Government Tightens Foreign Airline Investment
Monday, 11 September, 2006 | 12:58 WIB

Tempo Interactive, Jakarta: The government will tighten the procedures for foreign airline companies that will invest in national airlines starting this September.

This measure is to prevent the practice of altering national airline names to the names of foreign airlines.

According to Mohammad Iksan Tatang, Director General of Air Transportation at the Transportation Department, the regulation will be realized in bilateral agreements between Indonesia and 68 countries which have air transportation agreements with Indonesia.

“The effort is to make bilateral agreements by applying reciprocal principles to matters that are related,” he said at his office, Friday (8/9).

Under the agreements, Indonesia and each partner country will agree that inscribing a national airline’s or a country’s name must be done when there is an ownership change.

“This is also to safeguard that our domestic market is still served by national airlines,” said Tatang.

This measure, according to Tatang, is carried out so that the case of a national airline name alteration from PT Awair International to PT Indonesia Air Asia in the end of November 2005 is not repeated.

Indonesia Air Asia is a Malaysian airline which has bought 49 percent shares of Awair, a national airline.

“So by this bilateral agreement, Indonesian companies can do the same,” he said.

According to Tatang, if the partner country does not agree, the name alteration cannot be carried out.

This means, investment can still be made in accordance with the Capital Investment Decree, which states a maximum of 49 percent.

But the airline name must still use the one registered in Indonesia.

“If this is allowed to continue, Indonesia’s air territory will seem as if it is dominated by foreign airlines.”

Anton Aprianto
_________________________ Indonesian Business and Investment News Aggregator