Indonesia drafting new investment law
Indonesia drafting new investment law
JAKARTA (JP): State Minister for Investment Sanyoto Sastrowardoyo said yesterday that the government is drafting a new investment law in line with the principles of the World Trade Organization (WTO).
He said that the planned law will administer both domestic and foreign investment activities, which are currently regulated by two different laws.
"The draft is being processed and hopefully it could be submitted to the House of Representatives (DPR) for deliberations next year," he told newsmen after delivering his speech at the Indonesia Summit, a two-day international seminar on the Indonesian economy.
Sanyoto said that the planned investment law will cover only direct investments because investments made through capital markets or so-called portfolio investments will still be regulated by different rules.
"The foreign investment ceiling in companies on stock exchanges will, therefore, stay at the current level of 49 percent even though in direct investments, foreigners are already allowed to have up to 100 percent of companies' shares," he said.
Sanyoto said that the government is also embarking on tougher action to improve the realization of plans on new investment projects.
He said that his office has instructed all provincial investment offices to improve their monitoring of new investment activities in their provinces.
"If investors are not serious enough, or they do not carry out their projects after three years of government approvals, their licenses will be immediately revoked," he said.
He said that the stricter action is expected to further boost the realization rate of investment projects, which at present is 74.4 percent for domestic and 72 percent for foreign investment projects.
At yesterday's meeting, attended by around 600 executives of domestic and foreign companies, Sanyoto also pledged to further improve the business climate in order to attract more foreign and domestic investors to the country.
He said a series of deregulation measures introduced by the government in the past years have brought extremely positive results in the inflows of foreign direct investments.
The government's decision to allow 100 percent foreign ownership in industrial companies and up to 95 percent in public utility projects had been positive to the business climate.
"This measure is also attractive to small and medium scale investors because there are no longer requirements on a minimum amount of investment and divestment," he told the summit, which will end today
Earlier yesterday, Sanyoto told reporters after meeting with President Soeharto at the latter's residence here that foreign investment plans approved in the first four months of this year reached US$17.9 billion, a 13.3 percent increase over the same period of 1995.
Sanyoto, who is also the chairman of the Investment Coordinating Board (BKPM), explained that the foreign investments approved in the January-April period were planned for the establishment of 427 projects, which indicated a 62 percent increase -- in terms of the project number -- from the corresponding period of last year.
Meanwhile, the government also approved in the January-April period a total of 356 domestic investment projects worth Rp 56.1 trillion (approximately $24 billion), he said.
In terms of the project number, the domestic investments showed an increase of 15 percent, while in terms of project value they indicated a 146 percent increase.
The investment plans recorded by the Investment Coordinating Board are committed for non-oil and non-financial sectors.
"I told President Soeharto about the progress of both domestic and foreign investments. The value of domestic investment approvals will likely exceed the foreign ones this year," Sanyoto said.
The government last year approved 775 domestic investment projects worth Rp 69.9 trillion, as compared to 823 projects worth Rp 53.3 trillion in 1994. In 1995, foreign investment commitments reached $39.9 billion for 799 projects, as compared to $23.7 billion for 449 projects in the previous year.
"Japan will remain the top foreign investor in Indonesia in 1996," Sanyoto said. "Since 1967 up to May 4 this year, Japanese investment commitments were $31 billion. Britain replaced Hong Kong as the second largest investor with total investments of $23 billion."
He said that Singapore, with total investments of $16.4 billion as of May 4, may surpasses Hong Kong -- whose investments reached $18 billion -- as the third largest investor this year.
He said the United States now ranked eighth with its 236 projects worth $12.1 billion as of May 4.
Sanyoto said that he also reported to the President about his planned trips to South Korea, Hong Kong, Italy and Australia to promote investment in Indonesia. (hen/icn)