the maximum foreign equity for the business category "business and management consultancy services" was changed from 100% to 49% last july. it was one of the worst aspects of that last change to the investment negative list. it has caused a lot of disruption for foreigners wanting to set up professional service companies here. we got around it by using Indonesian nominees, but it's not the best way to do things. now it seems the govt have woken up to themselves.
Mon, 07 Jan 2008
JAKCHAT/Negative investment list still ambiguous, say business leaders
Wouldnt it be nice if they just had these discussions in private, worked everything out, agreed which is the best way forward and announced it to the business community in the best possible light. Maybe then the investors would feel more secure.
Mon, 07 Jan 2008
JP/Negative investment list still ambiguous, say business leaders
The Indonesian Chamber of Commerce and Industry (Kadin) said Sunday that the newly revised negative investment list was not enough to bolster investor confidence due to remaining ambiguities.
"Aside from the grandfather clause and the retail sector, revisions to the list are only on those (issues) that are not necessarily crucial to boost investors' confidence," Kadin vice chairman Chris Kanter told The Jakarta Post.
The revised list, which was signed by the President late December, contains a clause that was rephrased to reaffirm that all changes made to the list only apply to future business arrangements, something that was previously left unclear.
Other changes include three more lines of businesses that have become totally open for foreign investments: installation and maintenance of streets, non-ferrous metal or lead industries, and business and management consultation services.
The revised list also introduced a new arrangement for the retail sector, where full foreign ownership is allowed for supermarkets with more than 1,200 square meters of trading area, department stores on more than 2,000 square meters and community stores and convenient stores of more than 200 square meters.
Taking the consultation service as an example, Chris said that there was no urgency to open the line of business to foreign investment.
"We don't mind it now being open to foreign ownership. It's just that there are other items that are more crucial. It makes us question the government's sense of priorities," he said.
Among the crucial things that were not addressed promptly, he said, was the list's use of ambiguous foreign share ownership categorizations.
Under the 13 business sectors named in the list, each with several sub-categories totaling 97 items, there are nine foreign share ownership percentage categorizations used: 25, 45, 49, 50, 55, 65, 80, 85 and 95 percent, exactly the same as the initial list that was first introduced in July.
"There are still too many categorizations of share ownerships and no explanation whatsoever so as to why the categorizations are used. The fifty-fifty share ownership is just plainly uncommon for businesses," he said.
Moreover, Chris said, the new list did not clarify how much foreign investment was allowed for businesses specifically allocated for small and medium enterprises.
"The list still signals ambiguity, and this is bad for investors as they tend to move only when everything is clear,"
"The process of revision is also slow. We will push the government so that it can fully revise the list no later than mid-year, or else things will look much worse," Chris said.
As the caretaker of the formulation of the negative investment list, Trade Minister Mari Elka Pangestu said the list was still open for more reviews and revisions.
"I urge business players to continue giving input to the government through Kadin as we have done in the past," she said.
She also suggested that more changes on the list, particularly on the transportation sector, would be made as soon as the House of Representatives passed the new transportation bill.
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