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Investment
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2000-08-04 00:12:00-04
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Ban on Foreign IT Investment in Indonesia
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Indonesian ban on foreign IT investment highlights difficulties Asian countries are having with Internet explosion
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A presidential decree in Indonesia is the latest speed bump in the path of Asian nations to join the Internet explosion or the alternative: to control it within their borders. On July 20, a presidential decree imposed investment restrictions in the telecommunications and air transport businesses. Foreign ownership may not exceed 49%. Restrictions were also instituted in the infrastructure sector. Foreign investment may not exceed 95% in the areas of seaport construction and operation, electric power generation, transmission and distribution, shipping, drinking water supply, railway operation, atomic energy and medical care. Also banned was foreign investment in forestry concessions. The Indonesian decree underlines the precarious position of the developing economies of Southeast Asia. On the one hand, they need international investment and technical expertise to move forward. However, whenever they receive some of it there is a predictable nationalistic backlash. This backlash is particularly acute as most of the developing nations are recipients of International Monetary Fund and World Bank loans and have been forced as a condition of these loans to institute fiscal and monetary reform. These reforms have raised the hairs of the old-line controlling elite in these countries, prompting the backlash. Indonesia, Thailand, South Korea, the Philippines are just a few of the names of countries that are on the list. At international meetings many of these countries pledge transparency and once they return home, a different tune is played. Indonesia, especially, has shown a reluctance to implement reforms promoted by the IMF and World Bank in a fast and effective manner. Budion Dharsono, an executive of PT Agranet Multicitra Sibercom (Agrakom) said the decree would hamper an already laggard IT business in Indonesia. He was quoted as saying that foreign investors had made Indonesia among the five biggest investments targets for Internet development. The investment restrictions may bring boycott retaliation from foreign investors, Dharsono said.
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