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Indonesia over the weekend took a strong step forward in its ability to compete effectively with its regional neighbors for much-needed foreign investment. After long deliberations, the government has agreed to open more sectors to foreign direct investment. This is long overdue and most welcome.

Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), said a draft on investment in strategic areas, also known as the “negative list” on foreign investment, had been completed and should be given the final nod soon. We sincerely hope there will be no more roadblocks in the way.

As we know all too well, there has been fierce resistance from local vested interests to proposals to open up multibillion dollar investment in areas such as base towers for cellphones, and there could still be other late changes in the revised negative list. For too long, politics and special favors have gotten in the way of opening up the economy.

But Indonesia has little choice but to open up more sectors if it wishes to compete. The country’s strong macroeconomic conditions are attracting interest from foreign investors, especially from the Middle East, India, China and other Asian countries. Even traditional investors such as American, European and Australian companies have indicated they will increase their investments if the conditions are right.

In health care, foreign investors will now be allowed to hold up to 67 percent in hospitals across the country, a dramatic change from the previous law. Health is a critical sector and foreign hospitals can make a telling difference by introducing new equipment, medical expertise and modern techniques. Indonesians need this kind of investment for their own well-being.

Foreigners also will be allowed to have a maximum ownership of 49 percent in staple food plantations, such as rice, as well as cargo services and film businesses. Again, the opening of the doors in these industries will inject new dynamism and expertise in areas that have been relatively stagnant.

Indonesia hopes to lift foreign direct investment by 15 percent this year, after it attracted an underwhelming $10 billion in 2009. This is still far below what is needed, which is closer to the $30 billion mark. Much work is still needed if the country is to boost foreign investment to a level that will make a significant difference to economic growth. The country definitely has the ability to attract more investment; what remains is for us to create a favorable climate.

First and foremost, the government must offer fiscal and tax incentives. Every country in the region offers similar incentives and if Indonesia wants to compete, it has to level the playing field. It goes without saying that significant investment in infrastructure must also accompany the new laws. We also need proper training for the labor force.

The country has a golden opportunity to send a strong signal to international investors that it is open for business. Now we must not let this opportunity pass.