Big firms may expand only for exports: Sanyoto

JAKARTA (JP): State Minister of Investment Sanyoto Sastrowardoyo said yesterday that industrial companies with 50 percent or more of the domestic market will still be allowed to expand capacity if any additional production is destined for the export market.

"We will enforce the policy on a case by case basis," Sanyoto said in reference to his statement at the House of Representatives last week.

Sanyoto told a hearing at the House that his office, the Investment Coordinating Board, would not allow companies already holding 50 percent or more of the domestic market to expand their capacities.

"My remarks at the House were only the general policy outline," he said after meeting with President Soeharto yesterday.

Sanyoto's sweeping policy statement has been criticized by business conglomerates as a barrier to investments that may prompt businessmen to invest their capital outside of the country.

He added that PT Indofood, for example, was denied a license to expand its capacity because the company held more than 82 percent of the domestic noodle market.

But, Sanyoto said, if Indofood designs its capacity expansion to supply the export market the company will be allowed to increase its capacity.

Sanyoto seemed unaware that PT Indofood had gone public last July and that nearly 20 percent of its shares is already owned by the investing public.

"I just met with Sudwikatmono (the chairman of Indofood) and suggested that he float PT Indofood on the stock exchange," he said.

Sudwikatmono, who also met with the President yesterday, retorted that he did not understand what Sanyoto meant by his suggestion on going public.

"PT Indofood has gone public. Indocement now owns only 50.1 percent of the company," Sudwikatmono said.

He said his company had been exporting its noodles to 32 countries and that any rejection of its expansion proposal might hinder its export promotion.

"We intend to increase our exports from three percent of our total output now to 20 percent," Sudwikatmono said.

Sanyoto said the government, as the economic planner, should have the means to guide the pace and direction of the nation's economic development effectively.

One of the instruments, he added, is the industrial licensing authority.

Sanyoto recalled the 7th article of Law No.5/1984 on Manufacturing Industry which stipulates, among other things, that the government is obliged and empowered to guide industrial development in such a way that the competition between industrial firms is fair and sound and that certain industrial companies do not have a monopoly of particular goods.

Licensing

Sanyoto also said yesterday that BKPM licensed 373 foreign investment projects with a total commitment of US$20.03 billion between January and June 15, up by 284.6 percent from the same period last year.

Domestic investment approvals in the same period totaled 402 projects with Rp 28 trillion ($12.5 billion), reflecting an 8.6 percent increase over the corresponding period of last year.

Sanyoto acknowledged, however, that the rate of implementing licensed investments was still relatively low, albeit upward.

The rate of implementation of foreign investment projects has now reached 62 percent, compared to 51.3 percent previously. The rate for domestic investment projects reached 43.2 percent, up from 36 percent, he added. (vin)