House urges govt to complete crucial investment bill

House urges govt to complete crucial investment bill

Adianto P. Simamora, The Jakarta Post, Jakarta

The House of Representatives urged the government to quickly
complete the drafting of the new investment bill to help revive
investment flow into the country.

Suryadharma Ali, chairman of House Commission V for industry
and trade, expected the government to be able to submit the bill
to the House for deliberation before the end of October.

He was speaking during a working meeting with Investment
Coordinating Board (BKPM) chairman Theo Toemion. One of the
issues raised during the meeting was the fate of the new
investment bill, planned by the government seven years ago.

"We are in urgent need of a new investment law to attract more
investors to the country," legislator Irmadi Lubis of the
Indonesian Democratic Party of Struggle said.

Theo said that his office had completed drafting the bill and
had submitted it to the Ministry of Law and Human Rights, but the
latter had yet to pass it on to the State Secretariat for final
approval before being submitted for deliberation at the House.

He did not know the reason for the delay.

"We submitted the bill to the Ministry of Law and Human Rights
on Feb. 17, but so far there has been no decision about it (the
draft)," Theo said.

The new investment bill will replace Law No.1/1967 on foreign
investment and Law No.6/1968 on domestic investment.

One of the controversial points of the new investment bill is
a proposal to provide tax holidays to lure more foreign
investment. Although Theo claimed that President Megawati
Soekarnoputri supported the plan, Minister of Finance Boediono
seems to disagree with the tax holiday policy.

The government abolished tax holidays in 1983 following the
enactment of a new tax law, although investors in certain sectors
and areas of the country were eligible for a tax allowance
facility.

The proposed bill also aims to ensure equal government
treatment to foreign and domestic investors.

In addition, BKPM is planning to set up a one-stop services
facility to speed up investment licensing procedures and cut the
bureaucracy line.

Indonesia needs to attract new investment to help accelerate
economic growth. But since the country plunged into a combination
of economic and political crisis in the late 1990s, many foreign
investors have stayed away from Indonesia.

Lingering uncertainties such as labor conflicts and poor
implementation of the autonomy law have even caused some foreign
companies to relocate their operations to other countries with a
more favorable investment climate.
Data from BKPM shows that foreign direct investment (FDI)
approvals dropped by almost 42 percent to US$2.5 billion in the
first semester of this year from $4.3 billion in the same period
last year.

Domestic investment approvals, meanwhile, in the first half of
this year, fell by about 70 percent to Rp 11.1 trillion from Rp
39.8 trillion last year.

The Asian Development Bank has also required the government to
complete the new investment bill as one of the conditions for the
bank to disburse its latest loan.