Provinces able to issue investment permits
JAKARTA (JP): Provincial administrations now have full authority to approve foreign and domestic investment under a new presidential decree announced by the government on Wednesday.
Under the new regulation, foreign investors have three options in obtaining investment approvals: through Indonesian representative offices in their respective countries, the Investment Coordinating Board (BKPM) in Jakarta or by applying directly to the provincial investment office (BKPMD).
Ad Interim State Minister of Investment/Chairman of BKPM, Zuhal, said that the simplification of licensing procedures was necessary to provide more options and flexibility especially for foreign investors.
"It (the new regulation) simplifies the investment process and cuts unnecessary bureaucratic chains. Hopefully the changes will stimulate foreign investors to invest their money here," he told the media following the announcement of the new regulation.
Previously, the approval for foreign investment worth up to US$100 million could only be issued by BKPM or by the president himself if the investment value exceeded $100 million.
BKPMD was previously allowed only to approve domestic investment on projects worth less than Rp 10 billion.
Approvals for foreign investment in industrial bonded zones (Kapet) and Batam Island are still handled solely by the State Minister of Investment, while approvals on domestic investment in these areas also remains in the hands of the authority of the respective areas.
Zuhal, whose main job is chairman of the Agency for Technology Assessment and Application (BPPT), said that officials at BKPMDs and KBRI offices overseas had been trained and prepared to carry out their new obligations.
"Among the prepared KBRIs include those located in Japan, South Korea, Hong Kong, Taiwan, the United States, the United Kingdom, Germany and France," he said.
"As for BKPMDs, they all are ready. What still needs to be done is perhaps to further improve the knowledge and capability of the governor and his subordinates to handle investment process," he added.
Zuhal called on officials involved in the investment license processing to halt their current unprofessional work ethics.
"They must shun those KKN (corruption, cronyism and collusion) practices. They must work transparently," he said.
In order to improve the country's investment handling and promotion, Zuhal said his office had recently asked the government to increase the annual budget for investment promotion from the current level of $250,000 to $4 million.
"Our big problem is that we have a very small budget to support our investment promotion, including to counter inappropriate and unbalanced information that harms the image of Indonesia. Even the Philippines allocates $4 million. We want to get at least half of that ($2 million)," he said.
He said the fall in foreign investment approvals in the last two years was partly caused by misinformation on then country's and social political situation.
"Approved foreign investment fell by 60 percent in 1998 to $13.6 billion from $34 billion in 1997.
"While in the same period, domestic investment approval also dropped to Rp 60 trillion in 1998 from Rp 119.9 trillion in the previous year," he said.
Foreign investment approval dropped by 77.5 percent to $1.88 billion in the January to June period from $8.35 billion in the same period last year.
The domestic investment approvals during the same period also declined by 36.07 percent to Rp 19.12 trillion from Rp 29.9 trillion.
He said from January to Sept. 15, foreign and domestic investment approvals reached $6.1 billion and Rp 37 trillion respectively. (cst)