A working committee of the House Representative has finally concluded the prolonged debate on the investment bill, which is now expected to be endorsed by a House plenary session scheduled for March 29.
"With a sigh of relief, we have finally arrived at the end of a long journey," Trade Minister Mari Elka Pangestu said in her capacity as the government's representative at what became the final meeting with the committee on the bill Thursday.
Despite major changes from the original draft submitted by the government to the working committee set up by House Commission VI in June 2006, the underlying spirit of the bill, which is to provide equal legal status to domestic and foreign investors, remains intact.
Commission VI chairman Didik J. Rachbini said he was satisfied with the end result of the long series of meetings as the aim of improving the investment climate by being more open to foreign investment could now be achieved without having to sacrifice the interests of the public at large.
A professor in international investment law from the University of Indonesia, Erman Rajagukguk, who was actively involved in the deliberation process as an expert advisor, said he considered the bill to be on a par with the legislative frameworks applied by Indonesia's competitors.
"I have studied many investment laws. And what we have now is comparable to those in foreign countries. We have a competitive incentive scheme, comparable land titles, and support for small and medium enterprises," he said.
Upon being enacted into law, the bill, which will become the 2007 Investment Law, will supersede the 1967 Foreign Investment Law and the 1968 Domestic Investment Law.
The new legislation will cover all business sectors, including investment in the mining, and oil and gas sectors, although the technical aspects of investing in these sectors will continue to be governed by the Oil and Gas Law, and the Mining Law.
With regard to property rights, the maximum duration of a land cultivation right under the new law will be extended from 35 years at present to 95 years, and building rights from 50 to 80 years. Meanwhile, land usage rights, the length of which used to be determined by local administrations, will now be acquirable for a maximum period of 70 years.
Under the new law, both foreign and local firms will be entitled to enjoy the same incentives as long as they meet the requirements, such as investing in labor intensive industries, infrastructure projects, projects involving the transfer of technology, and so-called pioneering industries.
Fiscal incentives, such as tax reductions, tax breaks and tax deferments, are to be further provided for by government regulation
To reduce immigration obstacles, foreign investors will be entitled to two-year residency permits that will be subsequently convertible into permanent residency permits.