Restrict investment, say legislators

Andi Haswidi, The Jakarta Post, Jakarta

A number of legislators are insisting that certain sectors of the economy remain closed to foreign investment despite the fact that the newly enacted 2007 Investment Law guarantees equal treatment for both local and overseas investors.

"Equal treatment is not the same as equal opportunity. The seas are ours, the oil is also ours. It is up to us to decide whether we will keep the restrictions or not," Didik J. Rachbini, the chairman of House commission VI responsible for trade and investment, told The Jakarta Post on Monday.

Didik said that equal treatment only meant that foreign investors would be subject to the same fees and taxes, and receive the same incentives as their local counterparts.

"If it takes 10 days for a local investor to obtain a permit, it will also take a foreign investor 10 days. If a local company pays Rp 10,000 in tax, then the same will apply to the foreign company," he explained.

He therefore called on the government to ensure that a number of important commercial sectors were placed on the so-called negative investment list -- made up of sectors that are out-of-bounds to foreign investors -- to be issued under the ancillary regulations for the new law.

Commission VI deputy chairman Lili Asudiredja echoed the view that local firms needed protection.

"We favor openness, but subject to certain condition, such as mandatory partnerships with domestic enterprises. I think it is entirely reasonable that foreign companies be required to team up with smaller local partners in certain sectors so that the latter can benefit from the presence of their foreign partners," he said.

The inclusion of certain sectors on the negative investment list was also quite reasonable given the need to protect the interests of local companies, he argued. The sectors in question could later be removed from the list after local firms became strong enough to ensure fair competition, he added.

"In the future, when we see that the sectors have developed sufficiently, we can open them up again, no problem," he said.

Hasto Kristanto of the Indonesian Democratic Party of Struggle (PDIP), whose legislators walked out during the enactment of the Investment Law, said that the negative list was a tool by which the government could promote local businesses and improve the country's manufacturing capabilities.

"We have to be careful with foreign investors. For example, there is one foreign retailer that collects up to Rp 50 billion (about US$5.5 million) from the listing fees for the products sold in its store. That's enough to basically cover the store's initial investment,"

This practice, he said, negated the retailer's initial investment as, essentially, it was being paid for by its local partners.

Investment Coordinating Board chairman Muhammad Lutfi hinted recently that the current negative list could be expanded, but he argued that the inclusion of more sectors on the list would not damage the interests of foreign investors.

Lutfi said the new list would be ready within the next one to two months.

Under the prevailing regulations, the sectors that are closed to foreign investment include germ-plasma cultivation, concessions for natural forests, lumbering contractor services, taxi and bus services, small-scale maritime transportation and the motion-picture production industry.

Meanwhile, the sectors that are open to foreign investment but subject to restrictions include the building and operation of seaports, electricity generation, transmission and distribution, shipping, the processing and provision of potable water for public use, atomic power and medical services.
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