Provinces able to issue investment permits

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)