Sat, 21 Apr 2007
From: The Jakarta Post
By Andi Haswidi, The Jakarta Post, Jakarta
Both local and foreign investors are seeking clarification from the government on its commitment to providing a more conducive investment climate amid growing demands for the expansion of the business sectors that are closed to foreign investors.

"Investors are puzzled as regards the government's commitment to promoting investment, given that some departments are lobbying for the negative list to be expanded," Indonesian Employers Association chairman Sofyan Wanandi told The Jakarta Post on Friday, referring to the list of sectors that are closed to foreign investment.

"There are some people who seek to promote a narrow-minded view of nationalism and the instituting of counterproductive protectionist measures," he said.

Sofyan, together with a group of foreign investors, met Trade Minister Mari Elka Pangestu on Thursday and Investment Coordinating Board chairman Muhammad Lutfi on Friday to seek clarifications.

Also present at the meetings were representatives of various overseas business associations and chambers of commerce from countries such as Japan, the United States, South Korea and the Netherlands.

After meeting with Lutfi, Sofyan said the investors were satisfied by Lutfi's clarifications, which basically reaffirmed the government's commitment to pressing ahead with the implementation of the new Investment Law, which has been drawn the ire of left-wing and ultra-nationalist circles.

According to Sofyan, the BKPM chairman said any restrictions on foreign investment would be in line with the spirit of the legislation, which is designed to ensure equal treatment for both local and foreign investors.

"Lutfi also said the negative list had not been finalized, but promised that it would be ready within the next one to two months," Sofyan said.

Earlier, Minister Mari had said that a series of interministerial meetings, chaired by the coordinating minister for economy, would be held in the near future to determine which sectors would remain out-of-bounds to overseas investors.

A number of populist economists have been loudly demanding that the government increase the number of business sectors that are closed to foreign investment. They argue that the expansion of the negative list is necessary in order to protect local firms.

A number of ministers have also called for the expansion of the list. Industry Minister Fahmi Idris, for example, said the tobacco and sugar refining industries should remain off-limits to foreign investment.

The government has come under pressure to delay the introduction of the legislation, which left-wing and nationalist groups claim is too liberal.

A number of civil society groups, including the Institute for Global Justice, recently announced plans to challenge the constitutionality of the legislation in June, arguing that it fails to protect the interests of the majority of the Indonesian people, and was specifically framed to placate foreign investors.

Legislator Hasto Kristianto of the Indonesian Democratic Party of Struggle, which staged a walkout during the House plenary session that passed the new legislation, said the negative list was a tool that could be used by government to help local industry and improve the country's industrial capabilities.



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