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)