Press still closed to foreigners

JAKARTA (JP): The Indonesian press and broadcasting industries remain closed to foreigners despite a new government ruling which states otherwise.

Minister of Information Harmoko announced yesterday that President Soeharto, who by law has the power to approve or reject foreign investment applications, assured that no foreigners will be allowed to own equity in the local mass media.

His remarks put to rest the apprehensions of local media executives and legislators that foreign media moguls would buy into Indonesian press and broadcasting following the government regulation announced last week which theoretically opened the sector to foreign investors.

Harmoko, who admitted that the regulation took him by surprise and stressed that he had not been consulted, visited President Soeharto at Merdeka Palace yesterday morning to discuss the government's position.

Critics of the regulation pointed out that the 1982 Press Law specifically states that foreigners are barred from owning shares or taking full or partial control of the Indonesian press.

"Yes, I am very relieved that the outcome is in line with what I had said earlier," Harmoko said after meeting with Soeharto. "My intuition has been recognized and approved by the President."

Harmoko on Friday said that, in line with the 1982 Press Law, he would never sign any press publishing license for institutions where foreigners have equity.

He admitted that there was a contradiction between the government's PP20 ruling and the 1982 law, but pointed out that the new ruling did not contradict the 1967 Law on Foreign Investment which prohibits full foreign ownership of what are considered strategic sectors, including the mass media.

The new law states that foreigners can own up to 95 percent equity in press and broadcasting companies.

The 1967 law permits foreigners to invest in these sectors but only with the President's approval, Harmoko said. "President Soeharto says that he recognizes this situation. Since he intends to abide by the 1982 Press Law as well, this means foreigners will not be allowed to own shares in Indonesian mass media."

The government's economic policy-makers, who formulated the deregulation package, have yet to explain their decision to open up the mass media industry in contravention of the law, but some media observers speculate that it was done to placate the international community.

They pointed out that Indonesia is obliged to open up its economy under the newly upgraded General Agreement on Tariffs and Trade which calls for sweeping trade and investment liberalization.

Others speculate that the move was taken to pave the way for the country's private television networks and newspapers to go public and raise capital on local stock exchanges which are open to foreigners. They pointed out that both RCTI and the Jawa Pos have announced their intention of going public.

Controversy

Meanwhile, Marzuki Usman, chairman of the Indonesian Economists Association and a former chairman of the Jakarta Stock Exchange, said yesterday that one way out of the controversy is by allowing foreigners to buy portfolio investments in press and broadcasting companies without acquiring control.

Through portfolio investments, Marzuki said, "foreign investors will not have control, they will only invest their money."

Harmoko said there was no need to review the regulation and sought to play down the controversy. "There is no need to make a big fuss. The policy will be implemented, but we have the Press Law to abide by, which the President confirms."

The Association of Newspapers Publishers (SPS), which has attacked the ruling, was relieved by Soeharto's assurances.

"SPS hopes that the 1967 Law on Foreign Investment and the 1982 Press Law will be implemented in full," Chairman Handjojo Nitimihardjo said in a statement.

He pointed out that the media firms's obligation to give 20 percent of their shares to their employees -- as stipulated by the 1982 Press Law -- would be difficult to accomplish if foreign investors are allowed to penetrate the local market. (pwn/02)