Indonesia reviewing old investment laws
JAKARTA (JP): The government is planning to replace the two existing laws on investment with a new bill being drafted to suit the principles of the new General Agreement on Tariffs and Trade (GATT), State Minister of Investment Sanyoto Sastrowardoyo says.
Speaking at a seminar organized by the Center for Legal Studies, Sanyoto said yesterday that the existing laws -- the 1967 law on foreign investment and the 1968 law on domestic investment -- are already out of date.
The two laws contradict new GATT provisions, especially those under the Trade on Related Investment Measures (TRIMs) section, which does not permit the different treatment of foreign and domestic investors.
The New GATT will be administered by the World Trade Organization (WTO), which will be formed on Jan. 1, 1995. Indonesia ratified the establishment of the WTO in October.
Sanyoto, also chairman of the Investment Coordinating Board, said the bill will include subjects like national treatment, investment incentives, the location of investment projects and the portion of shares which can be owned by foreign investors.
"I understand that foreign investors need legal certainty, transparent and smooth bureaucracy, large share ownership or even 100 percent ownership, national treatment and conducive climate for investment," Sanyoto told the seminar participants.
When asked, he refused to give an exact deadline on when the government would finish the drafting of the bill and submit it to the House of Representatives for deliberation, saying that the works need precision and long vision so that the planned law will be able to accommodate the fast changing world economy.
"We try to accommodate all possible investment principles, which will be acknowledged by any international agreements we sign. And now, we are selecting materials from the existing laws, especially those which are still relevant," Sanyoto told reporters after addressing the seminar.
He noted that, besides meeting GATT provisions, the new law is expected to attract more foreign investments into the country. This year, as of Nov. 26, foreign investors booked their record high of US$23.4 billion, almost 200 percent higher than last year's figure of $8.1 billion.
Hail
Legal expert Sunaryati Hartono and economist Mari Pangestu, both speakers at yesterday's seminar, hailed the government's plan to renew the investment laws.
Sunaryati noted that the government now processes foreign investment projects based on government regulation No. 20/94 and Decree No.15/1994 of the State Minister of Investment, which in some cases contradict existing investment law.
The government's move to renew the existing investment laws is timely and in the right direction. At the least it will reduce contradictions among rulings in the country, Sunaryati said.
Mari, head of the Department of Economics at the Centre for Strategic and International Studies, noted that the planned bill should suit not only GATT principles but also the non-binding investment code of the Asia Pacific Economic Cooperation (APEC) forum.
In the sixth APEC ministerial meeting here last month, the group's members agreed on non-binding investment principles which include transparency, non-discrimination between source economies, national treatment, investment incentives, performance requirements, expropriation and compensation, repatriation and convertibility, settlement of disputes, entry and sojourn of personnel, avoidance of double taxation, investor behavior and removal of barriers to capital exports.
Mari predicted that TRIMs in the new GATT, some of which are still being negotiated, will adopt at least three of the APEC non-binding investment principles -- transparency, non- discrimination and national treatment.
"Hence, the government should consider them seriously in drafting the new bill," Mari said. (rid)