Govt imposes restrictions on foreign investment

Govt imposes restrictions on foreign investment

JAKARTA (JP): In addition to radio, television broadcasting,
print, information and multimedia services, the new investment
regulation also prohibits foreign investment in several other
sectors.

Other business sectors closed to foreign investment include
logging activities in natural forests, public transportation
(taxi and bus services), interisland shipping services, trade and
supporting services, except large-scale retail services such as
supermarket, department stores and large-scale wholesalers.

Exhibition and convention activities, quality certification
services, warehousing outside of sea ports and ship maintenance
services are also exempt from the ban.

According to the new investment regulation, dated July 20 and
effective immediately, foreign investors are also prohibited from
investing in sectors like movie production activities such as
production, technical filming services, exportation and
importation of movies, movie distribution and movie screening;
radio and television broadcasting, including pay and cable
television services; information and multimedia services; and
printed mass media.

The new investment regulation allows foreign investors to
enter some restricted business sectors but with limitations, such
as a requirement to establish a joint venture with local
partners.

The business sectors in which foreign investors are allowed to
enter but only through a joint venture with local partners, in
which they can own up to 95 percent of a company, are port
construction and management; power generation, transmission and
distribution; ocean freight services; processing and distribution
of drinking water for the public; public train services; atomic
power generation; and hospital-related services, including
hospital management, medical checkups; laboratory management,
health insurance; medical equipment distribution; and health
services.

Foreign investors are also allowed to set up business with
local partners in telecommunications and airline companies, but
can control only up to 49 percent of a company.

The decree also indicates some other business sectors that are
open to foreign investment, but with certain preconditions.

The sectors are the cultivation of certain types of fresh
water fish in which cooperation with local communities is
necessary; pulp and fiber production, but without the chlorine
and sulfite processing; chlor alkali production without using
mercury; sweetened and powdered milk production; and banknote and
philately printing with official license from Bank Indonesia and
the State Intelligence Coordinating Board (Bakin).

Other sectors open to foreign investment with certain
preconditions include sawmills, with operation allowed in Irian
Jaya and other areas, with the use of logs derived from natural
forest prohibited; amonium nitrate production under cooperation
with a local company recommended by the Ministry of Defense;
electricity generation in areas other than Java, Bali and Madura
islands; off-shore oil and gas drilling projects in collaboration
with local partners if conducted in eastern Indonesia.

Foreign investors can also open restaurants and manage
amusement centers, but only in touristic designated areas or if
integrated with a hotel.

Businesses which are closed entirely to both local and foreign
investment are: the cultivation and processing of marijuana and
akin plants; amassing and utilizing sea sponge; air traffic
control services at any airport; clarification and statutory
status control services on ships; management and broadcasting of
radio frequencies and satellite orbital monitoring stations;
gambling; and radioactive mineral mines.

In the manufacturing sector, private investment is also
prohibited in the production of specific chemicals such as penta
chlorophenol, dichloro diphenyl trichloro ethane (DDT), dieldrin,
chlordane, carbon tetra chloride, chloro flouro carbon (CFC),
methyl bromide, methyl chloroform and halon; chemical substances
for weapon use like sarin, soman, tabun, mustard, levisite,
ricine and saxitoxin; ammunitions, weapons and weapon components;
artificial sweeteners cyclamate and saccharin; and alcoholic
beverages. (cst)