* Indonesia amends 'negative investment list' to lure
* Eases investment rules for power plants, advertising,
* Maintains regulations on airports, ports
(Adds details on regulation changes, companies, reaction)
By Rieka Rahadiana
JAKARTA, Dec 24 Indonesia announced on Tuesday
it will allow increased levels of foreign investment in the
country's power plants, advertising, and pharmaceutical
industries as part of government efforts to boost the slowing
Policymakers are scrambling to tempt back jaded investors
who have fled Southeast Asia's largest economy due to the
country's sizable current account deficit, which has helped make
the rupiah skid more than 20 percent against the dollar
Indonesia fears further foreign outflows due to political
uncertainty ahead of next year's elections and the reduction of
U.S. monetary stimulus, which long fuelled demand for risky
assets in emerging markets.
"The commitment is to maintain Indonesia's economic growth
and anticipating a slowdown in the global economy by encouraging
investment, particularly in domestic and foreign investment,"
Chief Economic Minister Hatta Rajasa told reporters.
After months of delays, ministers amended Indonesia's
"negative investment list" of sectors in which foreign investors
are either barred or restricted. The list, which has existed for
decades, limits foreign involvement in areas deemed sensitive.
No date was given on when the changes will become effective
since President Susilo Bambang Yudhoyono must still formally
sign the decree.
"This (list) will boost the investment climate during a
political year, providing more legal certainty from a better
negative investment list," said Sofjan Wanandi, head of the
Employers' Association of Indonesia (APINDO).
Under the new policy, the government increased the maximum
foreign investment in pharmaceutical companies to 85 percent
from 75 percent, and in advertising agencies to 51 percent from
That means more competition could be in store for Indonesian
pharmaceutical firms Kimia Farma, Indofarma
and Kalbe Farma, as well as for advertising agency
Indonesia also allowed foreign investment of up to 100
percent from 95 percent for power plant projects carried out as
a public-private partnership. Under the partnership terms, a
foreign investor now can own an entire power-plant during a
concession period, after which some equity transfers to the
At the last minute, the government dropped its earlier
proposal to let foreign investors to fully operate airports and
ports, dealing a blow to India's GVK Power & Infrastructure
, South Korea's Incheon International Airport Corp
and others looking for a bigger presence in
Economists said the changes were a good first step to
attracting investment, but more was needed.
"The main problem is not the variation in investment types,
but how comfortable for them to invest in Indonesia," said Lana
Soelistianingsih, chief economist at Jakarta-based fund manager
PT Samuel Aset Manajemen.
The World Bank and International Monetary Fund earlier this
month warned the world's fourth most populous country to
implement more profound economic reforms if it has any hope of
returning to stronger growth.
(Additional reporting by Adriana Nina Kusuma and Andjarsari
Paramaditha; Writing by Randy Fabi; Editing by Richard Borsuk)