Ban on foreign Internet investors lifted by govt

JAKARTA (JP): The government announced on Monday it had removed information multimedia services from the list of industries closed to foreign investment in the controversial Presidential Decree No. 96/2000.

The government also dramatically amended the decree by wiping out the original decree's foreign investor ownership limits in sectors including telecommunications, air transportation and port management; power generation, transmission and distribution; shipping; drinking water supply; train services; atomic power generation; and various medical services.

The original decree allowed foreign investors to own up to a 95 percent stake in local companies operating in port construction and management; electricity generation, transmission and distribution; shipping; drinking water supply; train services; atomic power generation; and various medical services.

While foreign ownership in the telecommunications and air transportation sectors was limited to 49 percent.

Under the revised decree, foreign investors can enter any of the above sectors with the cooperation of local partners.

Riza Primadi, deputy to the state minister of investment and state enterprises, said that limits on foreign ownership in those business sectors would be determined by a separate government regulation.

But he was sure that foreign ownership in the telecommunications sector would be set at up to 95 percent.

The revision, which takes the form of presidential decree and was signed by President Abdurrahman Wahid on Aug. 16, came way earlier than Sept. 8 as was expected.

The issuance of the original decree on July 20 sparked wide- spread criticism from local and foreign Internet players.

The government defended its policy, saying the ban was designed to curb the influx of foreign Internet players to the country and give more opportunities for local companies to strengthen their positions.

Internet entrepreneurs and analysts said it would be impossible for local companies to continue in businesses without foreign backing.

All of the existing major Internet companies like Astaga!com, Detik.com, Catcha.co.id and IndoExchange.com are partly owned by foreign venture capital companies.

The criticism was acknowledged when several government institutions, including the office of the minister of investment and state enterprises, held a joint meeting on Aug. 14. An official letter requesting the revision of the decree followed the next day.

Minister of Trade and Industry Luhut Pandjaitan, who earlier called the decree a big mistake, said on Monday his office had received lots of complaints -- especially from foreign investors -- about the decree.

"I received so many complaints from foreign companies that have invested in the Internet here. It surely made all of us realize how big foreign investors' interests are in our Internet industry," he was quoted by Antara as saying.

He said that given the strong foreign investment in the local Internet industry, it was expected to develop at a rapid rate in the near future.

He said with its huge potential market, Indonesia was expected to account for at least 10 percent of the global Internet market in the next eight years. (byg/cst)