Investment licensing powers to be delegated to provinces

Investment licensing powers to be delegated to provinces

JAKARTA (JP): The Investment Coordinating Board (BKPM) will
authorize its provincial investment offices (BKPMD) to license
all foreign direct investment and domestic investment starting in
August, State Minister of Investment Marzuki Usman said on
Tuesday.

Marzuki, who is also BKPM's chairman, said his office was
currently waiting for a presidential decree to officially give
its provincial offices the authority to license investment.

"The licensing authority will be given without any
restrictions on the kind and value of investment projects," he
said.

He said the move, aimed to attract new investment, had been
approved by President B.J. Habibie and a presidential decree was
being prepared.

"We expect the decree to be issued later this month or next
month," he said.

Marzuki said BKPMDs were previously only allowed to approve
domestic investment projects valued below Rp 10 billion.

At present, investment projects valued at over Rp 10 billion
and foreign direct investment valued below US$100 million must be
approved by BKPM, while foreign investment valued at over $100
million requires direct approval from the President.

However, under the new presidential decree, BKPMD will be
authorized to approve all investment projects.

Marzuki said BKPM had earlier authorized BKPMDs in eight
provinces to license domestic investment without any restrictions
as a pilot project.

The eight provincial investment offices are in West Java,
Jakarta, Central Java, Yogyakarta, East Java, North Sumatra, East
Kalimantan and South Sulawesi.

Marzuki said that beginning in August, all overseas embassies,
consulates and trade offices would also be authorized to issue
preliminary approvals to foreign investors seeking to open
businesses in Indonesia.

"We have authorized our embassies and representatives in South
Korea, Japan and Hong Kong to issue investment licenses as a
pilot project," he said.

BKPM, in cooperation with the Ministry of Foreign Affairs, is
currently training Indonesian diplomats in Australia, Canada and
European countries in investment licensing procedures, he said.

Under the new scheme, potential foreign investors can submit
application letters and other requirements to Indonesian
embassies or consulates in their home countries.

The embassies will then evaluate the proposals and forward
them to BKPM for possible approval.

"Investors will not have to come to Jakarta to file their
investment applications. They only have to come here after their
proposals have been approved. The new service will help minimize
the cost to potential investors," he said.

Marzuki added that foreign investors had often complained
about the complicated and arduous procedures they must go through
to open businesses in Indonesia.

"If the pilot projects run smoothly, all of Indonesia's
overseas representative offices and BKPMDs will be empowered to
approve investment," he said.

Marzuki said the peaceful general election in June had
encouraged foreign investors to reenter Indonesia.

"I have received reports that many foreign investors are
planning to expand their businesses here," he said.

BKPM secretary Asril Noer said foreign direct investment
approved by the government in the first six months of this year
plunged by 77.5 percent to US$1.88 billion, from $8.35 billion
during the same period last year.

Licensed domestic investment in the same period dropped 36.07
percent to Rp 19.12 trillion from Rp 29.9 trillion in the first
semester of 1998.

The number of approved foreign investment projects over the
same period, however, rose by 7.5 percent to 518 projects from
482 projects, despite a sharp drop in their value.

"Most of the foreign investment projects approved in the first
semester were valued at between $500,000 and $1 million," he
said.

Last year, foreign direct investment fell by 60 percent to
$13.6 billion from $33.83 billion in 1997. However, over the same
period the number of foreign investment projects rose by 23.7
percent to 1,035 projects from 790 projects. (gis)