Embassies may issue initial approvals for foreign investment<\/p>\n
JAKARTA (JP): Overseas embassies and consulates general may
\nbegin issuing preliminary approvals to foreign investors wishing
\nto open businesses in Indonesia, a minister said here on Tuesday.<\/p>\n
State Minister of Investment Hamzah Haz said the embassies
\nand their consulates general also would be assigned to provide
\ntechnical assistance to prospective foreign investors as part of
\nthe program to promote foreign investment in Indonesia.<\/p>\n
\"It is part of our effort to streamline paperwork to help
\nfacilitate the operations of foreign and local investors in
\nIndonesia,\" Hamzah, who is also the chairman of the Investment
\nCoordinating Board (BKPM), said.<\/p>\n
\"I hope the plan can be realized in the third quarter of this
\nyear,\" he said on the sidelines of a seminar on industrial estate
\noperations.<\/p>\n
Under the new service, potential foreign investors can send
\ntheir application letters and other requirements to Indonesian
\nembassies or consulates general in their home countries.<\/p>\n
The embassies would then select the suitable proposals and
\nforward them to BKPM for possible approval.<\/p>\n
\"Investors will not have to come to Jakarta to hand in their
\ninvestment applications. They only have to come here after their
\nproposal has been approved,\" he said.<\/p>\n
Hamzah said foreign and domestic investment continued to feel
\nthe impact of the economic and political crises.<\/p>\n
During the first three months of this year, he said, 78
\ndomestic investment projects worth Rp 2.1 trillion were
\ncanceled.<\/p>\n
In the same period, nine foreign investment projects worth
\nUS$37.9 million were canceled, he said.<\/p>\n
Change of status<\/p>\n
Hamzah also said at least 152 local firms had their status
\nchanged to foreign companies in the first three months of this
\nyear due the transfer of their stakes to foreign investors.<\/p>\n
He said the owners of some of the local companies were forced
\nto sell a large part of their stakes to refinance their foreign
\ndebt.<\/p>\n
\"Some owners also had to surrender part of their stakes to
\ntheir foreign creditors as payment for their debt,\" he said.<\/p>\n
The government divides foreign direct investment into two
\ncategories: domestic investment and foreign investment schemes.
\nCompanies under the foreign investment category receive some form
\nof incentives.<\/p>\n
Hamzah said the number of local firms changing their status
\njumped 80 percent compared to the same period in 1998. He guessed
\nthe number would increase further in the future because many
\ncompanies considered share placements and equity-to-debt swaps
\nthe best alternatives to settling their mounting foreign debt.<\/p>\n
Secretary-general of the Office of the State Minister of
\nInvestment Asril Noer said changing their status would benefit
\nthe companies because foreign investment in the country received
\na number of governmental benefits, including insurance against
\npossible damage or loss inflicted by war, riots and
\ninsurrections, as well as protection against nationalization.<\/p>\n
\"This protection is guaranteed by the Investment Promotion and
\nProtection Agreement the government signed with 45 other
\ncountries, and as foreign investments they are included in the
\nagreement,\" Asril said.<\/p>\n
Asril said the government also was reviewing government
\nregulation No 22\/1994 on foreign direct investment.<\/p>\n
In a new regulation, he said, all companies with some amount
\nof foreign ownership automatically would be classified as foreign
\ninvestment.<\/p>\n
Previously, companies could choose to be classified as
\ndomestic investment or foreign investment, he said.<\/p>\n
The government also would allow all companies to sell stakes
\nto overseas investors, he said. Previously, selling stakes to
\nforeign investors was allowed only as part of a company's effort
\nto restructure its debt.<\/p>\n
\"During the crisis, we think there are a lot of Indonesian
\ncompanies which want to invite in foreign investors because they
\nneed fresh capital to continue operating.<\/p>\n
\"So we will allow them to sell stakes to foreign parties,\" he
\nsaid. (gis)<\/p>",
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"sponsor": "Okusi Associates",
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