other analysts said Indonesian officials should work
harder to improve the investment climate in the
country if they want to prevent local businessmen from
investing abroad.

That there is much to be done is evident.

Talking to civil servants on Monday, Dr Yudhoyono said
he was saddened by the perception abroad that
Indonesia is still not an attractive place for foreign
investors.

'The feeling is that of 'nelongso' when I spoke to
investors in Singapore,' he told the meeting. Nelongso
means sad in Javanese.

Investors prefer to put their money in India, China,
Vietnam and even Russia, he said, in what seemed to be
an indirect reference to the Salim Group's deal in
India, though he did not name the company.

'I have spoken about reforms, good governance,
improvement in business climate, but our investor
friends abroad are still waiting for something
concrete before they want to come in,' he lamented.

MORAL OBLIGATION

'The company has made its money in this country.
Hence, I think it is morally obliged to pay back by
investing in the country. But of course we can't force
them.' -- MR DRADJAD of the National Mandate Party, on
the Salim Group

------------------------------------------
Joyo Indonesia News Service
------------------------------------------