Foreigners barred from multimedia services

JAKARTA (JP): Executives of Indonesia's nascent Internet industry woke up Friday with the shocking news that the government has barred foreign investors from the multimedia services.

An official of the Office of the Minister of Investment and State Enterprises confirmed the existence of the Presidential Decree (Kepres) No. 96/2000 which provides a new list of areas where foreign investment is either barred or limited.

Multimedia services is one new area included in the list, Saeful Munajat, a spokesman for the office, said quoting the the decree, which was signed on July 20.

Saeful, whose office is preparing guidelines to implement the decree, said foreign investors already operating in Indonesia would be exempted from the new ruling.

"I don't think they have to withdraw, because the decree doesn't say so. Besides, they made those deals before the decree was made," he said.

Anwar Suprijadi, secretary general of Ministry of Communication, said restrictions on foreign ownership in the telecommunications industry are aimed at empowering local companies.

"I think the policy is intended to prepare local entrepreneurs to compete globally," Anwar was quoted by Antara as saying.

News of the Kepres, first reported by Bisnis Indonesia daily, was the subject of much speculation among Internet executives all day in the absence of any official explanation about the fate of existing foreign Internet companies.

Many big Internet portal services in Indonesia, including Astaga.com and Detik.com, have been built using foreign venture funds over the past year. Until the issuance of the Kepres, the Internet industry was not subject to any government regulation.

Andrew Hayek, chief executive of Astaga.com and parent PT Indonesia Online, said he didn't believe the ban would apply to Internet service companies. "So far there is nothing addressed with the Internet," he told Dow Jones.

An executive at another Internet start-up company currently scouting for funding said any ban on foreign investment would force operators to set up shop in Singapore or Malaysia, which he said would cost Indonesia jobs and hold back the sector.

"The only real investment in information technology and Internet is coming from outside," he said. (cst/emb)