Foreign Investor Proposal Angers Indonesian Telecom Players


Janeman Latul

A telecommunication tower in Jakarta. (JG Photo/Yudhi Sukma Wijaya)

A telecommunication tower in Jakarta. (JG Photo/Yudhi Sukma Wijaya)

Foreign Investor Proposal Angers Indonesian Telecom Players

Several telecommunication stakeholders on Sunday rejected the government’s plan to ease the negative investment list next month, particularly on ownership of telecom towers.

Southeast Asia’s largest telecom, Singapore Telecommunications, may be one of the foreign investors to take advantage of the change, possibly as a strategic partner in tower operator PT Dayamitra Telekomunikasi (Mitratel), a unit of PT Telekomunikasi Indonesia.

Maswidyantoro, a spokesman for the Indonesian Telecommunication Society (Mastel), a non-governmental organization focused on the telecom sector whose membership includes Telkom, urged the government to cancel the plan.

“It shows that the government is not consistent in making policy,” he said. “It will kill the local business community at a time when the country’s financial institutions have started to become confident [to lend to it], but compared to foreign players, especially Singapore, we can’t win.”

The list, also known as the DNI, limits foreign ownership of companies in sensitive sectors

Gatot S Dewabroto, spokesman for the Ministry of Communication and Information Technology, said it is unwise to open the sector for overseas investors.

“It’s not right if foreign investors control both upstream and downstream sectors of the industry,” Gatot said. “We need to give local business a chance to benefit from the sector and not give it to international players.

“One of the most crucial issues … is the social issue, like what happened in Bali,” he added.

From 2008 to 2009, there was a dispute between the island’s Badung district with telecommunication operators and tower providers over building permits that caused some of the towers to be brought down by locals, costing operators billions of rupiah.

“This is what happened when we still prohibited it. What happens if we open it?” Gatot said.

Azhar Lubis, deputy chairman for investment climate development of the Investment Coordinating Board (BKPM), acknowledged that the telecommunications sector is a more sensitive industry to liberalize than logistics, hospitals and creative industries.

“We need to talk extensively about it, what policy it would lead us to and discuss details of its requirements,” Azhar said.

Under a 2007 presidential decree, the telecommunication network can have up to 49 percent foreign ownership. However, the decree does not specifically refer to towers, resulting in multiple interpretations.

A Communication Ministry decree in 2008 prohibited foreign ownership. It was backed by two the home affairs and the public works ministries as well as the BKPM.

Gatot said his ministry would follow any direction on the matter from the Coordinating Ministry for the Economy. “But for now our stance is still clear, that we cannot accept this,” he added.

Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), also rejected the liberalization plan.

“Why should we give it all to the foreigners?” Sofyan said. “Are we going to be a nation of helpers? Constructing towers and operating them are not difficult for us, financially or technically.”

Meanwhile, Airlangga Hartarto, chairman of the House of Representatives Commission VI, which oversees the investment sector, said the government should focus on local content rather than ownership.

“I’m not opposed to the plan. I think the telecommunication sector is in huge need of capital, and local companies may not be able to fulfill it,” he said, but “local employees and local products should be the first option.”