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By Elizabeth Pisani
338 words
11 May 1989
Reuters News
(c) 1989 Reuters Limited

JAKARTA, May 11, Reuter - Indonesia on Thursday slashed the amount of money foreigners must stump up to invest in the country, and opened up previously restricted industries to new domestic and foreign capital.

Saleh Afiff, chairman of the State Planning Board, told reporters that minimum foreign investment had been cut to 250,000 dollars from one million, effective immediately, and bars on new investment in nearly 200 fields lifted.

"It has simplified things so much. This is the most positive thing they've done in a long time on the investment side," one foreign economist said.

The new list of 75 restricted industries differs from previous lists by stating only the fields where foreign and or domestic investment is prohibited.

"The move to a negative list has made the whole thing more transparent. Now we can really see which industries Indonesia is trying to protect," another economist said.

He said the old rules were flexible and could be negotiated but were so daunting they often scared off potential investors.

The new list still includes a number of industries such as forestry products and cooking oils, which are dominated by a few politically well-connected individuals.

But investment blocks in the mining and energy sectors have vanished, while in industry they have dropped from 138 to 23. Many industries escape restriction if 100 per cent of their product is exported.

Indonesia is keen to draw domestic and foreign capital into play to chivy along the development of its non-oil exports and help it pay off huge international debts.

Sanyoto Sastrowardoyo, chairman of the National Investment Board, said the measures were aimed at inspiring Taiwanese, South Korean and Japanese businessmen to put money into Indonesia as their home production costs continue to rise.

He said to reach its annual target of five per cent gross domestic product growth over the five years to 1995, Indonesia will have to attract 55 per cent of its total investment needs from the private sector.


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