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)