Thu, 30 Aug 2001

Investment bill aimed at breaking barriers

JAKARTA (JP): The Investment Coordinating Board (BKPM) is drafting a new investment bill that will give equal treatment to foreign and domestic investors, the BKPM chairman said on Wednesday.

Theo F. Toemion said the draft bill, currently being discussed with representatives of various ministries, would be submitted to the House of Representatives (DPR) for deliberation in November.

When passed into law, the bill will replace the 1967 law on foreign investment and the 1968 law on domestic investment.

"This new law will in effect break the barriers between foreign and local investments, which have so far been differentiated," Theo said on the sidelines of a business luncheon hosted by the Indonesia-Australia Business Council (IABC).

Theo contended that equal treatment between foreign and local investors would greatly increase Indonesia's attractiveness in the eyes of foreign investors.

He cited the need to extend the land use permit for foreign direct investment companies so that they would be more willing to increase investment through various expansions and new investments.

"We need to be like China, which gives land use permits for up to hundreds of years," he said.

Theo, however, did not say whether his proposal would mean a revision of the 1960 land law.

According to the land law, a land use permit is valid for a maximum of 50 years.

Unlike local investors who can own land, foreign investors can only use land under a land use title or concession rights, and both carry a maximum time limit of 50 years.

Theo also said that the investment bill would also encompass investment in mining as well as the oil and gas sectors, which are presently governed by the 1967 Law on mining and the 1971 Law on state oil and gas company Pertamina.

"Why should there be one law for investment in every other industry and separate ones in mining and oil and gas?" he said.

It was not immediately clear, however, whether the investment bill will complement or contradict the mining bill and the oil and gas bill, both of which are currently being deliberated by the House.

Theo realized his proposal for a new investment law would face many challenges from a number of ministries.

He explained that the Ministry of Finance, for instance, had expressed its opposition to equal treatment between foreign and domestic investors.

"This is a very new concept and must be made public as soon as possible. Its (success) will depend largely on the reactions of our friends at the DPR," said Theo, who was the vice chairman of House Commission IX for financial and development planning affairs prior to his appointment as BKPM chairman.

With the new investment bill, Theo said he hoped to get more authority over the management of direct investment in Indonesia, explaining that the board had yet to reclaim its main function of coordinating investment in the country.

"We need to act radically and revolutionary," he said, adding that he had accepted the post as BKPM chairman on the condition that he would be allowed to act in that manner, or else he would have stayed a member of the DPR. (tnt)