Chief economist at Bank Central Asia (BCA) David Sumual told The Jakarta Post that Indonesia should attract more foreign investment into the country to help fix the current account deficit (CAD) problem, which has widened to $8.8 billion, 3.37 percent of GDP in the third quarter.
The government is set to revise Indonesia's negative investment list to allow full foreign ownership in 25 industries in a bid to attract more investment into the country.
Indonesia enacted a law on investment in 2007 to provide a single legislative framework for domestic and foreign investment. In accordance with this law, all business sectors are open to investment, including foreign investment, unless specified in a negative investment list, issued by the president. The list was last revised in 2016. Indonesia to revised negative investment list.
The Coordinating Ministry for Economic Affairs announced a new list on Monday as part of the government's 16th economic policy package, which also includes tax holidays for certain categories of businesses and tax cuts for companies that repatriate their export earnings.
Fifty-four industries will be removed, while full foreign ownership will be allowed in 25 in the newly revised list, expected to be approved by President Joko "Jokowi" Widodo in the coming weeks.
Coordinating Economic Minister Darmin Nasution said the government decided to remove several industries from the list because investment in those sectors had stagnated. Indonesia to revised negative investment list
He said a lack of awareness among the public and business players also contributed to limited investment in certain industries, such as power plants with capacities of more than 10 megawatts, and market research services.
Indonesia needs foreign direct investment to narrow its growing current-account deficit, which is now at its biggest since the second quarter of 2014.
Indonesia's current-account deficit widened to $8.8 billion, or 3.7 percent of gross domestic product, in the third quarter of this year, compared with $8 billion, or 3.02 percent of GDP, in the second quarter.
The 25 sectors in which full foreign will be allowed include tourism (art galleries), trade (survey and market research services), transportation, communications and telecommunications.
(source: The Jakarta Post)