Broadcast law allows foreign ownership

Broadcast law allows foreign ownership

Dow Jones, Jakarta

Indonesia's parliament Thursday passed a new broadcasting law that allows foreign investors to directly hold a maximum 20 percent stake in local television and multimedia companies.

The law also sets up a commission which will regulate the thousands of broadcasters that have sprung up since pro-democracy riots led to the downfall of former dictator Suharto in 1998.

Private television stations are worried by an article that plans to allow only state-owned Televisi Republik Indonesia, or TVRI, to operate nationwide starting in three years.

Thousands of workers from private television companies demonstrated against the law outside parliament Thursday, eyewitnesses said.

The government plans to define the new law further in the coming months, Communication Minister Syamsul Muarif told reporters outside Parliament.

"To direct and guide the implementation of the law, the government will issue a decree at a later date," Muarif said.

But one thing is clear: Indonesia is hoping the new law will attract foreign investors to inject capital into the sector.

Until now only a few foreign companies have invested in Indonesian broadcasters, using local joint ventures to get around current rules which ban overseas ownership of local companies.

Australian company STW Communications owns a stake in a company with a local partner, which in turn holds a 40 percent stake in Surya Citra Media, the owner of private television station SCTV. Some Indonesian Internet companies also have foreign partners.

Currently, there are nine private television companies that broadcast nationally.

Of the nine, Surya Citra Media and PT Indosiar Visual Mandiri are listed on the Jakarta Stock Exchange. Rajawali Citra Televisi Indonesia, or RCTI, the country's most popular television station in terms of viewer numbers, is owned by listed diversified holding company PT Bimantara Citra.

Analysts expect the enactment of the law will affect sentiment for shares of Surya Citra Media and Indosiar.

Ni Made Muliartini, an analyst with Samuel Securities, said any limitation to areas of coverage could hurt revenues from advertisement.