Although without unanimous, the Investment Law Draft (ILD) have already been agreed by the House of Representatives to be legalized as a Law. The Partai Demokrasi Indonesia Perjuangan (PDI) Faction and Partai Kebangkitan Bangsa (PKB) Faction were those who are opposed the said draft evaluate the investment policies stated in the Investment Law (IL) is just a step to legalize a liberal economy models and it is very pro-foreign. The equal treatment model between the foreign investors and the domestics judged by both factions as a reflection that the IL inclined take a side with the foreign investors and as a shape of national economy liberalization.nn
Both parties considered that the IL could cause a new form of colonization in economic matters. Various sections even also opposed. For example, land titles problem which arranged in the IL. Right to Cultivate can be given for one century (95 years); Right to Build for 80 years and Right to Use for 70 years.nn
Not to mention about the repatriate assets problem, advantages; earnings; dividends and others which were afraid to cause a capital flight. And so the possibility of ‘nationalization’ matter of an alien corporation which are not allowed.nn
Not less important is the labor problem which was estimated would be extorted along with a cheap payment and could cause a hijacking of natural resources. These various important issues are the reasons of the rejection of the IL by the both factions. Despite the fact that the IL has not in effect, the judicial reviews of the IL have blocked the effectiveness of the IL itself.nn
But in the context of rule of law country based, before an abolition were decided by the Constitution Court, the IL remain valid and as soon as possible the IL has to be ratified by the government.nn
By the approval of the IL by the House of Representatives, the IL will replace the Foreign Investments Law No. 1 Year 1967 and the Domestic Investments Law No. 1 year 1968.nn
This new law evidently is hardly expected could give some changes the investment climate in Indonesia. Unlike at the present time, fascination from company/foreigners to invest in Indonesia is a long way from hope.nn
There are numerous obstacles in growing the investment climate in this country. One of them is the lack of legal certainty aspect. We often hear about the various regulations in investments are not profitable for the investors.nn
Even sometimes published regulations are not consistently implemented. Repeated of changes of regulations are not new things in this country. For example is the Batam Island development matter. Some say the island were hoped to be the ' investment heaven'. Hence, various facilities and infrastructure were built for supporting the project.nn
Various profitable policies were regulated to attract the foreign investors. The exemption of income tax (PPN) and tax incentives were strongly given.nn
Batam have the time to shine. Lots of foreign investors came in. America; Japan, Korea and not to mention Singapore invested their capital. However now, Batam returned to be gloomy. The problem is no other than the income tax problem and other policies which not support the foreign investment. The result is that the investors left Batam.nn
Inexistence of legal certainty causes the investors unable to predict profits. Even about the plan; calculation and strategy which will be taken are very difficult to predict. Not to mention the illegal charge ‘disease’ that difficult to fight against with, bringing the consequences of the high cost economic in investment in Indonesia.nn
Proverb 'changes of the government means changes of the policies and regulations', become trauma for the foreign investors. The question would be, will the new IL will attract the investors? And whether the habit for altering regulations and policies will desist? In other words, is the IL can be exercised consistently? Or the IL will only become the ' tiger ' on the paper only.nn
There are many of laws in this country that ' wilt before growing'. For example is the Law on Traffic; Regional Regulation on Smoking Prohibition; and Law on Taxation which are existed.nn
That is the reason, though various facilities and amenities have already been given in the IL, if we do not change our demeanor and embrace the ‘mental corrupt', ' cultural of bureaucracy' and 'policy changes without basis', a very good regulation would not be useable.nn
We might have to learn from Singapore. This country applied their laws and policies consistently. Lots of investors came to Singapore, because they have no doubt about the legal certainty in Singapore. The investors are certain that the investments regulations in the Merlion State would be applied in a good way.nn
Various incentives and facilities such as, free trade area, incentive of exemption tax of 90 % profits from export activity for 10 years and extendable if the Ministry of Commerce affirmed the extension were really excised.nn
Also for the export company above 10 million US$ could raise an international trade incentive of an exemption of tax from 50 % exported profits. All of us are certain that Singapore would not change their various the regulations in a jiffy. Will the investors take a glance at Indonesia?nnnIman Sjahputra and Partners is an
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