In­done­sia to open econ­omy to for­eign in­vest­ment

The Pak Banker - - COMPANIES/BOSS -

In­done­sian Pres­i­dent Joko Wi­dodo on Wed­nes­day un­veiled plans for a "big bang" loos­en­ing of re­stric­tions on for­eign in­vest­ment in nearly 50 sec­tors of the econ­omy to en­cour­age com­pe­ti­tion.

Wi­dodo's pro­posal, which will ease rules in the e-com­merce, retail, health care and movie in­dus­tries, is the most far-reach­ing yet in a string of stim­u­lus pack­ages rolled out over the past six months to ar­rest a slow­down in growth.

South­east Asia's largest econ­omy which has been grow­ing at its slow­est pace in six years be­cause of fall­ing com­mod­ity prices and cool­ing growth in ma­jor trad­ing part­ner China.

But Wi­dodo told Reuters in an in­ter­view at the pres­i­den­tial palace he was very op­ti­mistic that growth would re­bound to 5.3 per cent this year af­ter a slide to 4.8 per cent in 2015.

His trade min­is­ter, Tom Lem­bong, told Reuters that the sweep­ing changes planned for the so-called 'Neg­a­tive In­vest­ment List" sig­nalled a greater open­ness to for­eign in­vest­ment and would partly pre­pare the coun­try for free trade agree­ments, in­clud­ing even­tu­ally the Trans-Pa­cific Part­ner­ship (TPP).

"We are se­ri­ously con­sid­er­ing dereg­u­la­tion across the board, but fo­cus­ing on e-com­merce, health care, and cre­ative in­dus­try," Wi­dodo said ahead of a cab­i­net dis­cus­sion of the pro­pos­als.

"There are 49 sub-sec­tors (that will be af­fected) so in my opin­ion this is the big bang." Lem­bong said sep­a­rately that retail was also among the sec­tors that would be opened up un­der the plan.

He said there would be an open­ing up to some de­gree in each of the 16 main sec­tors in the neg­a­tive in­vest­ment list, which in­clude agri­cul­ture, forestry, en­ergy, com­mu­ni­ca­tion and trans­port. In some cases this would raise the limit on for­eign in­vest­ment stakes in com­pa­nies from a mi­nor­ity to a ma­jor­ity.

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