Foreign hotel chains must set up local subsidiaries
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)