Government to review ban on foreign dot-com investors

JAKARTA (JP): The government will review the controversial ruling banning the entry of foreign investors into the Internet sector.

Riza Primadi, the senior assistant on communications and media to the state minister of investment and state enterprises development, said here on Wednesday his office planned to hold an interministerial meeting on Monday next week to review the ruling.

"We can't say anything yet ... by Tuesday at the earliest we'll announce the outcome," Riza said during a media conference.

The upcoming meeting, he said, would include senior officials from the Ministry of Industry and Trade, the Ministry of Transportation and several other related government institutions.

The meeting will be held in response to demands from the country's nascent Internet industry to reconsider the ban, he said.

Riza said that last Friday chief executive officers from several Internet companies submitted their objections to the new investment policy.

"I received their input and forwarded them on Saturday to the minister, who said the input was good," Riza explained, adding that he also received numerous e-mails on the subject.

He also said his office would meet with dot-com investors to hear their complaints. According to him, the minister agreed to hold this meeting after the Annual Session of the People's Consultative Assembly, which ends on Aug. 18.

"We will just talk and see what we can do for them," he said.

The restrictions imposed on foreign investment in multimedia information services are contained in the negative investment list issued by the government last week.

Several other business sectors such the print industry, radio and television broadcasting, cable television and public transportation are also on the list.

The Forum of the Indonesian Internet Industry (FIII) has predicted the demise of the country's Internet sector as a result of this new ban.

FIII, which groups 36 local Internet-based firms, suggested the government revise the decree and declare the Internet sector open to foreign investment.

Minister of Trade and Industry Luhut Pandjaitan also lambasted the policy, saying the ban should not have been issued.

Most locally based Internet companies such as Detik, Catcha and Astaga are jointly owned by local and foreign firms.

Internet investors view Indonesia as having great potential because of its population of some 210 million and estimates that there will be five million Internet users in the country by 2002.

However, Riza said the investment ban on the Internet sector had won the approval of the International Monetary Fund.

The minister's deputy for investment policies and planning, Hidayatullah Suralaga, said the government understood the complaints of Internet investors.

"The government is always responsive to business needs," Hidayatullah said.

He said if investment in the Internet sector suffered a sharp drop, the government would certainly react.

"Basically, we can always review the negative investment list, at least once a year," Hidayatullah said, adding that if necessary the ban could be revoked.

Meanwhile, in response to criticism from the Assembly on declining investment in the country, the Ministry of Trade and Industry claimed investment approvals increased during the 10 months President Abdurrahman Wahid has been in power.

The ministry said approved foreign investment projects from Oct. 1999 to June 2000 rose 24.8 percent to 961 projects, from 770 projects during the same period the previous year.

The value of approved foreign investments during this same period rose 39.8 percent to US$3.7 billion from $2.6 billion last year.

It said that during Abdurrahman's presidency, approved domestic investment projects rose 34.8 percent to 221 projects from 164 projects the previous year.

However, the value of approved domestic investments dropped 4.8 percent to Rp 21.6 trillion ($2.5 billion) from Rp 22.6 trillion in 1999. (bkm)