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Jakarta Post

New rule expected to boost commitments

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Mon, January 25, 2016   /  06:15 pm

The government hopes total investment commitments to Indonesia will surge by 50 percent after a new policy designed to open up several business sectors to foreign players is issued, according to a top official.

The new policy will be made by revising the negative investment list (DNI).

Investment Coordinating Board (BKPM) head Franky Sibarani said the opening of more business sectors would help boost investment commitments to the country by 50 percent this year.

'€œI think with the new regulation, investment commitments could go up by 50 percent from the commitments generated last year,'€ Franky said recently.

Data from the BKPM reveal investment commitments to Indonesia increased by 45 percent year-on-year to Rp 1,800 quadrillion [US$129.7 billion] last year.

According to Franky, a new presidential regulation on the DNI revision will be issued in March and will provide foreign players with greater opportunities for business ownership.

Under current DNI regulations as stipulated by Presidential Decree No. 39/2014, various businesses in 16 industrial sectors are closed to foreign direct investment or only open with certain requirements.

The new DNI regulations would assure greater openness for foreign investment while at the same time maintaining the protection of local small and medium-sized businesses, said Franky.

No small and medium-sized businesses or businesses with investments totalling less than Rp 10 billion would be open for foreign ownership, he added.

The Trade Ministry'€™s director general for domestic trade, Srie Agustina, also said earlier that small retail businesses would continue to be reserved for local players.

A number of ministries have been discussing which business sectors would be opened up for foreign investment. The talks on six to eight industrial sectors might be finalized soon.

Franky told reporters that the discussion to open up foreign investment in three industrial sectors, namely tourism, the creative economy and health care, had almost been concluded.

In tourism, tour guides, art studios, homestays and travel agencies will be reserved for small and medium-sized enterprises, according to BKPM.

As many as 14 business sectors, including private museums, historic heritage sites, one and two-star hotels and travel bureaus will be opened for up to 67 percent foreign ownership. Meanwhile, soccer stadiums, swimming pools, tennis courts and sports centers will be opened for up to 100 percent foreign ownership.

Industries related to golf courses and meetings, conferences and exhibitions will be opened for up to 70 percent of investment from ASEAN countries, in line with the ASEAN Framework Agreement on Services (AFAS).

Foreign ownership caps in the health sector, meanwhile, are still under discussion, but Franky said it had been agreed that raw material for medicines would be opened up for foreign investment.

Five business sectors in the creative economy, including film production, will be opened up for foreign investment.

Creative Economy Agency (Bekraf) deputy head chairman Ricky Pesik said previously that the country needed more foreign investment in cinemas, as there was still a wide gap between the number of cinemas and the number of viewers.

The agency claimed that there was just one screen for every 237,000 Indonesian viewers, a stark contrast with Malaysia, where each screen caters to between 39,000 and 40,000 viewers.

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