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Indonesia a wrong choice?

MALAYSIA’S two largest telecommunication companies (telcos) and their foreign counterparts may see their stakes in Indonesian telcos reduced following a review of foreign ownership rules in the domestic sector.

Indonesian President Susilo Bambang Yudhoyono said Indonesia is reviewing some rules in various sectors including telecommunications as part of the implementation of a new investment law.

Susilo, however, said there would be no sudden or major changes in the telecomunication policy.

“We will not make dramatic, abrupt changes without explaining to our partners,” he said.

Susilo was responding to a query by Maxis Communications Bhd chairman Tan Sri Megat Zaharuddin Megat Mohd Nor about rumours that the current size of stakes foreign investors can hold in Indonesian telcos would be reduced, at a Malaysia-Indonesia business roundtable in Kuala Lumpur yesterday.

Indonesia currently allows foreigners to own up to 95 per cent of a local telco.

This is a much more generous limit than many other Asian nations.

Maxis owns 95 per cent of Indonesia’s PT Natrindo Telepon Seluler, while Telekom Malaysia Bhd has a 60 per cent stake in PT Excelcomindo Pratama.

Later, Indonesian Trade Minister Mari Pangestu said Indonesia is working on a new investment law that would, among other things, spell out foreign shareholding limits and other conditions in various industry sectors.

“The new list is more transparent and clearer to investors in general. With the new investment law, we are coming out with a new list.

Telecommunications will be under the new list. We are still finalising the list,” she added.

Meanwhile, Susilo said Indonesia’s economy may expand 6.3 per cent this year as the Government continues to promote overseas investment and growth of its energy sector.

Malaysia was Indonesia’s biggest foreign investor last year with US$2.2 billion (RM7.44 billion) worth of investments.

Susilo also said Indonesia would sort out various issues highlighted by the Malaysia-Indonesia Business Council (MIBC).

MIBC co-chairman Tan Sri Ahmad Sarji Abdul Hamid had sought Susilo’s help to resolve issues such as the status of the right of land usage by Malaysian companies and a Northport (M) Bhd plan to develop a port in Indonesia, and the availability of more bridging loans for infrastructure projects such as building power plants.-Business Times

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Last month, Maxis raised its stake in PT Natrindo Telepon Seluler from 51% to 95% interest.

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy