By: O. Safitrie*)
“But as important as official assistance is to improving people’s lives, the real-
ity is that it is trade and private capital flows that will make the real differ-
ence that are more, more, much more significant”
-U.S. Secretary of State Colin Powell-
Foreign Direct Investment (FDI) seems to be a hot potato in Indonesia. The most recent issue on FDI is the extension of Freeport’s export permit. The Energy and Mineral Resources Ministry’s director general for mineral and coal, R. Sukhyar, announced the extension on Friday (23/1). He said that it is given because the company had made progress on land procurement for the smelter.
On the previous day, Thursday, Freeport-McMoRan Inc announced that Gresik, East Java, will be the location for its planned new copper smelter. However, this plan got disapproval from Papuan government. Papua governor Lukas Enembe said on Friday that Papua needs integrated smelter facilities. He mentioned that by building the facilities in Papua, it will help local government to fight poverty and increase Papua’s fiscal capacity.
He further state that the plan to build the smelter outside Papua will confirm the assumption that the company only wants the profit without having any intention to develop Papua.
FDI is indeed a crucial part of the globalisation process as it speeds up technology diffusion, allowing developing nations to gain access to technology they otherwise wouldn’t have, therefore increasing their productivity. It is an injection of money to the domestic economy externally with specific target aimed by the investors, it could be used to purchase machinery, factory or employ local workforces.
Freeport without any doubt has created many economic benefit for Indonesian government. But, to what extent this benefit could offset the harm it also creates needs to be calculated. Indonesia as a developing country will rely on FDI to boost the growth. Nevertheless, FDI will only be optimal if the government have a strong commitment to be clean and supported by strong regulation. Hence, the FDI will benefit every Indonesian, not only bring wealth to small group of Indonesians.
*) The Author Is Singapore Contributor
