Investment bill to be rushed in for quick deliberation

Investment bill to be rushed in for quick deliberation

Fitri Wulandari, Jakarta

The government will soon submit a new investment bill to the
House of Representatives and push for approval before
legislators' terms end in September.

"The government will submit it at the last session, which will
last only a month before the presidential run-off," Coordinating
Minister for the Economy Dorodjatun Kuntjoro-Jakti said on
Monday.

Dorodjatun said the new bill was to be completed by the
current Cabinet in accordance with the government's "White Paper"
on economic programs to maintain business confidence following
the country's graduation from the International Monetary Fund
(IMF).

The final House session is scheduled from mid-August until the
imminent Sept. 20 run-off. New legislators elected in April will
be installed Oct. 1.

Alvin Lie, a Reform faction member of House Commission V
overseeing small-medium enterprises (SME), state enterprises and
investment, said it would be impossible to complete deliberating
the bill within a month.

"Deliberating a bill involves all factions. One month is the
length of time needed to form a special committee to deliberate
the bill," Alvin told The Jakarta Post, adding that the new
legislators would instead deliberate the investment bill.

The investment bill is to replace the foreign investment and
domestic investment laws passed in 1967 and 1968, respectively,
and aims to attract more foreign investors to the country.

Dorodjatun said all ministers supported the bill, which is
expected boost the country's competitiveness.

"In the era of globalization, in which more and more countries
are pushing for investing overseas, investment is something to
compete for," Dorodjatun said.

The bill, which promises freedom of investment and equal
treatment for domestic and foreign investment, will eliminate
outdated regulations that do not comply with international
standards.

One of the important features of the bill is the scrapping of
the 30-year limit on foreign investors to fulfill their project.
Instead, investors will be able to carry on with their business
as long as it is deemed economical.

The bill will also scrap a requirement that foreign investors
divest their projects to local partners after a certain period.

It also offers simplified procedures through a "one-stop"
investment service center as well as fiscal and non-fiscal
incentives.

In addition, foreign nationals who have invested a certain sum
and have lived for a certain length of time in Indonesia may
obtain permanent residence.

Investment activities in the country have been faltering over
the past few years because of various factors, including legal
uncertainties, security fears, labor disputes and poor
implementation of regional autonomy.

The Investment Coordinating Board (BKPM) reported that foreign
direct approval dropped by 34 percent on-year during the first
semester to US$3.05 billion due to election jitters.

Meanwhile, domestic investment approvals rose 52 percent to Rp
15.77 trillion ($1.77 billion) from the same period last year.

Investment was one of the country's main economic engines
before the late 1990s financial and political crises. Now,
investment accounts for less than 10 percent of the country's
gross domestic product, which has grown at an average 4 percent
in recent years.

Analysts said investment was vital to regain a 6 percent
growth rate.

Key points of bill:

1. Equal treatment of all investors, domestic and foreign
2. Investment open to any field/location, except for investors on

"negative list"
3. Investors are not required to divest stakes to local partners

or nationalize shares
4. Free repatriation of foreign investment capital/returns, and a

reasonable portion of salaries/wages of expatriate employees
5. Foreign investment licenses to be given according to

economical duration of project
6. Investment system may be simplified to allow foreign

investors' access to local financing.
7. Govt to promote beneficial partnership between large foreign

and local firms, and small/medium business
8. Regional govt to establish, operate "one-stop" investment

service for foreign and domestic investors