Oil and gas industries criticize new investment bill
Oil and gas industries criticize new investment bill
A'an Suryana, The Jakarta Post, Jakarta
Local oil and gas companies are urging the government to
revise the draft of the new investment bill because it is "too
liberal."
"If the government sticks with the bill, the local downstream
oil and gas industries will be sidelined because they cannot yet
compete head on with foreign players," Heroe Widjatmiko, chairman
of the Indonesian Steel Pipe Industries Association, told
reporters during a break in an investment forum on Tuesday.
It took the government over a year to draft the investment
bill, which it plans to submit to the House of Representatives
immediately for deliberation.
Many sees the bill as too liberal because it aims to open up
almost all sectors of the economy, except the strategic upstream
oil and gas sector, to foreign competition.
But downstream oil and gas companies are arguing that they are
not yet ready for direct competition with foreign companies.
"Local downstream industries are technologically unprepared
for direct competition with foreigners, especially the global
players," said oil and gas observer Ramses Hutapea.
Ramses suggested that there should be a delay in the
implementation of the bill after it is passed into law, in order
to allow Indonesia to catch up with the developed world in terms
of technology.
"The World Trade Organization has adopted this kind of scheme
for the developing world, and we can use it as well. The scheme
could be attached to the new bill," he said.
The new investment bill will replace the foreign and domestic
investment laws that were passed in 1967 and 1968, respectively.
The new bill is aimed at helping to attract more foreign
investors to the country.
One of the important features of the bill is the scrapping of
the 30-year time limit on foreigners holding a majority stake in
projects.
Foreign investors at present must divest at least 51 percent
of their projects to local partners after 30 years.
The new bill also reviews a list of areas closed to new
investment and produces a new list based only on "moral and
environmental" considerations.
The chairman of the Investment Coordinating Board (BKPM), Theo
Toemion, said the drive to liberalize the country's investment
sector was crucial to reviving faltering investment here.
Foreign direct investment approvals in January fell to
US$321.8 million from $486 million in the same month the previous
year.
Over all of last year, foreign investment dropped sharply to
$9.74 billion from $15.06 billion in 2001.
Experts have blamed lingering labor conflicts and the lack of
legal certainty in the country for the drop in investment, which
is crucial to help the country increase economic growth and
create greater employment opportunities.