Foreign hotel chains must set up local subsidiaries
JAKARTA (JP): The government has warned 28 foreign hotel chains operating in Indonesia to establish local subsidiaries soon if they want to continue their operations in the country.
Director of business and tourist facilities at the Ministry of Tourism, Post and Telecommunications, Luther Barrung, said that the foreign hotel chains had until Nov. 7 to report their readiness to set up local subsidiaries.
"They will have the opportunity to leave Indonesia if they fail to meet the deadline," Barrung said as quoted by Bisnis Indonesia daily on Saturday.
Based on a decree signed by Minister of Tourism, Post and Telecommunications Joop Ave in November 1996, foreign hotel chains operating in Indonesia must set up local subsidiaries by 2000.
The hotel operators, however, should notify the government of their plan to establish the subsidiaries within a year since the regulation was issued on Nov. 3, last year.
The new regulation also requires foreign hotel chains to employ no more than three expatriates in top management positions by the 2000 deadline.
Foreign hotel chains, which at present mostly operate through representative offices, may establish wholly-owned subsidiaries or joint ventures with local partners.
The government expects the new hotel regulation will improve human resources and also reduce labor disputes.
Some domestic firms which own star-rated hotels face frequent strikes because representative foreign hotel management offices do not have the authority to deal with industrial actions. Strikes are usually solved by hotel owners, though staff are usually recruited by hotel operators.
About 50 overseas hotel management chains are operating in Indonesia. All of them run star-rated hotels, including the United States' Carlson, Choice, Holiday Inn, Hyatt, Inter- Continental, Radisson, Ritz Carlton, Westin and Sheraton; Britain's Le Meridien and Hilton International; Canada's Regent and Four Seasons; Spain's Melia-Sol; Hong Kong's Century International Hotels, Oriental, Aman Resorts and Shangri-La; and Japan's Sunroute, Dai-ichi, Imperial, ANA and Nikko.
There are also Aston, Acacia, Banyan, Dusit Inn, Omni, Aquila, Accor, General Hotel Management, Ramada, Oberoi, Sedona, Club Med, Heritage, Mirage, Park Lane and Pan Pacific.
Other foreign chains which will operate in Indonesia are Hard Rock, Conrad, Kempinski, Marriott, Movenpick, Alsson, Best Western, Rosewood and Peninsula.
Role
Barrung said that only 11 companies had so far established domestic firms to manage their hotels in Indonesia, while six others were in the process of establishing their Indonesia-based companies.
Some of the hotel chains reported that they would appeal to the government to extend the deadline as they had faced some obstacles in obtaining investment approval from the Investment Coordinating Board office.
Barrung reiterated that the government would in the near future send another warning to the companies which had not sent notification about their local subsidiary plans.
He said that minister Joop Ave considered his office's approach in enforcing the new regulation as being too soft.
"We think we have acted strongly. But with the minister's call, we will be more strict," Barrung promised.
An executive of a star-hotel in West Jakarta admitted that many top executives of hotel operators ignored the regulation.
"Just like any other regulation in Indonesia, we previously thought this was just a kind of bluff. But now all of us have to really heed the requirement," the executive said. (icn)