Liberalize all the media
Kudos to the government for coming to its senses in allowing foreign investment into the robust multimedia services. Presidential Decree No. 118/2000, signed by President Abdurrahman Wahid this week, removed the multimedia services from the list of economic sectors where foreign investment is not permitted. The earlier decree, No. 96/2000, for whatever reasons it was issued for, was a farce and reflected the government's shortsightedness and ignorance of the dynamic nature of the information technology.
The issuance of the new decree shows that the government is responsive to the mass criticism which followed last month's ruling. But formal liberalization of the multimedia services sector -- it was never really banned until the emergence of Presidential Decree No. 96/2000 -- is not far-reaching enough. It is discriminatory against the "traditional" media -- print and TV/radio broadcasting -- where foreign investment is barred on the pretext of protecting the "strategic industry" from the preying hands of foreign nationals.
By depriving established newspapers, magazines, radio and television companies of access to global capital, these companies will find it increasingly difficult to compete against Internet companies, which are already encroaching on the turf of Indonesia's media industry. The "protected" companies in the traditional media will find the playing field far from level with Internet companies, which have unlimited access to global capital.
The advent of information technology has virtually redrawn the boundaries of the media industry as it combines the rapidly changing communications technology with information services. Internet portal companies, for example, give everything that newspapers/magazines, radio and TV stations offer, plus much more. It is also revolutionizing the way that people obtain their information and run their lives and businesses, hence the term "traditional media" for the old ways of disseminating information.
Typically, government regulators are always falling behind technological changes. Until the issuance of Decree No. 96/2000 last month, there was not a single regulation dealing with the Internet. The industry could not wait until the government got its act together. The Internet industry in Indonesia grew robustly in spite of the economic crisis from 1997 to 1999.
The growth of the Internet industry was largely fueled by foreign capital at a time when local companies were struggling with mountains of unpaid debt. Foreign investors were also quicker in identifying the business potentials Indonesia offers through the multimedia services, from the Internet to e-commerce. The as yet unregulated industry has become the only sector that has seen significant foreign investment these last three years.
The government's first attempt to regulate the nascent industry through Presidential Decree No. 96/2000 last month was embarrassing to say the least. It was essentially based on poor advice, and in all likelihood, on the same reasoning that led to the decision to bar foreign investment in the print and broadcasting industry, which is to protect "national interests".
This obsession with national interests is actually harming the nation's long-term interests, especially in a global economic era where state boundaries are becoming less clear. The foreign- funded Internet portal companies, for example, could easily set up offshore operations if the government went ahead with the ban against foreign investment. The nation would become the real losers in the end if they were deprived of foreign investment and, most importantly, the benefit of the new technology that is revolutionizing the way people live in other parts of the world.
Now that everyone seems to have accepted the inevitable -- that banning foreign investment in the multimedia services sector is detrimental to national interests -- the government should turn its attention to liberalizing all the other sectors of the media, particularly the "traditional media". The House of Representatives should also play its part because the restrictions on foreign investment in the media are actually stipulated in the Press Law and the Broadcast Law.
If their concern is to protect the local industry, then they would be doing a great service by allowing these companies to tap the global capital market, instead of preventing them. The best protection that they can give to Indonesian companies in the the traditional media in competing against the multimedia services is to level the playing field.