Indonesia eases foreign investment rules
Indonesia on May 2 eased its foreign investment regulations for several industries, including pharmaceuticals, power plants and advertising, amid signs of weakening investor appetite in Southeast Asia’s biggest economy, Reuters reported.
Foreign investment growth in the first quarter slowed to its lowest level in nearly five years following a government ban in January on mineral ore exports. The ban raised investor concerns over increasingly nationalistic policies.
But in a reform that should ease some of that concern, the cabinet secretary’s office, after months of delays, issued a revised “negative investment list” of sectors in which foreign investors are either barred or restricted. The list, which has existed for decades, limits foreign involvement in areas deemed sensitive.
“To further enhance the capital investment activity in Indonesia… it is deemed necessary to change the provision of business sectors closed and business sectors opened for capital investment,” President Susilo Bambang Yudhoyono said in a presidential decree.
Indonesia is dependent on foreign investment to fund a current account deficit, which the central bank has estimated at around 2 per cent of gross domestic product in the first quarter of 2014.
Under the investment policy, the government increased the maximum foreign investment in pharmaceutical companies to 85 from 75 per cent, and in advertising agencies to 51 from 49 per cent. The changes were effective from April 24, the cabinet secretary’s office said.
The International Pharmaceutical Manufacturers Group, which represents foreign companies like Pfizer, Sanofi and Novartis, said the revisions would do little to attract further investment as it would still require having an Indonesian partner.
“The main issue is intellectual property,” Parulian Simanjuntak, the trade group’s executive director, said. “By having a local shareholder, they have access to confidential information.”
Indonesia also allowed foreign investment of up to 100 per cent from 95 per cent for power plant projects carried out as a public-private partnership. Under the partnership terms, a foreign investor now can own an entire power-plant during a concession period, after which some equity transfers to the government.
Indonesia on May 2 eased its foreign investment regulations for several industries, including pharmaceuticals, power plants and advertising, amid signs of weakening investor appetite in Southeast Asia's biggest economy, Reuters reported. Foreign investment growth in the first quarter slowed to its lowest level in nearly five years following a government ban in January on mineral ore exports. The ban raised investor concerns over increasingly nationalistic policies. But in a reform that should ease some of that concern, the cabinet secretary's office, after months of delays, issued a revised "negative investment list" of sectors in which foreign investors are either barred...
Indonesia on May 2 eased its foreign investment regulations for several industries, including pharmaceuticals, power plants and advertising, amid signs of weakening investor appetite in Southeast Asia’s biggest economy, Reuters reported.
Foreign investment growth in the first quarter slowed to its lowest level in nearly five years following a government ban in January on mineral ore exports. The ban raised investor concerns over increasingly nationalistic policies.
But in a reform that should ease some of that concern, the cabinet secretary’s office, after months of delays, issued a revised “negative investment list” of sectors in which foreign investors are either barred or restricted. The list, which has existed for decades, limits foreign involvement in areas deemed sensitive.
“To further enhance the capital investment activity in Indonesia… it is deemed necessary to change the provision of business sectors closed and business sectors opened for capital investment,” President Susilo Bambang Yudhoyono said in a presidential decree.
Indonesia is dependent on foreign investment to fund a current account deficit, which the central bank has estimated at around 2 per cent of gross domestic product in the first quarter of 2014.
Under the investment policy, the government increased the maximum foreign investment in pharmaceutical companies to 85 from 75 per cent, and in advertising agencies to 51 from 49 per cent. The changes were effective from April 24, the cabinet secretary’s office said.
The International Pharmaceutical Manufacturers Group, which represents foreign companies like Pfizer, Sanofi and Novartis, said the revisions would do little to attract further investment as it would still require having an Indonesian partner.
“The main issue is intellectual property,” Parulian Simanjuntak, the trade group’s executive director, said. “By having a local shareholder, they have access to confidential information.”
Indonesia also allowed foreign investment of up to 100 per cent from 95 per cent for power plant projects carried out as a public-private partnership. Under the partnership terms, a foreign investor now can own an entire power-plant during a concession period, after which some equity transfers to the government.
