(Adds government comment, industry reaction)
By Randy Fabi
JAKARTA May 2 Indonesia on Friday eased its
foreign investment regulations for several industries, including
pharmaceuticals, power plants and advertising, amid signs of
weakening investor appetite in Southeast Asia's biggest economy.
Foreign investment growth in the first quarter slowed to its
lowest level in nearly five years following a government ban in
January on mineral ore exports. The ban raised investor concerns
over increasingly nationalistic policies.
But in a reform that should ease some of that concern, the
cabinet secretary's office, after months of delays, issued a
revised "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.
"To further enhance the capital investment activity in
Indonesia ... it is deemed necessary to change the provision of
business sectors closed and business sectors opened for capital
investment," President Susilo Bambang Yudhoyono said in a
Indonesia is dependent on foreign investment to fund a
current account deficit, which the central bank has estimated at
around 2 percent of gross domestic product in the first quarter.
Under the investment 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 49 percent.
The changes were effective from April 24, the cabinet
secretary's office said.
The International Pharmaceutical Manufacturers Group, which
represents foreign companies like Pfizer, Sanofi SA
, and Novartis, said the revisions would do
little to attract further investment as it would still require
having an Indonesian partner.
"The main issue is intellectual property," Parulian
Simanjuntak, the trade group's executive director, told Reuters.
"By having a local shareholder, they have access to confidential
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
(Additional reporting by Jakarta bureau; Editing by Robert