Although the Head of the Capital Investment Coordinating Board, Gita Wirjawan, indicated recently that the telecommunication tower construction sector would soon be opened to foreign investment, the extent of public and private resistance to the idea gave cause for reconsideration: Hatta Rajasa, the Coordinating Minister for the Economy, recently announced that after much deliberation, the upcoming revision to the ‘Negative Investment List’ (regulating closed and conditionally-open investment sectors) will restrict investment in that sector to domestic capital participation (Bisnis Indonesia, 16 March 2010).
Tifatul Sembiring, the Minister of Communication and Information, stated in the same article that he strongly opposed opening the sector to international investment, arguing that domestic capital was not ready to compete with Foreign Direct Investment (FDI). Foreign interests control 92% of Indonesia’s capital expenditures on communications and information technology, said Mr. Sembiring, and nearly 98% of the telecommunication tower construction sector particularly. Any further move to open the sector would undermine domestic players completely, he suggested - a view apparently supported by the Indonesian Telecommunication Regulatory Body (Media Indonesia, 11 March 2010).
The motivation to open the sector to foreign capital likely stems from a supply-demand dilemma: in order to supply the domestic demand, telecommunications tower infrastructure costs would be between USD 7 to 8 billion annually. The towers are technologically sophisticated, and also expensive - perhaps too sophisticated and too expensive for domestic capital alone. Yet, in Mr. Sembiring’s view, the technology is not complicated, and domestic resources will be sufficient for the development.
Despite the fact that many consider the telecommunications tower construction sector to already be controlled by foreign capital to a significant extent already, the Minister’s statements suggest that the proposition to liberalize further has been denied. Only the final regulation will tell: according to Mr. Rajasa, there is only one more meeting left before the finalization of the Draft Negative Investment List, which will be forwarded to the President for approval and issuance. Many expect the new List to be issued before April 2010.
This ILB is based on research conducted by hukumonline team.
See also:
ILB No. 1339 4/3/2010 on ‘Telecommunication Tower Construction to be Open for Foreign Investment.’
ILD No. 147 12/3/2010 on ‘Outlook on the Upcoming Revision to the Indonesian Negative Investment List.’
Although the Head of the Capital Investment Coordinating Board, Gita Wirjawan, indicated recently that the telecommunication tower construction sector would soon be opened to foreign investment, the extent of public and private resistance to the idea gave cause for reconsideration: Hatta Rajasa, the Coordinating Minister for the Economy, recently announced that after much deliberation, the upcoming revision to the ‘Negative Investment List’ (regulating closed and conditionally-open investment sectors) will restrict investment in that sector to domestic capital participation (Bisnis Indonesia, 16 March 2010).
Tifatul Sembiring, the Minister of Communication and Information, stated in the same article that he strongly opposed opening the sector to international investment, arguing that domestic capital was not ready to compete with Foreign Direct Investment (FDI). Foreign interests control 92% of Indonesia’s capital expenditures on communications and information technology, said Mr. Sembiring, and nearly 98% of the telecommunication tower construction sector particularly. Any further move to open the sector would undermine domestic players completely, he suggested - a view apparently supported by the Indonesian Telecommunication Regulatory Body (Media Indonesia, 11 March 2010).
The motivation to open the sector to foreign capital likely stems from a supply-demand dilemma: in order to supply the domestic demand, telecommunications tower infrastructure costs would be between USD 7 to 8 billion annually. The towers are technologically sophisticated, and also expensive - perhaps too sophisticated and too expensive for domestic capital alone. Yet, in Mr. Sembiring’s view, the technology is not complicated, and domestic resources will be sufficient for the development.
Despite the fact that many consider the telecommunications tower construction sector to already be controlled by foreign capital to a significant extent already, the Minister’s statements suggest that the proposition to liberalize further has been denied. Only the final regulation will tell: according to Mr. Rajasa, there is only one more meeting left before the finalization of the Draft Negative Investment List, which will be forwarded to the President for approval and issuance. Many expect the new List to be issued before April 2010.
This ILB is based on research conducted by hukumonline team.
See also:
ILB No. 1339 4/3/2010 on ‘Telecommunication Tower Construction to be Open for Foreign Investment.’
ILD No. 147 12/3/2010 on ‘Outlook on the Upcoming Revision to the Indonesian Negative Investment List.’
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