Thursday, April 1, 2010

Jakarta woos foreign property investors

Deregulation will soon allow direct purchase of homes, commercial property

Foreigners will soon be allowed to buy homes and commercial real estate directly in Indonesia, as plans are underway to deregulate the property sector by end-June this year, the country’s top investment chief said yesterday.

Speaking at an investment conference in Singapore, Gita Wirjawan, chairman of Indonesia’s Investment Coordinating Board, said that loosening restrictions on foreign home ownership would open up new sources of foreign capital inflows for South-east Asia’s largest economy.

At present, foreigners can only buy property in Indonesia via a nominee or through a local Indonesian company, which has deterred some buyers because it puts them at increased risk.

‘The move will unleash value,’ Mr Wirjawan told some 300 business leaders at the Hilton Hotel.

He was leading a trade and investment mission to brief the local business community on Indonesia’s new investment climate and business opportunities.

‘The government is committed to continuously comb through policies to make it easier to invest in Indonesia. I’m optimistic that once we can be seen to be taking steps in the right direction, we can reach a 15 per cent increase in foreign investment (over the US$14 billion in 2009).’

During a question- and-answer session, Mr Wirjawan said that condominiums in the capital Jakarta were undervalued against Singapore and Ho Chi Minh City.

He added that within the next 12 months or so, Indonesia – which has 235 million people – will reform land laws and inflexible labour market laws, which he said are two of the biggest stumbling blocks to raising foreign direct investment.

‘We have a permanent resident deficit,’ he said. ‘To many people, they only know Indonesia for its floods, earthquakes, tsunamis and corruption. Yes that’s a reality, but there are also many positives that we can offer.’

Singapore’s Trade and Industry Minister Lim Hng Kiang said that the Indonesian economy was one of the few in Asia to register healthy growth last year despite the global downturn. The economy expanded 4.5 per cent – the third-highest among G-20 countries after China and India. Indonesia’s central bank expects economic growth of 5.5-6 per cent this year.

‘The positive outlook of the Indonesian economy is a reflection of its resilience and the commitment of the government to continuously review and implement pro-business measures,’ Mr Lim said.

‘Under the leadership of President Susilo Bambang Yudhoyono, Indonesia has taken steps to reform its business and investment climate.’

He cited the One-Stop Shop System and the National Single Window for Investment, which have made it easier and faster for investors to obtain business licences.

Mr Lim highlighted two Singapore companies that have recognised the potential of the larger Indonesian market and invested in regions other than Jakarta and Batam-Bintan.

Keppel Land has developed a retail mall in Surabaya, while Killiney Kopitiam runs several outlets in Medan.

In 2009, Indonesia was Singapore’s fifth-largest trading partner, with total bilateral trade amounting to $58.5 billion. Singapore was also the top source of realised investments in Indonesia, accounting for almost US$4.4 billion last year.

Source: Business Times, 1 Apr 2010

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