Foreigners' entry in retail industry still prohibited<\/p>\n
JAKARTA (JP): The government will continue to ban foreign
\ncompanies from operating wholesale and retail businesses in the
\ncountry to protect local traders, says a senior official of the
\nMinistry of Trade.<\/p>\n
Paian Nainggolan, the head of the ministry's Research and
\nDevelopment Agency, said here yesterday that the wholesale and
\nretail businesses remain closed to foreign investors, even though
\nmost industries previously closed to foreigners had been taken
\nout from the negative investment list.<\/p>\n
Speaking at a three-day coordination meeting of the Investment
\nCoordinating Board (BKPM), Paian said that the measure would be
\nfurther maintained not only to protect domestic traders but also
\nto prevent foreigners from controlling the country's huge retail
\nand wholesale markets.<\/p>\n
The national meeting, which will end on Wednesday, is being
\nparticipated in by 150 officials of BKPM's provincial offices.
\nSpeakers of the seminar included Coordinating Minister for
\nIndustry and Trade Hartarto and Coordinating Minister for Economy
\nand Finance Saleh Afiff.<\/p>\n
The ministry of trade has issued a number of rulings
\nconcerning restrictions imposed on foreign investors in the
\nretail and wholesale industries. The restrictions are, however,
\nnot very effective as many of the world's major retail and
\nwholesale chains are still able to break the barriers through a
\nnumber of business arrangements with local companies. Sogo,
\nYaohan, both of Japan, and Makro of the Netherlands, for example,
\nhave operated here for more than two years through technical
\nagreements with local firms.<\/p>\n
Franchising<\/p>\n
Paian said foreign companies are allowed only to operate in
\nthe country's retail and wholesale industries through franchising
\nagreements with local firms or in cooperation with appointed
\ndistributors.<\/p>\n
The government recently opened a number of previously closed
\nbusiness sectors such as seaports, telecommunications, power,
\nrailways, civil aviation and nuclear plants to foreign ownership
\nto attract foreign investors. The move is also part of the
\nadjustment to the General Agreement on Tariffs and Trade (GATT).<\/p>\n
In his address in yesterday's meeting, Paian said the
\ngovernment has no plan to ease the restrictions imposed on
\nforeign investors in the retail and wholesale sectors even though
\nthe country, within the next five years, has to adjust its
\ninvestment rulings to the trade-related investment measures
\n(TRIMs) under the GATT.<\/p>\n
Abolishment<\/p>\n
State Minister of Investment Sanyoto Sastrowardoyo, who is
\nalso chairman of BKPM, told the meeting that developed nations
\nare required to abolish their trade-related investment rulings,
\nwhich are contrary to the GATT principles, within two years since
\nits ratification early this year, while developing countries,
\nincluding Indonesia, are required to abandon such rulings within
\nfive years and least developed nations within seven years.<\/p>\n
The BKPM chairman said that most of Indonesia's investment
\nrulings have been in accordance with the GATT principles except
\nthose in the automotive industry, where foreign automobile makers
\nare required to use a certain percentage of local contents to be
\nable to establish production units in the country.<\/p>\n
Sanyoto said that the restriction in the form of local
\ncontents in the automobile industry should be adjusted to TRIMs
\nin the next five years. (hen)<\/p>",
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