Government FDI plans upset local telcos

22 Feb 2010

A report in Indonesia’s The Jakarta Globe says that several domestic telecoms operators yesterday reacted angrily to the government’s proposal to relax foreign direct investment (FDI) ownership rules on the so-called ‘negative investment list’, also known as the DNI, which limits foreign ownership of companies in sensitive sectors – including the owning of telecom towers. Although details are sketchy, it is believed Singapore Telecommunications (SingTel), could be one of those firms looking to take advantage of the change, possibly as a strategic partner in tower operator PT Dayamitra Telekomunikasi (Mitratel), a unit of PT Telekomunikasi Indonesia (Tekom). However, Mr Maswidyantoro, a spokesman for the Indonesian Telecommunication Society (Mastel), a non-governmental organisation focused on Indonesia’s telecoms industry has urged the government to abandon the plan. He is quoted as saying: ‘It shows that the government is not consistent in making policy … It will kill the local business community at a time when the country’s financial institutions have started to become confident [in terms of lending], but compared to foreign players, especially Singapore, we can’t win.’

The Mastel official’s opinion is being echoed by Gatot S Dewabroto, a spokesman for the Ministry of Communication and Information Technology, who believes it unwise to open up the sector for overseas investors. ‘It’s not right if foreign investors control both upstream and downstream sectors of the industry,’ Gatot is quoted as saying. ‘We need to give local business a chance to benefit from the sector and not give it to international players.’ Under a 2007 presidential decree, foreign ownership in Indonesian telecommunication networks is capped at 49%. However, the decree did not specifically mention ownership towers, resulting in confusion and multiple interpretations.