New incentives proposed to lure foreign investors

JAKARTA (JP): The government is considering giving permanent resident status to foreigners who invest US$1 million or more in the country.

State Minister of Investment/Chairman of the Investment Planning Board (BKPM) Marzuki Usman said here on Tuesday that the planned move was necessary to lure foreign investors back into the country.

He said Indonesia was no longer "the only beautiful lady in the region" for foreign investors because many countries, including Thailand, Malaysia and Vietnam, offered investors more attractive incentives.

"Foreign investors are not only looking to invest in Indonesia. They are also looking for other attractive places which offer better facilities. So we have to create better incentives to attract them here," he said.

Marzuki said under the planned incentive, foreigners with a total investment of at least $1 million in the country would be eligible for permanent resident status, meaning they would be free to enter Indonesia without a visa.

He said the incentive would make it easier for foreign investors to realize their projects.

"But the policy still has to be discussed in the Cabinet meeting in July. The Cabinet will then decide on the plan," he said.

He said BKPM was currently discussing the proposed plan with related departments, including the Ministry of Justice's Directorate General of Immigration.

Marzuki said Indonesia considered investments of $1 million medium-scale, while this amount was categorized as small-scale investment overseas.

He said BKPM often received complaints from foreign investors about the complicated procedures they had to go through to get a visa or entry permit to Indonesia.

Deputy chairman of BKPM Sugihono Kadarisman said the idea for the new incentive came from Thailand, which offered a similar incentive to foreigners who invested more than 10 million baht in the country.

Thailand has also offered such foreign investors permits to buy property and own houses in the country, he said.

However, Sugihono said the new incentive, if approved, would not guarantee an influx of foreign investment without an accompanying security guarantee.

"The most important thing for foreign investors is security, both personal security and investment security. If they do not feel safe and secure here ... no incentive will attract them to invest here," he said.

He said Thailand recorded an increase in direct foreign investment since it began to offer investors such incentives, but this increase was also supported by a stable social and security condition in Thailand.

BKPM earlier said approvals of direct foreign investment during the first four months of 1999 amounted to 279 projects worth $935 million.

During the same period, the number of investment projects canceled, both foreign and domestic, rose by 200 percent.

Last year, direct foreign investment fell by 60 percent to $13.6 billion from $33.83 billion in 1997.

However, in the same period the number of foreign investment projects rose by 23.7 percent to 1,035 projects from 790 projects in 1997, despite the sharp drop in their value. (gis)