DESPITE the global economic downturn, the Indonesian economy grew by a remarkable 4.5 per cent last year. And it is expected to grow even faster this year. But how much better could the economy do if the country’s squabbling politicians and laid- back bureaucrats got their acts together?

Much of the blame for Indonesia’s weaknesses tends to fall on the leadership in Jakarta. Given the recent efforts of a small number of dedicated technocrats, however, this may be a little unfair. My own experience suggests that more serious examples of political and bureaucratic inertia probably lie in the provinces.
Situated approximately 1,500km east of Jakarta, sparsely populated Central Sulawesi is fairly typical. The province’s economy grew by an impressive 7.7 per cent last year, thanks partly to high international prices for cocoa beans, the province’s main export. But ageing trees, together with the impact of pests and a shortage of fertiliser, are making it difficult to maintain production. The long dry season has also led to a drop in rice production this year.
What sort of future does this largely agricultural province have? Apart from mining firms, few investors have shown much interest in it. Central Sulawesi’s reputation for sectarian violence as a result of the unrest in Poso several years ago may be at least partly to blame. But the violence, which hardly touched the provincial capital of Palu 480km to the west, has long since subsided.
At a meeting with an official representative of the province in Jakarta last month, I was inadvertently presented with an equally plausible explanation for the lack of investor interest.
Somewhat surprisingly, given his responsibility to promote Central Sulawesi to the wider world, the official could not speak English. The interview was therefore conducted almost entirely in Indonesian. But it wasn’t the gentleman’s lack of linguistic skills that grated. Rather, it was his poor preparation for the meeting.
Although clearly genuine – his name and contact details had been passed to me by the Investment Coordinating Board’s (BKPM’s) Singapore office – the official was unable to produce a business card. Nor could he name any Indonesian conglomerate active in his province. Enquiries about the provincial government’s economic development plans produced vague replies.
This laid-back approach, I soon learnt, extends to Central Sulawesi’s official publications. One booklet currently being handed out by provincial officials seeks to highlight the economic potential of Central Sulawesi in various industries. Unfortunately, the numerous grammatical errors in the English language text undermine the professional image projected by the high-quality paper. More seriously, the undated publication does not contain the contact information of officials or government departments in the provincial capital that might be of assistance to potential investors.
“I am not surprised,” responded Professor Ryass Rasyid, adviser to President Susilo Bambang Yudhoyono on regional issues, when I related my experience to him a few days later. Central Sulawesi governors, he explained, rarely have much experience outside the province. As a result, they are generally less attuned to the steps that need to be taken to attract local and foreign investors. Prof Ryass contrasted this with the more activist stance of governors from other provinces on the island such as Gorontalo.
Of course, the Central Sulawesi government and its representatives cannot be held solely responsible for the failure of the province to realise its potential. It took years for mining giant Rio Tinto to get a permit from Jakarta’s ministry of energy and mineral resources to allow the company to open a nickel mine in the province, for example.
Disputes over royalty payments to the central government, the involvement of a local contractor, and uncertainties relating to the 2008 mining law, all played a part. Yet another dispute, this time between a Japanese-led consortium and the authorities in Jakarta, is currently holding up progress on a US$1.7 billion (S$2.26 billion) gas project.
Even so, it is difficult to avoid the conclusion that one of the main reasons at least some of the provinces in the outer islands remain underdeveloped is because those who are responsible for promoting their development have not been doing their jobs.
My meeting with the official from Central Sulawesi ended with a promise that the information I had requested would soon be forwarded. Unfortunately, it was not. Follow-up e-mail also failed to elicit a response.
Buried on page 74 of the glossy booklet is the cryptic comment that the Sulewana rapids outside Tertana City have the potential to produce an estimated 800 megawatts of hydro-electric power – enough, it says, for the entire island of Sulawesi. For a province which experienced severe electricity shortages earlier this year when several of its coal-fired plants ran out of fuel, exploiting this resource must surely be a major priority of the provincial government.
Sadly, few potential investors are likely to find out.