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A Warmer Welcome To Foreign Investors
Irvan Tisnabudi & Faisal Maliki Baskoro | June 09, 2010

The government have recently increased the amount of markets foreign companies have access to in the hope of attracting more foreign direct investment. (JG Photo/Yudhi Sukma Widjaya) The government have recently increased the amount of markets foreign companies have access to in the hope of attracting more foreign direct investment. (JG Photo/Yudhi Sukma Widjaya)
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jetset24
2:38am Jun 11, 2010

Opening a fair and open investment to foreign potentials in every sector of the economy do not necessarily mean that an upgrade of a country would turn out to be the same of living standard as in the West...OMG did I really learn this logic concept in my Business college subjects. Hmm...Let me check.

What I know that most Malaysian students with the backing of their government have had the greatest opportunity to study abroad back in the 80's and bring back ideas to boost the country's image and prosperity for what it is now. Learning abroad actually paid off.


lekkerding
4:34pm Jun 10, 2010

This shows clearly that the Indonesian government is not really serious about attracting foreign investment. Malaysia years ago set the door quite open to foreign investment in allmost every sector of the economy... The result: Malaysia is not really a third world country anymore .. The standard of living is almost the same as in the western world. The fierce competion between Malaysians and their foreign newcomers on the economic market resulted in better products and services.

What do Indonesians do ? Look at the bali taxi Bluebird dispute and there you have the answer. Throwing stones at the competition who's crime is that they put the customer first will not improve quality of service. In the end everyone lose because potential customers will spend their holiday money elsewhere.

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In a bid to attract more foreign investment, the government announced on Wednesday that it has opened the door to a range of sectors a little bit wider.

Coordinating Minister for the Economy Hatta Rajasa said the president had signed a decree revising the negative investment list (DNI), easing restrictions on foreign investment in sectors such as construction, health care and electricity generation.

“This decision will give foreigners more assurance about investing in Indonesia,” Hatta said.

However, telecommunication towers, a highly attractive sector poised to boom, remains completely off-limits to foreigners.

With its huge population and strong domestic demand, Indonesia is increasingly attractive to companies overseas. However, limits on foreign participation, as well as corruption, infrastructure problems and bureaucratic hurdles, have deterred many investors.

The decree will allow foreigners a greater stake in the country’s economy, but only by degrees.

It permits, for example, foreign companies to own 67 percent of construction businesses, up from 55 percent.

Meanwhile, foreign companies will be able to own 67 percent stakes in hospitals nationwide, up from 65 percent in specific health-related enterprises that were restricted to a few cities.

Desperate to address a power shortage, however, the government has granted foreign investors the right to own up to 95 percent of joint ventures in power plants with a capacity above 10 megawatts.

Meanwhile, in movie production, the government is allowing foreigners to own 49 percent of such companies, up from zero.

But the government has heeded fierce opposition from domestic companies opposed to allowing foreign investment in cellular towers, keeping the sector off limits.

There was also no change in the postal services sector, where foreigners will still be limited to 49 percent ownership.

In some industries, investors from Asean member countries will be given preference over those from outside the grouping.

Asean investors in maritime cargo-handling services, for example, are now allowed to own 60 percent of joint ventures, while others are limited to 49 percent.

“This is one of the steps taken to further show Indonesia’s commitment to be a vital part of the Asean economic community,” Deputy Trade Minister Mahendra Siregar said.

After the announcement, Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), said LG Electronics and Caterpillar were among foreign companies interested in raising their stakes in Indonesia, at least partly because of the new rules.

Ichsanuddin Noorsy, an economist at Gadjah Mada University, questioned the effectiveness of the changes.

He said health care, construction and film-making were not strategic sectors where foreign investment was crucial.

“The 2 percent increase in the hospital sector is not significant,” he said. “Investors are more concerned about the property sector. I doubt that foreign investors would invest heavily in the film-making industry.”