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28 February 2010

Indonesia to open up healthcare, education to foreign funds

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Indonesia is inviting more foreign investment into healthcare and education to improve services and the quality of Indonesian human resources, the Jakarta Post quoted the Investment Coordinating Board chairman Gita Wirjawan as saying.

Speaking to US businesspeople Gita explained the negative investment list limited foreign ownership of hospitals in Jakarta, Surabaya in East Java and Medan in N. Sumatra.

"We will remove this limitation. Investors can invest in any place they consider feasible," Gita said in Washington, on Wednesday, adding the list would be revised in 2 months.

But foreign ownership of hospitals, would be capped at 67 percent.

Gita told The Jakarta Post that opening up the healthcare sector to foreign investment would benefit customers via competition, with better services and prices.

With more foreign hospitals here less people would go abroad for treatment.

"The value of foreign exchange that could be saved may be small ... but we value more the benefits for our people, i.e. better services and alternatives," Gita said.

He said government would ask top foreign universities to enter Indonesia via local university links.

He would target foreign universities as Indonesia was still lagging in the region in tertiary education.

"We are already good in basic education, i.e. from elementary schools to high schools. But we are still lacking in tertiary education and also vocational schools," he said.

But foreign universities cannot establish branches in Indonesia because the law does not allow it and they cannot repatriate profits.

Gita suggested that they should establish local legal entities to provide teachers, advisory services and research facilities to local universities in Indonesia to make money and recoup their investment. Gita said Indonesia would also open logistics and courier services to foreign participation, as a key area of soft infrastructure to facilitate advanced economic development.

But foreign investors are not allowed majority ownership in this sector, except TNT has a special concession to hold 51 percent.

Gita said government would push ahead with its plans to open up the telecommunications towers sector to help keep up with demand.

The telecommunications industry needs $7 billion to $8 billion per year in infrastructure investment. Considering the huge amount of investment needed, local businesspeople could not meet the demand.

"I have my own experience in this sector. When I was with Excelcomindo, we faced difficulty finding local partners to manage and build towers at the pace we wanted.

Unless we open up this sector to foreign investment, I'm afraid our telecommunications industry would not be able to grow," he said. He said telecommunications towers were off the negative list, but foreign participation had been excluded by a ministerial decree.

"What we need is to revoke this decree, and automatically, it would open up this sector," he said.

With more sectors opened up, Gita said, Indonesia should be able to attract more foreign investment, much more than the current target of $10 to $22 billion per year.

"We are thinking of a much bigger volume of investment, at the level of around $25 to $35 billion *per year* given the size of our economy. We are a $550 billion economy," Gita told the assembled businesspeople.

To achieve his ambitious targets, Gita said that he had started his "one stop shop" licensing system for investment that should expedite licensing in as fast as five hours and in seven days at the slowest.

Gita said, a total of 15 ministers had agreed to delegate their licensing powers to help BKPM to introduce the one stop shop service and make it workable.

"It's a huge task. Policy making is easier to fix, but policy implementation is a lot more difficult," he said.


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