Foreign hotel chains must set up local subsidiaries<\/p>\n
JAKARTA (JP): The government has warned 28 foreign hotel
\nchains operating in Indonesia to establish local subsidiaries
\nsoon if they want to continue their operations in the country.<\/p>\n
Director of business and tourist facilities at the Ministry of
\nTourism, Post and Telecommunications, Luther Barrung, said that
\nthe foreign hotel chains had until Nov. 7 to report their
\nreadiness to set up local subsidiaries.<\/p>\n
"They will have the opportunity to leave Indonesia if they
\nfail to meet the deadline," Barrung said as quoted by Bisnis
\nIndonesia daily on Saturday.<\/p>\n
Based on a decree signed by Minister of Tourism, Post and
\nTelecommunications Joop Ave in November 1996, foreign hotel
\nchains operating in Indonesia must set up local subsidiaries by
\n2000.<\/p>\n
The hotel operators, however, should notify the government of
\ntheir plan to establish the subsidiaries within a year since the
\nregulation was issued on Nov. 3, last year.<\/p>\n
The new regulation also requires foreign hotel chains to
\nemploy no more than three expatriates in top management positions
\nby the 2000 deadline.<\/p>\n
Foreign hotel chains, which at present mostly operate through
\nrepresentative offices, may establish wholly-owned subsidiaries
\nor joint ventures with local partners.<\/p>\n
The government expects the new hotel regulation will improve
\nhuman resources and also reduce labor disputes.<\/p>\n
Some domestic firms which own star-rated hotels face frequent
\nstrikes because representative foreign hotel management offices
\ndo not have the authority to deal with industrial actions.
\nStrikes are usually solved by hotel owners, though staff are
\nusually recruited by hotel operators.<\/p>\n
About 50 overseas hotel management chains are operating in
\nIndonesia. All of them run star-rated hotels, including the
\nUnited States' Carlson, Choice, Holiday Inn, Hyatt, Inter-
\nContinental, Radisson, Ritz Carlton, Westin and Sheraton;
\nBritain's Le Meridien and Hilton International; Canada's Regent
\nand Four Seasons; Spain's Melia-Sol; Hong Kong's Century
\nInternational Hotels, Oriental, Aman Resorts and Shangri-La; and
\nJapan's Sunroute, Dai-ichi, Imperial, ANA and Nikko.<\/p>\n
There are also Aston, Acacia, Banyan, Dusit Inn, Omni, Aquila,
\nAccor, General Hotel Management, Ramada, Oberoi, Sedona, Club
\nMed, Heritage, Mirage, Park Lane and Pan Pacific.<\/p>\n
Other foreign chains which will operate in Indonesia are Hard
\nRock, Conrad, Kempinski, Marriott, Movenpick, Alsson, Best
\nWestern, Rosewood and Peninsula.<\/p>\n
Role<\/p>\n
Barrung said that only 11 companies had so far established
\ndomestic firms to manage their hotels in Indonesia, while six
\nothers were in the process of establishing their Indonesia-based
\ncompanies.<\/p>\n
Some of the hotel chains reported that they would appeal to
\nthe government to extend the deadline as they had faced some
\nobstacles in obtaining investment approval from the Investment
\nCoordinating Board office.<\/p>\n
Barrung reiterated that the government would in the near
\nfuture send another warning to the companies which had not sent
\nnotification about their local subsidiary plans.<\/p>\n
He said that minister Joop Ave considered his office's
\napproach in enforcing the new regulation as being too soft.<\/p>\n
"We think we have acted strongly. But with the minister's
\ncall, we will be more strict," Barrung promised.<\/p>\n
An executive of a star-hotel in West Jakarta admitted that
\nmany top executives of hotel operators ignored the regulation.<\/p>\n
"Just like any other regulation in Indonesia, we previously
\nthought this was just a kind of bluff. But now all of us have to
\nreally heed the requirement," the executive said. (icn)<\/p>",
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"sponsor": "Okusi Associates",
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