BKPM seeks to complete new investment bill
The Jakarta Post, Jakarta
The Investment Coordinating Board (BKPM) said on Monday the foot- dragging process in the drafting of a crucial investment bill was mainly caused by stiff resistance from the Ministry of Forestry.
The strong rejection of the ministry had forced the state secretary to send the bill back to the Office of the Coordinating Minister for the Economy for further study, putting the bill's status in jeopardy, BKPM Chairman Theo F. Toemion lamented.
"The bill stipulates that investment in the forestry sector will be coordinated by BKPM. They strongly object to this, which has stalled the progress (in drafting) of the bill," Theo said after attending a hearing with House of Representatives Commission VI on trade and industry.
Theo added that his office received an official letter from the ministry -- the minister was then M. Prakosa -- about three months ago stating its rejection of the bill.
Under existing regulations, any bill proposed by one or more ministry has to pass through the state secretary before being submitted to the House for deliberation.
The new investment bill is meant to replace the existing 1967 Foreign Investment Law and 1968 Domestic Investment Law -- both exclude investment in certain sectors such as forestry.
Aside from the forestry sector, under the existing laws investment in sectors such as mining, banking and other financial services, stock and currency markets are not included in BKPM's portfolio.
The bill -- which contains clauses to open up new sectors to foreign investors -- is expected to help boost foreign direct investment (FDI), a crucial element to help the country generate economic growth at a level sufficient to deal with the chronic problems of unemployment.
Besides opening up new sectors to foreign investment, the new bill would also contain measures to minimize the obstacles facing foreign investors, such as excessive red tape.
The media and transportation are among sectors to be opened up for foreign ownership.
President Susilo Bambang Yudhoyono has pledged to boost growth to pre-crisis levels of 6 percent to 7 percent to help create more jobs for the millions of unemployed and job seekers entering the market each year.
Before the crisis, investment was one of the country's main economic growth engines, but it only accounts for about 20 percent of the growth in gross domestic product (GDP), with consumption contributing more than 70 percent.
Legal uncertainty, security fears, labor disputes and poorly managed decentralization are among a few of the problems that have put a brake on investment.
BKPM data showed that as of October, approvals for foreign direct investment (FDI) stood at US$8.85 billion, or a 11 percent decline from the same period last year.
Elsewhere, Theo said that he had asked to meet Malam Sambat Kaban, the new Minister of Forestry, to discuss the problem.
"Hopefully, we'll be able to meet soon and find a solution to this problem," Theo said.