Investment restrictions no longer needed: BKPM
JAKARTA (JP): State Minister of Investment Marzuki Usman acknowledged on Friday the need to open a number of business sectors currently included on the Negative Investment List.
Marzuki said a review of some business sectors currently closed to foreign companies was necessary to boost foreign direct investment.
"As the chairman of the Investment Coordinating Board (BKPM), I would prefer that, if possible, there was no negative investment list at all," he said. "At least we can provide a clearer explanation of why we have to close certain sectors to foreign investment."
The Negative Investment List, which catalogs business sectors closed to foreign investment, was last issued in 1995 and has not been updated since.
Sectors closed to capital investment wholly owned by foreign citizens or legal entities include airlines, port construction and operation, waterwork construction and operation, atomic energy, public railways, shipping and telecommunications.
Sectors closed to capital investment with partial foreign ownership include businesses which support domestic trade, local shipping, the operation of cinemas, private television and radio broadcasting services, retail trade and taxi and bus transportation.
Sectors closed to foreign capital investment unless certain requirements are met include aircraft equipment and accessories, alcoholic drinks, ethyl alcohol outside technical grade, explosives, firecrackers, the manufacturing powdered or condensed milk except when integrated with cattle breeding, the printing of valuable papers such as Bank Indonesia securities, duty stamps, passports or postage stamps, producing ordinary plywood, except in East Timor and Irian Jaya, and operating sawmills, except in East Timor and Irian Jaya.
A number of sectors are absolutely closed to foreign capital investment, including the operation of casinos or gambling houses, the veneer industry, the processing of finished and semifinished products from mangrove wood, the pulp industry and sulfide processing, the processing of dichlorodiphenyl trichloroethane (DDT) and dieldrin and chloradane, the utilization and exploitation of sponges and the chlorofluorocarbon industry.
For certain business sectors this policy is no longer relevant. The government has, for example, allowed foreign investors to participate in operating seaports and managing drinking water as part of its privatization program.
Marzuki said a review of the closed sectors could only be done in collaboration with related ministries, because they knew more about the costs and benefits of lifting the restrictions.
He said more transparent investment procedures and wider opportunities to invest in various sectors were expected to attract more foreign investors to the country.
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. (cst)