BKPM wants to be more open to investors
Adianto P. Simamora, The Jakarta Post, Jakarta
The Investment Coordinating Board (BKPM) is proposing to open all business sectors to foreign investors, except for a few sensitive sectors, under the preliminary draft investment bill proposed by the agency.
Agency chairman Theo F. Toemion told The Jakarta Post that the bill would further streamline the "negative investment list" to leave only a few sectors, including religion, culture, environment and small and medium enterprises, out of bounds for foreign investment.
"We will keep the negative investment list very short," Theo said, adding that the future investment law would be characterized by a "spirit of openness".
Theo said he would present BKPM's draft bill to the Cabinet on Monday for discussion and approval.
Theo planned to submit the bill to the House of Representatives for deliberation next month.
The bill will replace both Foreign Investment Law No. 1/1967 and Domestic Investment Law No. 11/70.
The government has long maintained the negative investment list, which totally or partially closes several business sectors to foreign investment.
The most recent list was issued by former president Abdurrahman Wahid's administration in Presidential Decree No. 96/2000, which, among other things, stipulated that the print media, television and radio were closed to foreign investors.
The decree, however, scrapped foreign ownership limits in the telecommunications sector; air transportation and port management; power generation, transmission and distribution; shipping; drinking water supply; train services; atomic power generation and various medical services.
It said that foreign investors could enter any of the above sectors only with the cooperation of local partners.
Theo insisted that the investment liberalization aimed at by the future law intended to strengthen competition in the country and boost the efficiency of the country's industrial sector.
The public in general will benefit from the competition as it will force companies to operate efficiently and cut prices to win market share.
"Both telephone and electricity rates, for example, keep increasing in this country because there is little efficiency and no competition. In some neighboring countries, rates have been falling steadily.
"So, why should we close the power transmission and distribution sectors to foreign investors, if it can create competition and in the end result in the reduction of power prices?" he asked.
Under the proposed draft, the government would treat foreign and domestic investors equally. The government would also establish a one-stop service center to speed up investment licensing procedures.
The government will also provide some incentives to foreign investors, including tax incentives.
He noted, however, that sound regulations and incentives were not enough to attract foreign investors as they also took into consideration other factors, including legal certainties.
Theo expressed hope that the new investment law would also give legal certainty to foreign investors.
Foreign direct investment approvals dropped sharply by 41.5 percent in 2001 to US$9.02 billion, compared with $15.42 billion the year before.
Domestic investment, meanwhile, ended lower at Rp 58.67 trillion last year, from Rp 92.41 trillion in 2000.
Analysts have repeatedly said foreign investors were still reluctant to come to the country due to the continuing security problems and unstable social and political situation.