home
***
CD-ROM
|
disk
|
FTP
|
other
***
search
/
Current Shareware 1994 January
/
SHAR194.ISO
/
business
/
indonesa.zip
/
INVESTRG.TXT
< prev
next >
Wrap
Text File
|
1993-04-29
|
7KB
|
172 lines
INDONESIA TRADE DIRECTORY ON DISK
1993
TRADEWARE BOX 406 WHITE MARSH VA 23183
TITLE : INDONESIA - NEW INVESTMENT REGULATIONS -
SUBJECT: INVESTMENT MEASURES IN INDONESIA'S 1992
DEREGULATION PACKAGE
1. NOTE: THE FOLLOWING IS PART OF A SERIES OF
CABLES ON THE GOVERNMENT OF INDONESIA'S JULY 6 1992
DEREGULATION PACKAGE.
2. SUMMARY: INVESTMENT MEASURES INCLUDED IN THE
GOVERNMENT OF INDONESIA'S (GOI'S) JULY 1992
DEREGULATION PACKAGE MAY HAVE AN
IMPACT ON THE EASE OF DOING BUSINESS HERE, IF THEY
ARE FULLY IMPLEMENTED. THE PACKAGE INCLUDES MEASURES
TO ALLOW JOINT VENTURES WITH FOREIGN OWNERSHIP TO
HOLD LAND USE TITLES, AND TO USE THOSE TITLES FOR
LOAN COLLATERAL. JOINT VENTURES WITH FOREIGN
OWNERSHIP WILL ALSO BE ALLOWED TO HOLD BUILDING
RIGHTS ON COMMERCIAL PROPERTY. LAND USE PERMITS AND
EXPATRIATE WORK PERMITS SHOULD ALSO BECOME EASIER TO
OBTAIN IF THE NEW MEASURES ARE IMPLEMENTED FULLY.
THE JULY PACKAGE ALSO REMOVED 9 SECTORS FROM THE
NEGATIVE INVESTMENT LIST, OPENING THEM TO FOREIGN "
INVESTMENT. END SUMMARY.
- - - - - - - - - - - - - - - - - - - - - -
FREEING UP LAND TITLES MAY SPUR DEVELOPMENT
- - - - - - - - - - - - - - - - - - - - - -
3. THE GOI'S JULY 6 1992 DEREGULATION PACKAGE
(PAKJUL) INCLUDED MEASURES WHICH WILL ALLOW JOINT
VENTURES WITH FOREIGN OWNERSHIP TO HOLD LAND USE
TITLES (HAK GUNA USAHA - HGU) FOR A PERIOD OF UP TO
30 YEARS, WITH A POSSIBLE 25-YEAR EXTENSION.
COMPANIES CAN USE SUCH TITLES AS COLLATERAL FOR BANK
LOANS. THE PACKAGE DOES NOT SPECIFY WHAT PERCENTAGE
OF THE JOINT VENTURE CAN BE FOREIGN-OWNED IN ORDER TO
QUALIFY FOR THE PERMITS.
4. THE DECREE ALSO STATES THAT JOINT VENTURES WITH
FOREIGN OWNERSHIP WILL BE ALLOWED TO HOLD BUILDING
RIGHTS (HAK GUNA PEMBANGUNAN - HGB) FOR A SIMILAR
PERIOD. JOINT VENTURE COMPANIES WILL BE ALLOWED TO
HOLD THE RIGHTS TO BUILD INFRASTRUCTURE SUCH AS
FACTORY BUILDINGS, WAREHOUSES, AND EMPLOYEE HOUSING.
5. COMMENT AND BACKGROUND: IT APPEARS THAT THE
CHANGES IN THE OWNERSHIP OF LAND USE TITLES ARE
PRIMARILY TARGETED AT THE PLANTATION SECTOR, WHICH
HAS LOBBIED THE GOVERNMENT FOR THIS CHANGE IN HGU
ISSUANCE, IN PART BECAUSE OF THE NEED FOR CONTINUAL
REPLANTING AND THE LAG TIME BETWEEN PLANTING AND
HARVEST. MANY FOREIGN-OWNED PLANTATIONS WHICH
CURRENTLY OPERATE IN INDONESIA WERE EXPROPRIATED
DURING THE SUKARNO ERA, BUT RETURNED IN THE LATE 60S
AFTER SOEHARTO CAME TO POWER. MOST OF THE LAND USE
TITLES NEGOTIATED AT THAT TIME WILL EXPIRE IN THE
LATE 90S, AND MOST FOREIGN PLANTATION GROUPS HAVE
BEEN IN THE PROCESS OF RENEGOTIATING EXTENSIONS.
6. COMMENT, CONTINUED: THE PROVISIONS ON BUILDING
RIGHTS, HGB, COULD GREATLY BENEFIT THE MANUFACTURING
AND INDUSTRIAL SECTORS. HOWEVER, THE PACKAGE IS
UNCLEAR ON THE SCOPE OF THIS CHANGE, AND THE
GOVERNMENT HAS NOT YET ISSUED IMPLEMENTING
REGULATIONS. SOME OF OUR INTERLOCUTORS HAVE SAID
THIS PROVISION WILL APPLY ONLY TO FACILITIES IN
INDUS""IAL ESTATES, BUT ONE CONTACT IN THE FINANCE
MINIS"RY SAID THAT JOINT VENTURES IN ALL AREAS WILL
BE ELIGIBLE.
7. COMMENT, CONTINUED: SEVERAL ECONOMISTS HAVE
COMMENTED THAT THE TOTAL LAND USE TIME PERIOD OF 5"
YEARS IS STILL TOO SHORT, ESPECIALLY IN COMPARISON
WITH THE 100-YEAR LAND TITLES OFFERED BY SOME OTHER
ASIAN COUNTRIES. END COMMENT.
8. THE PACKAGE ALSO INCLUDES MEASURES WHICH ABOLISH
THE REQUIREMENT FOR FOUR PERMITS PREVIOUSLY ISSUED BY
THE NATIONAL INVESTMENT COORDINATING BOARD (BKPM).
FOUR OTHER PERMITS FROM BKPM ARE STILL REQUIRED:
BUSINESS LICENSES, LIMITED IMPORT LICENSES, TAX AND
IMPORT DUTY RELIEF LICENSES, AND EXPATRIATE WORK
PERMITS.
-
- - - - - - - - - - - - - - - - - - - -
WORK PERMIT ISSUANCE TO BE DECENTRALIZED
- - - - - - - - - - - - - - - - - - - -
9. IN THE PRESS RELEASE ANNOUNCING PAKJUL, MINISTER
PRAWIRO STRESSED THAT THE GOI WILL NOW D"CENTRALIZE
THE AUTHORITY TO ISSUE WORK PERMITS TO EXPATRIATES.
PROVINCIAL OFFICES OF THE LABOR MINISTRY AND THE
INVESTMENT COORDINATING BOARD (BKPM) SHOULD NOW HAVE
THE AUTHORITY TO ISSUE PERMITS, AND PROVINCIAL
OFFICES OF THE MINISTRY OF TOURISM, POST, AND
TELECOMMUNICATIONS SHOULD BE ABLE TO APPROVE
APPLICATIONS FOR WORKERS IN THE HOTEL/RESTAURANT
INDUSTRY. UNDER THE NEW PACKAGE, ISSUANCE OF
EXPATRIATE WORK PERMITS WILL NO LONGER REQUIRE
DEPARTMENT OF TECHNOLOGY PERMISSION, AND THE
GOVERNMENT WILL BE REQUIRED TO ACT ON APPLICATIONS
WITHIN FOUR DAYS OF SUBMISSION.
10. COMMENT: WE HAVE BEEN TOLD THE GOVERNMENT
CURRENTLY ISSUES ONLY 26,000 EXPATRIATE WORK PERMITS
FOR THE ENTIRE COUNTRY. WHILE THE MANUFACTURING AND
SERVICE INDUSTRIES GENERALLY FACE GREATER
DIFFICULTIES, EVEN THE FINANCIAL AND PETROLEUM
SECTORS SOMETIMES HAVE DIFFICULTIES IN OBTAINING WORK
PERMITS. AN EASING IN WORK PERMIT PROCEDURES COUL"
LEAD TO GREATER INVESTMENT FROM COMPANIES FROM OTHER
ASIAN COUNTRIES, WHO PREFER TO BRING IN THEIR OWN
FLOOR MANAGEMENT FOR MANUFACTURING OPERATIONS.
AGAIN, THE EXTENT TO WHICH IMPLEMENTATION OF PAKJUL'S
POLICY ANNOUNCEMENT ACTUALLY EASES WORK PERMIT
HEADACHES WILL DETERMINE THE IMPACT THIS PROVISION
WILL HAVE ON INVESTMENT AND THE ECONOMY. END COMMENT.
- - - - - - - - - - - - - - - - - - - - - -
REDUCTIONS IN THE NEGATIVE INVESTMENT LIST
- - - - - - - - - - - - - - - - - - - - - -
11. IN 1989 THE GOI REPLACED THE "POSITIVE LIST," A
REGISTER OF INDUSTRIES IN WHICH FOREIGN INVESTMENT
WAS ALLOWED, WITH THE NEGATIVE INVESTMENT LIST, A
SPECIFIC ITERATION OF INDUSTRIES IN WHICH FOREIGN
INVESTMENT IS PROHIBITED. THE NAME IS SOMEWHAT
MISLEADING -- FOREIGN COMPANIES MAY ACTUALLY OPERATE
IN SOME OF THESE INDUSTRIES IF THEY MEET CERTAIN
REQUIREMENTS, SUCH AS PRODUCING PRIMARILY FOR EXPORT
OR LOCATING THEIR OPERATIONS IN REMOTE AREAS. OF THE
REMAINING 51 SECTORS ON THE LIST, ONLY 9 ARE
COMPLETELY CLOSED TO FOREIGN INVESTMENT.
12. THE PRESS RELEASE ANNOUNCED THAT THE 1992
DEREGULATION PACKAGE CUTS 9 SECTORS FROM THE NEGATIVE
INVESTMENT LIST. HOWEVER, AT LEAST TWO OF THOSE NINE
SECTORS WERE BLENDED INTO OTHER DISALLOWED
CATEGORIES. SECTORS LISTED IN 1991 WHICH WERE
REMOVED FROM THE 1992 NEGATIVE INVESTMENT LIST ARE:
-- NITROGEN FERTILIZER (UREA, AMMONIUM SULFATE)
-- RAILWAY PARTS AND EQUIPMENT
-- DIESEL ENGINES AND GASOLINE ENGINES FOR COMMERCIAL
VEHICLES
-- SEPTICHEMIA EPIZOOTICAE, ANTHRAX, BRUCELLOSIS,.
HOOF AND MOUTH DISEASE AND RABIES VACCINES FOR ANIMALS
-- CLOVE CIGARETTES
-- MATCHES
-- COLD ROLLED LOW CARBON STEEL SHEETS
13. COMMENT: WE PREDICT THE CHANGES IN THE NEGATIVE
INVESTMENT LIST WILL HAVE NO MAJOR MACROECONOMIC
IMPLICATIONS.
14. GENERAL COMMENT: PAKJUL IS IN MANY WAYS MORE
NOTICEABLE FOR THE AREAS IT DOES NOT ADDRESS -- THE
AUTOMOTIVE, TIMBER, AND FOOD INDUSTRIES -- THAN FOR
THE AREAS IT DOES. SEVERAL OF OUR INTERLOCUTORS HAVE
COMMENTED THAT THE EASY DEREGULATON MEASURES HAVE
BEEN TAKEN, AND THE REMAINING SPECIAL TRADING
ARRANGEMENTS WILL BE VERY DIFFICULT TO DISMANTLE.
NEVERTHELESS, THE PACKAGE ILLUSTRATES THAT THE GOI IS
CONVINCED OF THE NECESSITY OF ONGOING DEREGULATION OF
THE ECONOMY, EVEN THOUGH THE PACE OF CHANGE MAY HAVE
MOVED INTO A SLIGHTLY SLOWER GEAR.
HAMILTON