Embassies may issue initial approvals for foreign investment
Embassies may issue initial approvals for foreign investment
JAKARTA (JP): Overseas embassies and consulates general may
begin issuing preliminary approvals to foreign investors wishing
to open businesses in Indonesia, a minister said here on Tuesday.
State Minister of Investment Hamzah Haz said the embassies
and their consulates general also would be assigned to provide
technical assistance to prospective foreign investors as part of
the program to promote foreign investment in Indonesia.
"It is part of our effort to streamline paperwork to help
facilitate the operations of foreign and local investors in
Indonesia," Hamzah, who is also the chairman of the Investment
Coordinating Board (BKPM), said.
"I hope the plan can be realized in the third quarter of this
year," he said on the sidelines of a seminar on industrial estate
operations.
Under the new service, potential foreign investors can send
their application letters and other requirements to Indonesian
embassies or consulates general in their home countries.
The embassies would then select the suitable proposals and
forward them to BKPM for possible approval.
"Investors will not have to come to Jakarta to hand in their
investment applications. They only have to come here after their
proposal has been approved," he said.
Hamzah said foreign and domestic investment continued to feel
the impact of the economic and political crises.
During the first three months of this year, he said, 78
domestic investment projects worth Rp 2.1 trillion were
canceled.
In the same period, nine foreign investment projects worth
US$37.9 million were canceled, he said.
Change of status
Hamzah also said at least 152 local firms had their status
changed to foreign companies in the first three months of this
year due the transfer of their stakes to foreign investors.
He said the owners of some of the local companies were forced
to sell a large part of their stakes to refinance their foreign
debt.
"Some owners also had to surrender part of their stakes to
their foreign creditors as payment for their debt," he said.
The government divides foreign direct investment into two
categories: domestic investment and foreign investment schemes.
Companies under the foreign investment category receive some form
of incentives.
Hamzah said the number of local firms changing their status
jumped 80 percent compared to the same period in 1998. He guessed
the number would increase further in the future because many
companies considered share placements and equity-to-debt swaps
the best alternatives to settling their mounting foreign debt.
Secretary-general of the Office of the State Minister of
Investment Asril Noer said changing their status would benefit
the companies because foreign investment in the country received
a number of governmental benefits, including insurance against
possible damage or loss inflicted by war, riots and
insurrections, as well as protection against nationalization.
"This protection is guaranteed by the Investment Promotion and
Protection Agreement the government signed with 45 other
countries, and as foreign investments they are included in the
agreement," Asril said.
Asril said the government also was reviewing government
regulation No 22/1994 on foreign direct investment.
In a new regulation, he said, all companies with some amount
of foreign ownership automatically would be classified as foreign
investment.
Previously, companies could choose to be classified as
domestic investment or foreign investment, he said.
The government also would allow all companies to sell stakes
to overseas investors, he said. Previously, selling stakes to
foreign investors was allowed only as part of a company's effort
to restructure its debt.
"During the crisis, we think there are a lot of Indonesian
companies which want to invite in foreign investors because they
need fresh capital to continue operating.
"So we will allow them to sell stakes to foreign parties," he
said. (gis)