Investment board proposes bill

Investment board proposes bill

JAKARTA (JP): The Investment Coordinating Board will propose a
bill on both domestic and foreign investment operations to
replace Law No.1/1967 and Law No.8/1968.

The board secretary Asriel Noer said the bill was made to
accommodate the process of economic globalization.

Foreign investment is currently governed by Law No.1/1967 and
domestic investment by Law.8/1968.

He said the board followed the examples of many other
countries in integrating the regulations on domestic and foreign
investment activities into a single law.

The bill regulates eight aspects of investment, including the
scope of investment, investment period, share ownership and
transfer, equal treatment to both domestic and foreign investors,
licensing procedures, investment by domestic businessmen in
foreign countries, preferential treatment in favor of domestic
investors.

On the scope of investment, Asriel said, the bill did not
cover investment in banking, oil and gas, which had been
regulated in special rulings.

Regarding share ownership and transfer, the bill accommodates
the government regulation No. 20 of 1994 on share ownership in
foreign investment companies.

"This government regulation ( which allows wholly foreign
owned companies) has a weak legal basis. By being incorporated
into the bill, the regulation will have a stronger legal basis,"
Asriel was quoted by Antara as saying.

He said the bill emphasized an equal treatment to domestic and
foreign investment as the international trends had increasingly
required.

"These trends did not exist when we made the law on foreign
investment in 1967," he said.

The bill regulates investment by local businessmen in foreign
countries to correct the prevailing perception that such an
investment is a capital flight.

"It is a misleading perception. Such an investment is
necessary as a business strategy in the globalization era," he
said.

Local businessmen have sometimes to invest overseas in order
to maintain its competitiveness against foreign businessmen, he
said.

Asriel said the draft bill had yet be approved by other
related government agencies before the board could propose it to
the House of Representatives.

He called on the agencies to prioritize discussing the bill
due to its importance. (jsk)