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Risk in Indonesia

The proposal for investment must demonstrate that the investment will lead to increased employment for Indonesian citizens.

2. The proposal for investment must demonstrate that a transfer of technology will occur.

3. The proposal for investment must demonstrate that products and services required for the functioning of the proposed venture will be acquired from Indonesian sources to the extent that such products and services are available in Indonesia.

Profit repatriation is permitted on foreign investments in Indonesia. With the 51 percent indigenous equity requirement, however, a maximum of 49 percent only of profits is permitted to be repatriated. Profits are permitted to be repatriated at the prevailing international currency exchange rate which is applicable. With respect to the United States dollar, Indonesia's currency is permitted to float--within limits.

An important aspect of financial regulation in Indonesia involves the permission of monopolistic enterprise. Monopolies are permitted (created) by government regulation in Indonesia in a wide variety of industries and economic activities. In the mid-1980s, there were well over 200 such government protected monopolies. Under pressure from The World Bank, the government agreed to end 165 of these monopolies. The 165 monopolies being terminated, however, account for less than two-percent of the countries total imports, while those permitted to remain account for 63.3 percent. The most significant of the monopolies remaining are in banking and finance, steel, plastics, oil trading, insurance, foodstuffs, tourism, and telecommunications.

The monopoly creating regulations in Indonesia are called network of trade regulation. Critics of the monopoly regulation contend that it is stifling economic growth, causing increases in inflation and unemployment, and jeopardizing the country's massive foreign debt position. The networ...

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Risk in Indonesia. (1969, December 31). In Retrieved 02:57, September 21, 2017, from
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