Govt lifts 10 industries off negative investment list
Govt lifts 10 industries off negative investment list
JAKARTA (JP): The deregulation package issued yesterday will
significantly relax investment requirements in Indonesia, as
illustrated by the opening up of 10 industries previously
classified on the "negative investment" list.
"The opening of the 10 industries is required to increase
business opportunities in the private sector, to provide more
value-added products and to intensify the transfer of know-how
and technology," Minister of Industry Tunky Ariwibowo told
reporters after a briefing on the deregulation package with
President Soeharto yesterday.
Tunky was accompanied by eight other ministers, including
Minister/State Secretary Moerdiono, Coordinating Minister of
Finance and Economy Saleh Afiff and Coordinating Minister of
Industry and Trade Hartarto.
According to the document issued by the ministers yesterday,
the 10 industries which are now open to wholly foreign-owned
investment companies are palm oil-based cooking oil, block board,
processed and half-processed rattan, utility boilers, motor
vehicles, non-clove cigarettes, disposable gas lighter, medicine
formulations, aircraft maintenance services and what were termed
as "supporting services for domestic trade".
Unclear
Yesterday's deregulation package on investment, however, is
not clear and could cause confusion since complete information on
the latest negative investment list, and the terms to which it is
subject, was not immediately available.
For example, "supporting services for domestic trade" are
stipulated on both the lists of business areas open to wholly
foreign-owned investment ventures and on those open only to
Indonesian-foreign joint ventures.
This list does not define the term "supporting services for
domestic trade" nor does it specify the required ratio between
Indonesian and foreign share ownerships.
The list of business areas which are open only to Indonesian-
foreign joint ventures also includes the development and
management of seaports, the generation, transmission and
distribution of power, telecommunications, shipping, the
development and management of public water supply, train services
and atomic reactors.
It is also unclear whether yesterday's package legally annuls
the previous deregulation package issued in June, 1994, known as
the Government Regulation (PP) No 20/1994.
The PP 20/1994 -- which eased restrictions on foreign
investors by freeing them from the minimum capital requirements
and ending compulsory divestment for join ventures --
dramatically opened seaports, telecommunications, power,
railways, civil aviation, nuclear power and the mass media to
foreign ownership.
None of the ministers present at the press briefing yesterday
addressed these potentially confusing issues.
Environment
The ministers also announced that out of environmental
concerns, the government has banned investments in five sectors
including the processing of mangrove wood, the pulp industries
using sulfate, the chlorine-alkali industries using mercury, the
chloro-fluoro carbon and freon industries and the saccharin
industry.
Tunky said that the new package would simplify the process for
acquiring licenses for new industrial development and for the
expansion or restructuring of existing projects.
Only one permit is now required for all kinds of industrial
investments.
Permits to expand projects are no longer required. Instead, it
is now sufficient for investors to simply submit their expansion
plans.
Existing industries which intend to expand their capacity or
restructure their production with additional investments
amounting at least to 30 percent of their initial investment will
be granted tariff relief on imports of machinery, equipment and
basic materials for four years.
The latest incentive, however, does not apply to the
automotive industry. (hdj)