Introspection, not revenge, needed over loss of RIM to Malaysia

Investment Coordinating Board Chairman Gita Wirjawan is right to ask why indeed would a company like RIM that has exponentially more consumers in Indonesia and Malaysia choose the latter for its production base. It makes little financial and political sense.

Gita is also right to speculate that it may be because Indonesia last year required RIM to set up a regional network aggregator, or data center, in the country, establish at least 40 authorized customer care centers, facilitate lawful interception of its encrypted BlackBerry Messenger services by officials and filter pornographic content.

But he does not ask and speculate on the important questions: Were there other factors behind RIM’s decision to locate its base in Malaysia? Is Indonesia’s corruption and lack of legal certainty a factor? What about the red tape in setting something like this up here, compared to Malaysia? And how much of a concern should IT and communications-related companies have over an Information Minister as mercurial as Tifatul?

But at least Gita did make an effort at asking. The Industry Minister just went straight for the revenge bit. Companies make business decisions based on what’s good for their business. Being close to their market and winning the goodwill of their largest markets are very important factors for businesses in their decision-making processes. Unspun is sure that RIM, and Bosch for that matter, considered the pros and cons of Indonesia and Malaysia carefully and the sad truth, for them, is that the cons in Indonesia outweigh the very strong pro of a huge consumer base in Indonesia.

Instead of acting with the fury of a woman scorned the Indonesian ministers would do well to do, as the late Suharto would have advised, some introspection on what Indonesia needs to change to make itself more attractive as an investment destination. Or at least to mitigate the cons that help outweigh its pros of a huge population and market, a stable and growing economy and vast store of resources.

See also: Indonesian Government threatens RIM with additional taxes over Malaysia decision

An extract of the news as it appears in The Jakarta Globe today:

Govt Upset as RIM Chooses Malaysia for Base

The decision of BlackBerry maker Research In Motion, to set up its production base for Asia in Malaysia is upsetting some senior Indonesian officials and prompting them to consider hitting back at the Canadian company.

“Why did they choose to build in Malaysia?” said Gita Wirjawan, the chairman of the Investment Coordinating Board (BKPM), suggesting Indonesia’s large market should have been a factor.

Gita said the market for BlackBerrys in Malaysia — less than 400,000 units sold annually — was small compared to the Indonesian market — estimated at 4 million units a year.

He said he believed that Jakarta’s demand for the company to establish a data center here was behind the decision.

RIM spokesman Oliver Pilgerstorfer said the company was unable to comment on the matter.

Last year, Indonesia required RIM to set up a regional network aggregator, or data center, in the country, establish at least 40 authorized customer care centers, facilitate lawful interception of its encrypted BlackBerry Messenger services by officials and filter pornographic content.

German company Bosch recently announced it was planning to build a solar-panel plant in Malaysia, even though Indonesia was its target market, Gita said. The BKPM chairman proposed tariff barriers for companies that import luxury goods rather than produce them in Indonesia.

He received some support from Industry Minister M.S. Hidayat, who said the government should penalize producers with a large market share in Indonesia who import their products.

“I suggest we impose an additional value-added tax, or luxury tax, for such goods, so that people would choose to invest here instead,” Hidayat said.

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