Mon, 07 Aug 2000

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)