JAKARTA: Indonesian President Joko Widodo will allow greater foreign ownership in industries 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 would let non-Indonesians hold 100% stakes in businesses and enterprises 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 business services, conferences and airport support would be raised to 67%, he said.
“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.
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.
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.
The government was also closing 19 industries to foreign stakes, including coral reef harvesting for construction materials and plantations of less than 25 hectares, Nasution said.
Foreign-direct investment increased 3% in 2015 to US$29.3bil. That boosted the total that includes domestic funding to 545.4 trillion rupiah, which exceeded the official target.
The government was optimistic it could achieve its 594.8 trillion rupiah goal this year as it sought to cut red tape, Investment Coordinating Board chairman Franky Sibarani said last month.
The nation’s economic growth beat all analysts’ estimates in the fourth quarter, expanding 5.04% from a year earlier, supported by government spending that rose 7.3%.
Household consumption, which makes up more than half of the economy, grew 4.9%, while exports have fallen for 15 months through December.
Indonesia President Joko Widodo is confident he can reach his economic growth target of 7% by 2019 through increased infrastructure spending and lower borrowing costs.
The country was relying on investors and state-owned companies to fund 70% of its infrastructure needs, and wanted a third of that from the China-led Asian Infrastructure Investment Bank, the president, known as Jokowi, said in the interview.
The government is aiming for 5.3% economic growth this year, well short of the goal set by Jokowi upon taking office in 2014. — Bloomberg