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The bill, which promises freedom of investment and equal treatment for domestic and foreign investment, will eliminate outdated regulations that do not comply with international standards.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