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DJ Indonesia Opens Up More Sectors to Foreign Investment
December 24, 2013

By Farida Husna JAKARTA, Indonesia--Indonesia on Tuesday said it would open a number of sectors to foreign investment--including airports and power plants--as it looks to maintain record levels of foreign investment in Southeast Asia's largest economy. In a regular review of investment rules, the government said it would allow foreigners to take stakes of up to 49% in land transportation and airport terminals and up to 95% in electric power plants, seaports and toll roads. In the pharmaceutical sector, allowable stakes will increase to 85% from 75% currently. Indonesia's foreign direct investment hit a record of almost $23 billion in 2012 amid the allure of rising domestic consumption among the nation's more than 240 million people. Foreign investment has been even higher in 2013, but recently growth in quarterly investment has fallen as Indonesia's economy slows. The government says 2013 growth in gross domestic product will fall below 6% for the first time in three years as the country's commodity exports remain lackluster amid weak global demand. The government is trying to attract FDI to help finance a stubbornly large current-account deficit, which during the summer exposed the country to massive capital outflows amid expectations of a tapering of the Federal Reserve's quantitative easing. The revision of allowable foreign stakes is the first in three years. Hospitals, publishing, broadcasting and the education sector remain closed to foreign investment. Hatta Rajasa, coordinating minister for the economy, told reporters the official revision would be released "in the near future" in the form of a presidential decree. Sofjan Wanandi, chairman of the Indonesian Employers Association, said he was "quite satisfied" with the revision as it still allows majority stakes in many sectors to be held only by domestic investors. --Write to Farida Husna at farida.husna@wsj.com.