Fri, 18 Aug 2000

Limit foreigners in airline sector: Official

JAKARTA (JP): Restrictions on foreign investment in Indonesia's airline industry should be retained to prepare local airlines for the free trade area, a senior official at the Ministry of Communications said on Wednesday.

"Give local companies a chance to prepare themselves in this capital-intensive and high technology industry. Later, they will be able to compete freely in the global era," Director-general of Air Communications Soenaryo Yosopratomo told Antara on Wednesday.

He was commenting on Presidential Decree No. 96 issued on July 20 which provides a list of industries where foreign investors are either barred or restricted. In the airline industry, foreign investors cannot own more than 49 percent of an airline company.

The decree may be reviewed following strong protests from Internet-related companies who have objected to the ban on foreign investment in the multimedia sector. It is not clear whether a review of the decree will affect other sectors also.

About 60 airline companies, mostly chartered helicopter operators, operate in the country at present. There are 12 scheduled airline companies.

Anwar Suprijadi, secretary-general of the communications ministry, cited "national interests" as the reason for restricting foreign investment in the airline industry.

He warned that if foreign companies took controlling shares in a local airline, they could refuse to fly to isolated towns and therefore disrupt transportation services in the area.

Rusdi Kirana, president of PT Lion Mentari Air (Lion Airlines), said separately that foreign investors were not interested in the local airline business.

And they won't be as long as Indonesia is still in an economic crisis and facing political instability, he said.

"The airline business is a long-term activity. It would not be possible to operate under unstable conditions," said Rusdi, whose airline is one of seven new operators of scheduled services.

Rusdi said the earliest investors were likely to come was five years, and then only if the situation was considered safe and stable. (10)