BKPM wants to be more open to investors
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.