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RI to exclude portfolio investment from DNI




Aditya Suharmoko , The Jakarta Post , Jakarta | Tue, 07/14/2009 10:27 AM | Headlines

The government plans to include an article excluding portfolio investment from its so-called negative list of investments (DNI) in a bid to provide certainties for investors entering the Indonesian market, a ministry official says.

Under the revision of the 2007 presidential regulation on DNI, there is a proposal to differentiate investment done through portfolio schemes and direct ways - termed foreign direct investment (FDI), Edy Putra Irawadi, deputy to the coordinating minister for the economy, in charge of industry and trade, said Monday.

It is aimed to reaffirm Law No. 25/2007 on investment, which states portfolio investment is not categorized as investment and represents transactions or holdings of securities such as shares, bonds, or other financial assets.

"It *the implementation of DNI* hasn't been effective all these times. There is no certainty *in relation to the DNI* for people who want to buy shares through the stock market for instance."

"Under the revision, we propose to differentiate foreign direct investment *FDI* and portfolio investment to provide business certainties," he said.







Excluding it from the list will mean no limitations for overseas investors on the purchase of such investments.

Edy said the proposal was being discussed at the ministerial level, involving the Law and Human Rights Ministry, the office of Secretary of State and the office of Secretary of Cabinet.

No decisions have been made so far, he said.

Edy added regulations in the stock market were already strict, meaning that investment done through portfolio would be overseen by stock market regulators.

"Therefore, DNI is proposed to be separate from portfolio investment," he said.

The Law and Humans Rights Ministry will study whether the revision of DNI is "appropriate" and will not disturb other existing regulations to ensure business certainties, he added.

"Many businesses are confused with different implementations *of existing regulations* in the field," Edy said.

To help attract more overseas investment, the government has recently issued the regulation on one-stop single service (PTSP) to speed up the usually lengthy and costly bureaucratic process, thus eliminating one of the major obstructions for investment.

Next year, Edy said, Indonesia would compete with many countries worldwide to attract investment as the global economy began to recover.

Purbaya Yudhi Sadewa, chief researcher of Danareksa Research Institute, said the government seemed confused in its separation of FDI and portfolio investment.

He said in the US, portfolio investments of more than 10 percent of a company shares would be categorized as FDI.

"Portfolio investment here should be treated that way, *if more than 10 percent* it should be categorized as FDI and became part of DNI."

Purbaya added the government should solely exclude DNI from the business sector rather than differentiating FDI and portfolio investment.





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