Telecommunication towers closed to foreign investors

Aditya Suharmoko, The Jakarta Post, Jakarta, Thu, 03/18/2010 9:28 AM

The government will keep the telecommunications towers business closed to foreign investors in the upcoming revision to the “negative investment list”, Coordinating Economic Minister Hatta Rajasa said.

Hatta said the new negative investment list would adopt a joint agreement signed in 2009 by the Home Ministry, the Communications and Information Technology Ministry.

The agreement stipulates that all investments in towers or base transfer stations (BTS) for cellular telecommunications systems are strictly closed to foreigners in a bid to support local players.

The adoption of the agreement will end a prolonged debate on the need to open up this type of business, assuming that local players could not meet the demand for rapid cellular telecoms penetration in the country.

Investment Coordinating Board head Gita Wirjawan said opening up the tower business would result in more capital flowing into the telecommunications sector, which would benefit the people.

Communications and Information Technology Minister Tifatul Sembiring, however, argued local businesses should have a share in the telecommunications sector, which is already heavy with foreign players.

“I just want our share in the information and communication technologies [ICT] business of Rp 300 trillion [US$33 billion],” he said.

He added that BTS construction does not require a large amount of finance, which make him prefer to protect the BTS business, retaining it for local businesses. Tifatul said the BTS business was only 8 percent of the whole ICT business.

Hatta said although BTS business would be designated for local businesses only, they could look for funds anywhere including from foreign fund managers.

“You have to differentiate between ownership and the ability to look for funds. Funds can be generated from domestic [sources] or from fund managers or anywhere,” he said.

“Those that provide funds do not have to be investors. Don’t let our capacity for [BTS] construction be obstructed because we maintain 100 percent national ownership. BTS is an important infrastructure for Indonesia’s development,” he added.

Hatta said the revision of the 2007 presidential regulation on the negative investment list would be finished after one more meeting between affected officials. The negative investment list regulates the percentage of foreign ownership in certain business sectors, including telecommunications, health, education and agriculture.

Hatta dismissed claims that foreign investors may be limited in purchasing shares offered through rights issues, as part of the revision of the list.

He said purchasing shares via the stock market was different from ownership in certain businesses.

The revision of the negative investment list is aimed to ensure a more competitive investment climate, seeing the need to attract more investment into Indonesia’s consumer-driven economy.

Indonesia needs total investment of nearly Rp 2,000 trillion in the 2010-2014 period to accelerate infrastructure projects, the National Development Planning Agency says.