Investment types on islands limited

JAKARTA (JP): Minister of Maritime Exploration Sarwono Kusumaatmadja proposed on Monday to limit investments in small islands to activities that take into account the islands' ecological and social environment.

Sarwono suggested to open the country's numerous islands for investments only to eco-tourism, the fishing industry, the cultivation of fish and for conservation purposes.

According to him, the restriction of investment activities would help prevent ecological and social damage to the islands.

"We have no intention to lease our islands to build casinos, waste dumping sites or foreign military bases," Sarwono told reporters in a press meeting.

He was responding to criticism saying that the government was selling out the country's sovereignty with its plan to rent small islands to foreign investors.

"The old way of generating state income was to sell all, sell quick and sell cheap at the expense of the nation's own interests," he said.

However, Sarwono assured that restricting the islands' investment activities would not discourage foreign investors.

He said most of the foreign investors interested in Indonesia's islands were already mainly eco-tourism investors and international conservation agencies.

These investors, he said, were attracted by Indonesia's potential as a tourist destination and the country's rich flora and fauna.

Furthermore, he said, Indonesia's islands also pose excellent cultivation sites for fish with high value on foreign markets.

"In 1998 there was no such thing as fish cultivation, however, last year we sold some 280,000 tons of fish," he said, but failed to mention the sales value.

The plan to restrict investment on islands is part of a government draft on general guidelines regulating the utilization of small islands by investors,

Sarwono said that investors had asked him how the government would ensure the legal certainty on investments in islands.

The draft, he said, would guarantee the locals' traditional rights, the islands' unique ecosystem and regulate the investment activities.

The islands inhabitants were also fully entitled to utilize their own islands, he said.

Under the draft any outside investments must be under the permission of the regional government, while foreign investment must have the permission of the central government.

Investors must also place a deposit in escrow to guard the island and its inhabitants against possible ecological or social damages.

The deposit may take the form of bonds, collateral or environmental insurance.

Sarwono further said his ministry had yet to decide on the mechanism to grant investors the rights to utilize the islands.

"We don't necessarily have to rent the islands," he said.

However, he added that some islands had already been rented out in the past to several investors.

Sarwono said that once their contracts on these islands expired, these investors would also be subject on the new guidelines.

He expected the guidelines to come out by the end of this year, in the form of a presidential decree.

Director general of coastal areas, beaches and small islands Rohmin Dahuri earlier said foreign investors from Japan, Hong Kong, Singapore and Australia had expressed interest in renting islands, particularly for tourism purposes.

Rohmin has said that the islands could be rented out under a 35-year lease similar to the method by which the government awards forestry concessions to foreign logging companies.

While local investors were more interested in renting islands closer to population centers, foreign investors were interested in islands in the open sea, he said.(bkm)