July 10th, 2007 - IFCCI -

SINGAPORE, June 25- Indonesia is open for business, the chairman of the country's investment board told the World Economic Forum on East Asia Monday.

Muhammad Lutfi told global business leaders the country has moved to address concerns about corruption, red tape and legal uncertainty while opening its doors to foreign investors and seeking to end its reliance on commodity exports.

He bombarded delegates with a series of economic data on the country's improving economic condition and said the government aims to reduce poverty to about 17 million people in 2009, from close to 56 million today.

"In order to reach this, the Indonesian economy needs to grow around 6.6 percent average. And in order to get 6.6 percent average it needs investment around 426 billion US dollars from
2004 to 2009," said Lutfi (foto), chairman of the Investment Coordinating Board (BKPM).

Government spending in the world's fourth most populous nation will constitute only a fraction of that 426 billion, Lutfi told a luncheon gathering at the forum attended by about 300 business leaders and government officials.

"Because of that, it needs to change its mindset. The government needs to change its mindset. Indonesia will be a government that is pro-business," he said.

"Because we understand the business created economic growth.
Economic growth will create jobs, then these jobs will fight poverty, and with fighting poverty we will deliver prosperity and that will be the essence of democracy..."

The government has a target of 6.3 percent economic growth this year and first-quarter expansion hit six percent, which Lutfi said beat all expectations.

He said domestic and foreign investment rose 27 percent year-on-year in the first quarter of 2007, interest rates are at their lowest level since 2004, inflation has dropped markedly and unemployment is also seen falling further.

Since the election of President Susilo Bambang Yudhoyono (foto) in late
2004 the bourse has soared and is now "one of the most robust stock exchanges in the world", Lutfi said.

Nine years after the downfall of the dictator Suharto, who Indonesians accused of "corruption, cronyism and nepotism", Indonesia has struggled to overcome an international reputation for legal uncertainty, bureaucratic red tape and corruption.

The country was a laggard in recovering from a financial crisis that hit the region 10 years ago.

Analysts have warned Indonesia needed to improve its investment climate and reduce its reliance on commodity exports to achieve its growth target.

Lutfi said Yudhoyono's government is addressing all of those concerns.

"We've been doing a lot in tackling, and emphasis on, transparency and accountability," Lutfi said.

Corruption-fighting measures have saved the country about 43 billion US dollars up to 2006, he said.

Indonesia is also moving to smoothe out the processes of setting up and running businesses so it "will be comparable if not better to countries like Vietnam and hopefully will be in competition with Malaysia and Thailand."

A new investment law passed this year treats domestic and foreign businesses equally, he said.

Noting complaints about legal certainty, he said the investment law states the government will uphold decisions made by international arbitration.

"This is something new..." he said.

"I will assure you that we will uphold the contracts and the sanctity of the contracts."

The country's decayed infrastructure has hindered competitiveness but spending on those projects is at a 10-year high and will rise further, Lutfi said.

Indonesia is also moving away from simply selling its many raw materials, he added.

"We would like to sell at least a half-finished good."

Lutfi said he knows the vast archipelago nation is not perfect.

"People have been saying that nothing is easy in the country but I can assure you of one thing: Nothing is impossible in Indonesia."

Source: Agence France-Presse

INDONESIA will 'uphold the sanctity' of all contracts signed between foreign and Indonesian entities under new investment laws introduced last month, a senior government official said yesterday.

Mr Muhammad Lutfi, who chairs the Investment Coordinating Board
- the equivalent of the Economic Development Board - told the World Economic Forum (WEF): 'We will treat foreign investors and domestic investors as equals.

'The moment you arrive at Jakarta International Airport, you will be equal to the people of Indonesia.

'There will also be no minimum sum requirement for investments.
Whether you have US$500 (S$769) or US$500 million, we welcome you.'

Mr Muhammad Lutfi's words came amid concerns that Indonesians were getting cagey about foreigners owning big slices of major firms.

Such investors include Singapore's investment company, Temasek Holdings, which has been accused of price-fixing and monopolistic behaviour in the country's mobile phone sector.

Temasek, which owns stakes in the two main operators, Telkomsel and Indosat, has denied the charges but a probe by Indonesia's Business Competition and Supervising Committee is ongoing.

Asked about his country's apparent nationalistic attitude, Mr Muhammad Lutfi told The Straits Times: 'It's not just Temasek, but also Indonesia's Indofood which has (faced anti-trust complaints). It has nothing to do with nationalism. If you're not controlling (the price), then I don't think there is an issue.

'At the end of the day, Indonesia has full confidence in the sanctity of the contract.'

His comment did not stem a raft of questions from delegates but he repeatedly assured them that Indonesia was intent on expanding its economy.

As he told The Straits Times: 'To be candid with you, the only problem is implementation at the grassroots level. But the commitment of the government is there...to ensure an efficient economy.'

He also told the WEF that he expects the government to soon release its 'negative list' of enterprises that foreigners will either be barred from or restricted to small slices.

The list already included armaments and munitions (no foreign investment allowed), transportation (up to 45 per cent), broadcasting (up to 20 per cent) and highly polluting industries like mining (unspecified restrictions).

Otherwise, he said, Indonesia was banking on a four-pronged 'pro-business' approach to lift 19 million people out of poverty by 2009.

These are to cut red tape, invest heavily in infrastructure, tackle labour issues and make the legal system friendlier to business.

Sweeteners like tax holidays and tax cuts would be available to foreign investors in certain industries, such as steel-making, he added.

The promise of new investment laws, which update restrictive regulations put in place in 1994, seems to have drawn investors back to a country beset by recent natural disasters and civil strife.

From January to May this year, Mr Muhammad Lutfi said foreign direct investments had shot up 497 per cent, while domestic direct investment had jumped 375 per cent from the same period last year.

Of that, he said he was most chuffed about the domestic sector:
'It means Indonesian investors are coming back after the 1997 crisis.'

The Straits Times (Singapore)
Tuesday, June 26, 2007

Indonesia to restrict foreign investment in 4 sectors under new law, says official

SINGAPORE, June 25 (AP) - Indonesia's new investment law will restrict foreign investment in transportation, mining, broadcasting and armament, but all other industries will remain open, a senior government official said Monday.

Foreign investors will be allowed to hold stakes of up to 45 percent in transportation companies and projects, and stakes of not more than 20 percent in the broadcasting sector, said Muhammad Lutfi, chairman of Indonesia's Investment Coordinating Board.

The armament industry will be closed to foreign investment, while investment in mining and other highly polluting industries will be "tightly regulated," he said, without providing details.

"For (other) industries, they will all be open," Lutfi told the World Economic Forum on East Asia, a gathering of political and business leaders to discuss the region's growth.

Indonesia has set a target of US$426 billion (EURO 316 billion) in foreign and domestic investment between 2004 and 2009, and a target of US$123 billion (EURO 91 billion) to build new infrastructure -- the bulk which will come from the private sector, he said. Lutfi did not say what percentages of the two targets have been met.

Investors have been increasingly reluctant to invest in Indonesia since former President Suharto's fall in 1998 and the loss of certainty in investment structures. Investors have been particularly reluctant to put money into oil and gas, mining and infrastructure projects.

The new law is a "progressive" policy that ensures equal treatment and gives legal guarantees for foreign and local investors, cuts bureaucratic red tape, eases immigration rules for foreign workers and provides tax holidays for select sectors, Lutfi said.

"Indonesia will be a government that is pro-business," he said.
"The government is committed to fight corruption, create good governance and deliver a strong economy."

Other details are expected to be unveiled soon, he said.

Officials have said the new investment policies will protect Indonesia's national interest and update current regulations, which have been in place since 1994 and are becoming inconsistent with the country's needs.

Lutfi said Indonesia, which is rich in natural resources, wants to develop its petrochemical, and steel and iron industries. It plans to build two new steel plants in southern Kalimantan and two new oil refineries, he said.

"We don't want to just sell raw materials. We want to sell at least half finished goods and go up the value chain," he said.

By EILEEN NG Associated Press Writer

The Ambassador of France in Indonesia, H.E. Mrs. Catherine Boivineau (foto) had an intern meeting with the new Minister of Justice and Human Rights, Mr Andi Mattalata on Thursday, 13th June 2007 in Jakarta. The meeting was held to discuss about the cooperation between French and Indonesian government in term of legal technical assistance and other opportunities in different sectors.

In the meeting, the Ambassador, accompanied by Mr. Hubert Ancelin  the Security Attache, while Mr Andi Mattalata (foto) was accompanied by Director General of General Administration Law, Mr Syamsuddin Manan Sinaga and Director General of Human Rights, Mr Harikristuti Harkrisnowo.

French Ambassador was discussing the cooperation in Law enforcement, particular in  sectors, such as: corruptions, terrorism, police, immigration, and judicial review. Furthermore, Madame Boivineau  asked for a law regarding cooperation in extradition for French citizen who committed  crimes in Indonesia in accordance to Indonesian Law.

To accelerate the above matter, the French embassy has prepared a draft concerning the Law Cooperation with Indonesian government in reference of mutual legal assistance, Extradition, and Transferring Sentenced Persons (TSP).

However, the French and Indonesian governments still have contradiction of points of view in references of sentences. According to the French government, the sentences could change if the transfer is done in French, whereas Indonesia point of view focuses on the fact that the sentences have to be in the accordance in the law of the origin country (locus delicti).

On this short opportunities, the Director of Human Rights Mr Harikristuti Harkrisnowo would invited French experts to Indonesia to share their comprehension regarding Human Right especially for Children and Women.

Meanwhile, Director General of General Administration Law, Mr Syamsuddin Manan Sinaga was focusing on the extradition issue in order to be negotiated to unite the perception of criminal law.

Rosiva Prima & Myriam Redouane