Govt announce investor update on telecommunications

Govt announce investor update on telecommunications

JAKARTA (JP): Foreign investors can only own up to 49 percent
interest in local communication companies that provide telephone
infrastructures and call services, Director-General of Post and
Telecommunications Sasmito Dirdjo said on Wednesday.

Sasmito said foreign investors were allowed to have majority
ownership of up to 95 percent only on local communication
companies that provide non-basic or value-added products and
services.

"Foreign investment in companies that provide telephone
infrastructure and call services on both fixed-line and wireless
systems are limited to only 49 percent," he told journalists on
the sidelines of an internet exhibition.

He said companies that provided basic services include state-
owned companies PT Telkom and PT Indosat and the country's seven
mobile telephone operators.

The non-basic telephone services include radio trunking,
paging and premium calls, he said.

Government officials said that despite the chance for foreign
investors to set up joint ventures in the country's telecoms
sector, foreign firms were only allowed to enter the basic
telephone service sector after Telkom and Indosat ended their
exclusive rights in 2002 and 2003 respectively.

Telkom was given the monopoly on local and domestic long
distance service for fixed-line telephone service until 2010 and
2005, while Indosat controls international direct dial service
until 2004. The government, however, decided last month to
terminate the two companies' exclusive rights ahead of the
original schedules.

Sasmito said that maintaining the partial restriction on
foreign investment in the basic telephone sector was not meant to
protect the local industry.

"It's not a protection. We can be very flexible, but if we
really want to support our local players, then we should place
them ahead of foreign firms on our priority," he said.

Separate regulations will be issued to clarify details of
foreign investment guidelines on telecoms sector and complement
the revised decree, he said referring to the recently revised
Presidential Decree No. 96/2000 on the negative lists for foreign
investment.

The government revised the controversial decree on Aug. 16
following massive criticism from the public. The revised decree
specifically declared information multimedia services totally
open for foreign direct investment and telecoms sector open only
for foreign joint venture companies.

The decree previously banned foreigners from entering
information multimedia and restricted foreign investment in
telecoms sector at 49 percent.

No clarification on the new approved foreign investment level
in the telecommunications sector has been given by the
government, except for the statement made by deputy to the state
minister of investment and state enterprises, Riza Primadi, who
said that foreign ownership in the sector would be set at a
maximum of 95 percent.

Separately, Minister of Transportation and Telecommunications
Agum Gumelar said foreign investors were badly needed to help
Indonesia develop its telecoms sector, especially expanding the
fixed-line telephone infrastructures.

"We need no less than US$5 billion to run four million to five
million telephone lines through 2004. How can we get that much
money? There's no way other than inviting foreign investors," he
said. (cst)