Good Environment for Investment

Investment is very important for economic development. As we know, investment is one of factors which can create more jobs and more opportunities to society in conducting economic activities. So, almost all countries strive to attract investor for investing. But, only a few countries can create good environment for investment. 

According of investment sources, there are two type of investment such as foreign investment and domestic investment. Then, according of investment type, investment is divided into two kinds such as direct investment and financial investment (indirect investment). Direct investment is created by foreign investor or domestic investor in which it directly use money on building infrastructure, factory, etc. While financial investment is just put in financial market and it can be taken suddenly by investor.

Financial investment is very plenty in Indonesia. There is much money flowing into our financial market. Then, that money can go out into our financial market suddenly if there is shock or destructive economic phenomenon. So, foreign direct investment is more important for enhancing economy and gov’t should focus on inviting FDI. I think that gov’t should not regard about how to increase financial market, but has to focus for attracting direct investment from domestic or foreign.  

Inviting investment, especially FDI is not easy task. There are many challenges to attract FDI in Indonesia. In other side, our environment still doesn’t support investment. I mean that there are many obstacles which hinder investment activity such as bureaucracy, incentive, etc. While other countries, especially Malaysia, Thailand, and Singapore also try to attract investment. So, we compete with other countries to influence investor in order to conduct investment in our country.

Good environment is not only related to availability of resources, but also to easiness in doing business. If business process is lumbering, that can make investor reluctant to invest in our country. So, Indonesia should not depend in resource advantage, but has to repair investment process, so that investor will feel comfortable in conducting investment. This strategy should do by center government and local government. Both center and local government play important role in attracting investment. They have to strive to make their environment good for investment. Change has to be begun in government conduct connected to measures to attract investor. []

NB: I apologize if there are grammatical errors. I am still studying English now.

Fiscal Decentralization: Fail or Success?

Since 2011, Indonesia embarked fiscal decentralization with enacted and promulgated Law 22/1999 and Law 25/1999. Law 22/1999 emphasizes on Local Government Management, while Law 25/1999 emphasizes on fiscal balance between center government and local government. 

After more one decade of fiscal decentralization implemented, surely we hope that targets can be reached. One decade is not short time to undertake change. But, reviewing output of fiscal decentralization perhaps makes us disappointed. As experts said, there is no equalization within region after a decade of fiscal decentralization. It means that fiscal decentralization can’t achieve its target in order to create equalization within region in Indonesia. One of trait which proves that judgment is unavailability of equal distribution of welfare and population within region. As we know, most contribution of GDP is rendered of Java. Java contributes above 50 percent of GDP, while others are remaining. Also, distribution of population is still ugly. People inclined live in Java or big cities. They presume that Java or big cities offer more and more money rather than small cities or villages. I don’t judge that it’s wrong choice because everyone eager enhances quality of live. So, they are craving to live in good place.

Decentralization aimed to create equalization within region still can’t be achieved. Actually, government has transfer fund more equal to districts. Center government provides more money for poor districts rather than rich districts. Poor districts are characterized by less natural resources, bad infrastructures, and low human quality. They acquire more money from center government than those rich districts. Hopefully, poor districts can use that money to enhance economy. They can allocate to finance infrastructure building and provide health care and education to poor people. Surely, if every poor district uses its fund optimally, it can enhance its economy and create more quality in human.  

But, if we look phenomenon now, poor districts are still poor. We witness that many poor districts can’t allocate their fund optimally. Perhaps they don’t have capability to manage their budget. So that, more money doesn’t assure more enhancing economy. More money has to be followed by capacity in budget management. Surely, one important thing is political will of local government to prioritize development in its region. If high public official doesn’t regard need of society, automatically there is no refinement in economic development.

We realize that fiscal decentralization doesn’t succeed until now. But, we have to strive to create more equitable distribution of welfare within region. Hopefully, it can be followed by more distribution of people. I think fiscal decentralization which is pro-poor districts is one of strategy to achieve equalization or well distributed of welfare. But, we have to equip with controlling of fund allocating. Controlling local government in allocating fund, perhaps it will create pro-poor budget or pro-infrastructure budget. Controlling may be conducted by NGO, society, and center government. []

NB: I apologize if there are grammatical errors. I am studying English now.