Foreign, domestic firms to be treated equally

Foreign, domestic firms to be treated equally

JAKARTA (JP): Both foreign and domestic investment companies in Indonesia will be governed by the same law when a new investment bill, currently being drafted by the Investment Coordinating Board (BKPM), is passed later this year.

BKPM's Deputy Chairman Achmad Az said the bill on investment would replace the Foreign Investment Law of 1967 and the Domestic Investment Law of 1968.

"We expect to complete the bill in August," Achmad told The Jakarta Post earlier this week.

Achmad said that under the new law domestic and foreign investment ventures would receive the same treatment.

He declined to give further details of the investment bill, the existence of which he disclosed to participants at The Economist Conferences' Roundtable with the Indonesian Government on Tuesday.

The different legal status currently accorded to foreign companies, on the one hand, and domestic companies, on the other, has frequently been criticized by foreign investors as discriminatory.

Due to the differential treatment, foreign investors are denied access to several facilities and business sectors which are fully open to domestic investors.

Foreign investment companies, for example, are prohibited from marketing their own products within the country and from operating in the retail trade sector, and do not have full access to domestic bank credit.

The ban on foreign participation in the retail trade, inadequate protection of intellectual property rights and problems with tax officials were among the issues most frequently raised by foreign businessmen during the three-day business conference.

Businessmen attending the Roundtable told the Post that the coming enactment of a single investment law might be part of Indonesia's preparations to take the trade-related investment measures prescribed by the new General Agreement on Tariffs and Trade, which is administered by the World Trade Organization.

Between now and the enactment of the new investment law, domestic companies which sell shares to foreign investors are given the option of changing their status to that of a foreign investment company or retaining their domestic company status, Achmad said.

For example, he said, PT Bakrie Electronics recently sold 30 percent of its shares to the Dutch company PTT Telekom BV but chose to retain its domestic investment status. (vin)