Govt to issue regulation on hotel chains

JAKARTA (JP): The government will soon issue a regulation requiring foreign hotel chains to set up Indonesian-incorporated companies before establishing or managing hotels in the country, Director General of Tourism Andi Mappi Sammeng said.

Speaking at the opening of the Novotel Benoa Bali hotel in Bali on Monday, Andi said the planned regulation aimed to reduce the flow of foreign currency out of Indonesia. Currently, large amounts of money go to pay royalties and other payments to foreign hotel chains.

"Hotels managed by international chains have to pay high payments to the chains' headquarters abroad, thereby increasing the country's deficit in its current accounts," he was quoted by Antara as saying.

Almost two years ago, Minister of Tourism, Post and Telecommunication Joop Ave promised the issuance of the ruling but Andi did not disclose why the regulation's preparation had taken so long.

Andi said international chain-managed hotels were too dependent on their foreign headquarters, making it difficult for the government to control their management.

"Whenever they are asked to follow local regulations, the managements of such hotels always excuse themselves, saying they have no rights to make decisions," he said.

Under the planned regulation, all hotels operating in Indonesia must establish companies incorporated in Indonesia, so their top management in Indonesia have the power to make decisions even though they cooperate with foreign chains, he said.

Andi said some hotels had established Indonesian-incorporated firms, such as the Hilton International Indonesia Hotel and the newly-dedicated Novotel Benoa Bali Hotel.

In Novotel Benoa Bali Hotel's case, the hotel is managed by Accor Asia Pacific (AAPC). The hotel's owner, the Jakarta-based PT Kaestindo, has invested about US$25 million in its establishment. (jsk)