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)