Asia Times: Indonesia to give equal treatment to foreign investors


	September 12, 2001	atimes.com

Southeast Asia

Indonesia to give equal treatment to foreign investors

JAKARTA - The Indonesian government has agreed to accord equal treatment to domestic and foreign investments as requested by the Asian Development Bank (ADB), according to a report.

"ADB has asked the government to liberalize its investment policy. The request is tied with its plan to disburse a loan by the end of this year," Theo F Toemion, head of the Capital Investment Board (BKPM), said after a meeting with a group of investors Monday. ADB plans to disburse a loan of US$600 million for Indonesia toward the end of this year, the newspaper Media Indonesia reported.

Under the Foreign Investment Law of 1967, a foreign investment is required to have a local partner, who will become the majority shareholder after a given period. A series of deregulation measures have been introduced over the years but discrimination continues as some business areas are still closed to foreign investment, and local bank loans are not available for foreign investors.

Theo said BKPM was drafting a new investment law under which foreign investors would be given freedom to secure loans from local banks. He added that the new policy would also serve as a preparation for Indonesia to enter a free market under the Asean Free Trade Area scheme next year. The government would also reduce the number of business sectors closed to new investment by foreign companies, as included in what is called Investment Negative List.

Theo said the new National Investmnent Law now being drafted by BKPM would provide legal certainty, which has long been an issue raised by foreign investors in the country. At the meeting, foreign investors complained about overlapping tax policies and regulations and called for relaxation of value added tax and luxury sales taxes.

Data at BKPM showed that foreign investment approvals dropped slightly to US$5.52 billion in the first seven months of this year from US$6.17 billion in the same period last year.

(Asia Pulse/Antara)