Mon, 13 Jun 1994

Govt keeps transportation tariff control

JAKARTA (JP): The government will maintain control over the pricing of transportation-related services even though foreign investors are allowed to take majority shares in these sectors, Minister of Transportation Haryanto Dhanurtirto said.

"The public should not necessarily get worried about the possibility of foreign investors taking majority stakes in transportation-related businesses because pricing will remain in the hands of the government," Haryanto said here over the weekend.

In the domestic flight sector, for example, the government has thus far been committed to preventing airlines -- which are now open to foreign involvement -- determine fares on their regular services, he said.

The government introduced a new deregulatory policy early this month under Government Regulation No. 20/1994, which allows foreign companies to own and manage seaports, civil aviation, sea transportation, railways, telecommunications, power generation, nuclear power, water supply, education and the mass media.

The new reform, which will be likely followed by another deregulatory package this month, reduces the minimum equity holding for the Indonesian partner in a joint venture from 20 to five percent and lifts compulsory equity divestment for joint ventures.

Haryanto also pledged Saturday that the government will strictly supervise the operation of transportation facilities which will be owned and run by foreign companies, considering that there are only a small number of domestic companies which have an access to these business.

"Domestic companies' involvement in infrastructure development will likely reach only some five or 10 percent," the minister was quoted by Antara news agency as saying over the weekend.

He also predicted that the involvement of foreign investors in the transportation industries would only reach some 70 percent, hoping that the remaining 30 percent will be controlled by domestic companies. (fhp)