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)