ASEAN KEY DESTINATIONS
Industry welcomes new foreign investment ruling
Following the government’s announcement of a new investment list that includes the opening up of the cold-storage industry to foreign investors, sector players have welcomed the policy, predicting that the ruling will help woo related investors to develop the cold-storage business.
The Indonesia Cold Storage Association (ARPI) said as most cold-storage components were imported, the government should follow up on the regulation up by obliging investors to open component manufacturing plants in the country.
“I agree with the policy, but suggest the government require investors to use more local components and workers,” Indonesia Cold Storage Association (ARPI) chairman Hasanuddin Yasni said over the weekend.
According to ARPI data, cold-storage capacity in Indonesia currently stands at 7.2 tons of fisheries products, 1.9 million tons of chickens and 400,000 tons of beef, far below the country’s production, which reaches 14 million tons in fisheries, 3.7 million tons of chickens and 580,000 tons of beef.
“Currently, there are only five manufacturers operating, with low-capacity machines. The government needs to grant tax incentives to attract others,” Hasanuddin said.
Maritime Affairs and Fisheries Minister Susi Pudjiastuti was reported by local media as saying that 12 investors from several countries in Europe, including Denmark and Norway, had expressed interest in entering the cold-storage business.
The presence of private investors, especially foreigners, is considered crucial, since the government last year allocated only Rp 235 billion to build 58 cold storage facilities and 38 ice factories countrywide last year.
Hasanuddin added that cold storage required investment of between US$500 and $600 per million cubic meters, with a minimum average retail storage capacity of 1.1 billion cubic meters CBM and wholesale storage of 3 billion cubic meters.
“Foreign investors need to build their own electricity sources using alternative energy to support the cold storage industry,” he said, adding that the government also needed to direct investors to develop plants in remote areas where cold storage facilities remained rare.
Remote areas of the archipelago nation face numerous difficulties, ranging from lack of electricity and fuel supply to poor transportation infrastructure and connectivity. Under the administration of President Joko “Jokowi” Widodo, remote areas, especially in the eastern part of Indonesia, are seeing a renewed chance for coastal and maritime development thanks to the reinstatement of the “maritime axis” doctrine. The development of mega infrastructure, such as seaports, power plants and maritime highways, is the government’s priority program to address problems in the long-neglected and underdeveloped regions.
Voicing similar support for the new policy, the Indonesian Employers Association (Apindo) noted that the government needed to ensure sufficient supply of fish for exports to benefit from the newly expanded cold storage facilities.
Apindo head of fisheries Thomas Darmawan said the latest ban by the Maritime Affairs and Fisheries Ministry on the operation of large vessels to catch fish in Indonesian waters could threaten the supply of fish for export.
Thomas estimated that fish exports fell to $4 million in 2015 from $4.64 million in 2014.
In a tenth economic stimulus package announced on Feb. 11, the government revised the country’s negative investment list (DNI), covering sectors in which restrictions on foreign investment apply.
Under the revision, cold storage is among the 35 business sectors opened up completely for foreign investors. In the previous DNI regulation, foreign ownership of cold storages was limited to 33 percent in Sumatra, Java and Bali and 67 percent outside those regions.
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