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The film industry: Foreign investment or local monopoly
How many Indonesian films are allotted sufficient show time at movie houses? How many non-Hollywood foreign pictures are screened at theaters? Are movie theaters within easy reach and in an acceptable condition? Are their film projections and sound systems good? Moviegoers have often asked such questions, referring to the variety of films, the availability, physical conditions and technology of theaters
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ow many Indonesian films are allotted sufficient show time at movie houses? How many non-Hollywood foreign pictures are screened at theaters? Are movie theaters within easy reach and in an acceptable condition? Are their film projections and sound systems good?
Moviegoers have often asked such questions, referring to the variety of films, the availability, physical conditions and technology of theaters.
The limited number and distribution of movie theaters in Indonesia is the biggest problem of its film industry. Many provincial capitals have no theaters.
The minimum infrastructure leads to the least variety of quality films, local as well as foreign, as the public has frequently complained about. The availability, physical conditions and technology of theaters combined indicates the capital intensive nature of the movie house business.
The theater issue has become a specter of the Indonesian film industry. It's due to the domination of Cineplex 21, which has controlled almost 90 percent of the total of movie screens for well over two decades since 1987 and on a national scale.
Blitzmegaplex now owns 10 percent since its founding in 2006. This domination proves to have killed independent (non-network) movie house business and film distributors.
The presence of the global market is believed to help solve the theater issue by reducing the domination. Jhony Syarifudin, chairman of the Indonesian Union of Cinema Owners (GPBSI), said: 'The opening of investment in movie theaters contributes more to manpower absorption because it is directly related to food, beverage and creative industries.'
The film industry in China allows foreign investment in the move house industry. In several cities like Beijing, Shanghai and Guangzhou foreign investors can even have share ownership of up to 79 percent. However, foreign films remain under the government's control, with only 30 foreign titles permitted for one-year distribution. This situation is fairly conducive to the growth of national films in China and foreign companies are also investing in the local film industry, thus, absorbing millions of workers in the movie theater and film industry.
The only impediment to foreign investment in the movie house business is the negative investment list (DNI) issued under Presidential Regulation No. 36/2010, which protects film production and movie theater industries from foreign investment, considering that foreign penetration is feared to kill the weak local industry.
South Korea, which currently leads Asian film market expansion, has entered the country's movie house business. South Korean investors have officially cooperated with the local theater network. CJ Entertainment (CJ CGV) works with Blitzmegaplex, with share ownership of around 40 percent. Lotte cooperates with Cineplex 21, whose share ownership is unknown.
On another occasion, Dedi Gumelar, a member of the House of Representatives Commission X, via tribunnews.com (Jan. 8, 2014), said: 'Although [Blitzmegaplex] already bought it, it should be discontinued because the DNI doesn't open it. As they [CJ CGV] are foreign investors, they belong to foreign invesstment permit [PMA]. The point is that they don't invest in the theater sector.'
By the end of 2013, Mahendra Siregar, head of the Investment Coordinating Board (BKPM), talked of cancellation of the proposed opening of foreign investment in film distribution business.
'The reason is that the outcome of consultations with relevant stakeholders indicates that national companies are already capable. Their service is also good.'
Who are the relevant stakeholders and film distributors actually? There are no such local distributors other than a few import film distributors and DVD distributors. And why is film production and theater business closed to foreign investment?
Lippo Group as a financial, property and media conglomerate has introduced Cinemaxx as a movie house network and film distributor. Cinemaxx is said to be created as part of the vertical integration of media owned: Newspapers, Cable TV (First Media and BigTV), production house (First Media Entertainment) and the Internet service provision network.
Indonesia with its vast geographic potential and large population constitutes an economic market conducive to monopoly through large-scale investment, foreign as well as local. On the one hand, local (regional) property ownership will automatically limit the scale of foreign investment.
On the other hand, if Cinemaxx spreads on a national scale in various kinds of property ownership of Lippo Group, it will limit development of independent movie theater businesses in the regions by local companies. This only indicates the local monopoly scale potential through vertical integration of films related to production, distribution and movie houses.
It should be noted that since 1948 Hollywood has limited the scale of affiliation of film distribution and movie house business through the Paramount Decree, which rejected the unfairness of theater owners in the process of purchase of films not produced or distributed by the networks of their companies, or the system of studio monopoly.
In the film industry of Thailand, the equilibrium of production, distribution and movie house chains is created through the division of theater ownership regions, specialization of film distributors, and film production houses unaffiliated with movie theaters.
South Korean investment in theaters is believed to jack up local film production in order to achieve exponential growth. Coupled with their background of understanding of the film industry, the local film industry's development will be aided in terms of the film profession. The problem of economic repatriation becomes part of the policy needing further consideration.
Through the mechanism of planned investment realization, foreign and local investment can go hand in hand. The challenge lies in the details of integrated economic policy planning based on the principle of transparency. Both kinds of investment are needed to increase the number of movie theaters and screens, which is a basic problem of the film industry. Like selling cakes, additional outlets will help promote the sale of its variety of cakes.
As too will the variety of theaters: It will give rise to film distribution competition, which causes the appearance of local film distributors. The distributors will stimulate the growth of film production. Higher film production will help the absorption of manpower and optimize natural resources, eventually leading to the economic multiplication of the creative sector related to films, both on the regional scale and on the national scale through its contribution to gross domestic product (GDP).
In connection with the ASEAN Free Trade Area (AFTA) 2015, the time has come for the Indonesian film industry to start setting the target of becoming a film exporter in the ASEAN region. Once again, the key is integrated economic policy in the film sector connected with the scale of investment in production, distribution and movie houses, rather than the question of sources of investment.
The writer is a film producer, instructor and researcher.
