JAKARTA - Indonesia's proposals to relax limits on foreign investment in a range of sectors have met with criticism, with media headlines decrying a more visible "foreign dominance" in South-east Asia's largest economy.
But the point man for attracting foreign businesses into Indonesia, investment coordinating board (BKPM) chief Mahendra Siregar, rebutted concerns that this hurt Indonesia's sovereignty.
"Isn't our country independent? What we want is to create a synergy between what is attractive for foreign and domestic investors and what we need, like technology, know-how and funds," he told reporters at an investment conference here. "We want to move forward and make sure all parties benefit."
On Wednesday, Mr Mahendra and Coordinating Economic Minister Hatta Rajasa announced plans to allow foreign investors to wholly run airports and seaports - which they can't even partly do now - as part of a liberalisation of investment rules. Other moves included raising caps on foreign stakes in sectors such as pharmaceuticals, eco-tourism, advertising and vehicle licensing.
The changes come amid a global slowdown, but bear some degree of political risk and could be greeted with further posturing, with elections for Parliament six months away, and for the presidency in July next year.
The new regulations are not final, but officials hope they will be ready by the end of the month.
Growth in South-east Asia's largest economy slowed to 5.6 per cent for the third quarter of this year, and Mr Mahendra said slower growth created greater urgency for reform.
Others saw it differently.
Yesterday, major broadsheet Kompas, known for its reading of ground sentiment, highlighted on its front page how 50.6 per cent of national banking assets were foreign-owned, with at least 12 private banks owned by foreign investors. It listed ANZ, UOB Indonesia, HSBC, CIMB Niaga and OCBC.
It also highlighted how over 70 per cent of the mining sector was in foreign hands, and at least 60 per cent of three of the four main telecommunications companies are majority foreign-owned: XL Axiata by Malaysia's Axiata, Indosat by Qatar's Ooredoo, and Hutchison Tri by Hong Kong's Hutchison Whampoa.
SingTel has a 35 per cent stake in Telkomsel.
"This is liberalism in its best form," the daily quoted University of Indonesia economist Sri Edi Swasono as saying. "Our country is being sold, and we are very concerned."
But Mr Mahendra said foreign investments in areas such as vehicle licensing would help Indonesia lift its standards, including in road safety, and sectors like airport and port management. "If we do not meet international standards, we will be hampered from being part of the global supply chain," he said. "We would be creating our own barriers."
MP Harry Azhar Azis, the deputy chair of Parliament's banking and finance committee, told The Straits Times the opening up of airport and port operations, now monopolised by state-run operators, would spur development in areas near these facilities.
"It's not just about letting foreigners come in because we want to," he said. "The changes will help speed up movement of goods and people, and I feel we can open up a bit more so others can take part in developing areas around airports and ports."
But Indonesian Employers Association chairman Sofjan Wanandi said foreign participation in certain areas where Indonesian companies can hold their own should remain restricted, such as retail and logistics.
As for other areas, he said: "What we can't do well enough on our own, we have to let others join in, because what we need is efficiency."
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