JAKARTA: Indonesian President Joko Widodo will allow full foreign ownership in businesses from toll roads to cinemas, as he seeks to attract investment and create jobs after cutbacks by Ford Motor Co and Toshiba Corp.
"The government will also let non- Indonesians hold 100% stakes in industries including cold storage, pharmaceutical raw material manufacturing, and restaurants,'' Coordinating Minister for Economic Affairs Darmin Nasution said in Jakarta yesterday.
"The maximum foreign-investment limit in golf courses, health support services and airport support will be raised to 67%, he added.
"This is the first round, there will be a second and a third," Widodo said in a Bloomberg TV interview yesterday, adding that the rules would be changed in 49 sectors including in the retail industry, fisheries and the digital economy.
"We will see the results of each step," he said, after inspecting a fish farm in Sumatra.
Indonesia wants to lure more foreign capital to offset weaker export performance and provide more jobs to drive annual economic growth from a six-year low.
Growth in Southeast Asia's largest economy is expected to have slowed to below 5% in 2015, as faltering commodity prices have had a ripple effect across many areas including government revenue, private consumption, incomes and investment.
While total investment from overseas rose in 2015, capital placement in labour-intensive industries slid 12% amid increases in the minimum wage.
Ford shuttered local operations in late January, while Toshiba, Panasonic Corp and Chevron Corp have announced job cuts.
"With this revised investment guidance list, our aim is to open a wider labour market while strengthening our pool of capital," Cabinet Secretary Pramono Anung said from the presidential palace in Jakarta.
"We need to anticipate the inevitable time when we join the Asean economic community, so we must improve our competitiveness.
"The government will head toward simplifying overseas investment limits to three levels: 49%, 67% and 100%,'' Anung said.
That means foreigners may own 67% of private museums and catering services, from 51% previously, or hold entire stakes in toll road operations, from 95% previously.
"The regulation is set to be signed in the next one or two weeks,'' Nasution said.
"The government is also closing 19 industries to foreign stakes, including coral reef harvesting for construction materials and plantations of less than 25 hectares,'' he added.
"While it's allowing foreigners to wholly own cinemas, the companies will be required to show local movies for 60% of their total show hours,'' said Investment Coordinating Board chairman Franky Sibarani.
Foreign direct investment increased 3% in 2015 to $29.3 billion, compared to $28.5 billion in 2014. That boosted the total that includes domestic funding to 545.4 trillion rupiah, which exceeded the official target.
"The government is optimistic it can achieve its 594.8 trillion rupiah goal this year as it seeks to cut red tape,'' Sibarani said.
"Indonesia has hardly flung the doors wide open to foreign direct investment," Glenn Maguire, chief economist for Asia- Pacific at Australia & New Zealand Banking Group Ltd said in a report. "They have clearly opened, but one or two gatekeepers have been added."