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RI plans to revise negative investment list

Jakarta, 19 Februari 2013 - The Jakarta Post - The Investment Coordinating Board (BKPM) is planning to revise the list of business sectors that are wholly or partially closed to investment, known as the negative investment list (DNI), in an attempt to lure more investors into the country.


"The DNI was last revised in 2010, and we see the need for a re-evaluation of several sectors from which foreign investors are restricted. The spirit [behind the revision] is clear. We must continue to improve our investment climate and promote the image of Indonesia as an investor friendly nation," BKPM chairman M. Chatib Basri told The Jakarta Post on Monday.

The revised version of the DNI should be completed by the third quarter of this year, he added.
The DNI is the list of sectors that are either wholly or partially closed to foreign investment for various reasons, such as the protection of local industries or due to Indonesian culture.

Among the sectors that are classified in the DNI as wholly closed to investment are industries such as narcotics, alcohol production and certain chemicals, as well as the establishment of specific transportation facilities and casino's.

Those categorized as partially open to investment are industries such as sugar, rattan, printed batik and mining. "We will still be able to relax requirements for sectors such as pharmaceuticals, so that we will be able to produce our own medicines locally," BKPM deputy chairman Azhar Lubis told reporters in Jakarta on Monday.

Amid the stalled global economic recovery, Indonesia has set an economic growth target of 6.8 percent this year,with Finance Minister Agus Martowardojo touting investment as the main growth driver in 2013, replacing domestic consumer spending.

Indonesia attracted a historically high level of investment in 2012, with the country realizing Rp 313.2 trillion (US$32.4 billion) of investments, thanks to Indonesia's stable economic growth, as well as reform programs performed by the government to improve its investment climate.

The BKPM has upped its investment target to Rp 390 trillion in 2013, almost 40 percent higher than last year's target of Rp 283.5 trillion.

BKPM's Chatib acknowledged that this year's target was "quite high" and the revision of the DNI was part of his institution's efforts to lure more investments and achieve the target.

In conducting the revision, however, Chatib said that he would still "prioritize national interests", arguing that there was still a need to protect local industries in certain sectors.

The BKPM chairman said that the revision was also necessary to allow Indonesia-based industries to expand their business in line with growing domestic demand and the rising purchasing power of the country's middle class. "If we do not take steps that give room for those investors [to expand their production], then we will depend more heavily on imports."

Economists have welcomed the government's plan to revise the DNI, especially as Indonesia is likely to face tougher competition among emerging nations in attracting investment this year, given the brighter economic outlook for its neighbors, notably China, India, Vietnam, the Philippines and others.

"More foreign investment is actually good for us because it can act as a spur for local industries to improve their competitiveness,"said Asian Development Bank (ADB) economist Edimon Ginting.

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