Thu, 18 Mar 2010

From: The Jakarta Globe

By Irvan Tisnabudi
The government has backed away from a plan to allow foreign companies to invest in the domestic telecommunication-tower sector, despite warnings from the country’s investment czar that investment by local companies will not be sufficient.

The government was said in January to be finalizing revisions to its “negative investment list” that would open five new sectors to foreign investment, including telecom towers.

Gita Wirjawan, the chairman of the Investment Coordinating Board (BKPM), has said the sector should be opened to foreign investors because domestic investors did not have the money to build the tower infrastructure needed to carry the country’s increasing cellular traffic.

However, Coordinating Minister for the Economy Hatta Rajasa said on Wednesday that the government “will follow the 2008 joint decree,” which bans foreign investment in the sector.

He dismissed the suggestion that Indonesia was incapable of building the needed towers without foreign investment.

“We will have no problems in providing funding domestically and we could allow foreigners to lend for, [but] not invest in, [telecom towers],” he said.

Gatot S Dewabroto, the spokesman for the Ministry of Communication and Information Technology, said his ministry supported the continued ban.

“We have been forthright from the start that this sector should be closed to foreign ownership,” Gatot said, adding that he has faith in the ability of domestic investors.

Gatot claimed that increased cellphone use did not require the construction of as many extra towers as has been estimated by Gita because one tower could be used by multiple operators.

“Since foreign investors have already been allowed to invest in telecom companies, ownership of telecom towers should remain closed,” he said.

Gita stuck to his guns on Wednesday, reiterating that it was essential for the government to open the telecom-tower sector to foreign investors given the huge amount of capital needed.

He has previously urged political and business leaders and the public not to subscribe to irrational economic nationalism.

“We have to be realistic, as the telecom-tower sector requires an enormous amount of investment, which we cannot not fulfill alone,” he said.

Gita said the country will need 150,000 to 200,000 additional towers over the next 5 to 7 years to cover all the country’s islands. Each tower costs about Rp 1 billion ($110,000).

“I have calculated and domestic investors can only fulfill Rp 3 trillion per year, while we would need up to Rp 70 or 80 trillion annually,” he said.

The government may still op en other restricted sectors to foreign investment, including education, courier services and logistics, creative industries and health care.