The new Investment Law

• Indonesia has new rules aiming to make it easier for foreigners to do business, and leaders at home and abroad are anxious to know if the investment policies will generate economic growth.

• The Legislative Assembly approved the investment law package this year, the first reform of investment policy since the previous law was passed in 1967.

• The new law offers tax relief to foreign investors, particularly for ventures that create jobs in rural areas. Lease terms for land acquisitions will be granted for 60 years, with options for extensions of 35 years. And the process for starting a business has also been streamlined, with pledges to do paperwork in one month instead of five.

• Business leaders want to see 6.3 percent overall economic growth by the end of 2007. To make this possible, foreign direct investment must grow by 12.3 percent this year, up from 2.9 percent in 2006.

• The government have published new guidelines for the level of participation of foreign investors in local industries, blocking foreign involvement only in the defence industry.

• Overseas investors may hold up to 99 percent control of domestic banks. Power generation, oil and gas, water and agriculture are allowed a maximum of 95 percent of foreign controlling interest. Foreigners may possess up to 65 percent of control of mobile phone operators, and the construction sector is limited to 55 percent of foreign control, according to the new legislation.

• In total, 338 sectors are subject to limits. The newly established caps aren’t thought to be a deterrent to investors providing that majority foreign ownership is allowed.