Fri, 26 Feb 2010

From: The Jakarta Post

By Riyadi Suparno, The Jakarta Post, New York
Indonesia is inviting more foreign investment into the healthcare and education sectors in a bid to improve services as well as the quality of Indonesian human resources, according to Investment Coordinating Board chairman Gita Wirjawan.

Speaking before U.S. businesspeople in Washington D.C. on Wednesday, Gita revealed that the current negative list of investment limited foreign hospitals in three cities, i.e. Jakarta, Surabaya in East Java and Medan in North Sumatra.

“In the new negative list, we will remove such a limitation. Investors can invest in any place they consider feasible,” Gita told businesspeople here, adding that the new negative list would be ready in the next one or two months.

Foreign ownership in hospitals, meanwhile, would be capped at 67 percent.

In an interview with The Jakarta Post in New York on Thursday, Gita argued that opening up the healthcare sector to foreign investment would benefit customers more, with better services and prices because competition would force even existing hospitals to improve services.

In addition, he said, having more foreign hospitals in the country would eventually reduce the number of people going to hospitals overseas, and therefore, it would save some foreign exchange.

“The value of foreign exchange that could be saved may be small, a few hundreds US dollars a year, but we value more the benefits for our people, i.e. better services and availability of alternatives,” Gita said.

In education, Gita explained that the government would try to attract notable foreign universities to enter the country by establishing cooperation with local universities.

He said that he would especially target foreign universities because Indonesia is still lagging behind other countries in the region in tertiary education.

“We are already good in basic education, i.e. elementary schools to high schools. But we are still lacking in tertiary education and also vocational schools,” he said.

Foreign universities, however, cannot establish their own universities in Indonesia because the national education law apparently did not allow universities and schools to make profit.

Therefore, Gita suggested that they established a local legal entity that could provide teachers, advisory services and even research facilities to universities in Indonesia. That way, they could make money and recoup their investment.

In addition to healthcare and education, Gita revealed that Indonesia would also open its logistics and courier services to foreign participation, arguing that this area is an important soft infrastructure for Indonesia to move into the higher degree of economic development.

Foreign investors, however, are not allowed to take majority ownership in this sector, except one company TNT which has already got a government approval to take a 51 percent stake in a joint venture investment.