Deregulatory measure on investment subject to revision
Deregulatory measure on investment subject to revision
JAKARTA (JP): A senior investment official, bombarded with
criticism over a new deregulatory measure which allows foreign
investors to construct and operate infrastructure facilities,
said yesterday that the ruling is not final and can be reviewed.
"Don't worry too much because the deregulation can be
revised," R.T. Napitupulu, deputy chairman of the Investment
Coordinating Board (BKPM), told the participants of a seminar on
political economy.
Businessman Probosutedjo, a speaker at the meeting organized
by the Center for Information and Development Studies (CIDES),
said that the deregulatory measure, which is stipulated under
Government Regulation No. 20/1994, or PP 20, is unconstitutional
because it allows foreigners to control facilities for the public
interest.
Sri-Edi Swasono, chairman of the Indonesian Cooperatives
Council, told the meeting that PP 20 represents a divergence from
our economic philosophy which does not believe in an all-out
free-market economy.
The government in March issued the decree, which significantly
eased restrictions on foreign investors, freeing them from the
minimum capital requirements and ending compulsory equity
divestment for joint ventures. It also allows both domestic and
foreign investors to operate infrastructure facilities, including
seaports, telecommunications, power plants, railway facilities,
civil aviation, nuclear power and mass media.
Reaction
The ruling, aimed mainly at wooing foreign investment, won
immediate support from foreign investors but drew mixed reactions
from local businessmen, leaders of cooperatives, legislators and
media executives.
According to BKPM, foreign investments approved by the
government in 1993 declined to US$8 billion from $10 billion in
1994. During the first 7.5 months of this year, BKPM approved
foreign investment commitments of $15.97 billion.
Probosutedjo, who is also a half brother of President
Soeharto, said that the government should adopt other ways of
looking for investments for development.
State Minister of Investment/Chairman of BKPM Sanyoto
Sastrowardoyo said that a total investment of Rp 660 trillion
(US$300 billion) is needed in the coming five years to maintain
the economy's annual average growth of 6.2 percent. Out of the
investments, 73.3 percent is expected to come from the private
sector.
Probosutedjo said the government, for example, could increase
the tax rate on luxury goods.
He also said that the government should not necessarily invite
foreign investors to operate businesses of public interest in
order to encourage state companies to increase efficiency.
Efficiency of state firms can be increased through improvement
of management, he said.(hdj)