The government of Indonesia is to allow bigger foreign ownership in a number of sectors. These sectors involve the cinema/film industry, tourism, leisure, trade, as well as the sugar and rubber industries. The move to increase opportunities for foreign investors by revising the country's Negative Investment List (in Indonesian: Daftar Negatif Investasi) is part of the government's ninth economic stimulus package (to be released soon), is designed to attract more foreign direct investment (FDI) into Indonesia.
Movie Industry Indonesia
Foreigners will be allowed to own a 100 percent stake in Indonesia's cinema and film industry. This includes technical services, the movie production houses, the distribution of movies, exhibitions and the ownership of cinemas. However, Triawan Munaf (Head of the Creative Economy Agency) said the government will set a number of requirements that foreigners need to comply with before being allowed to own a 100 percent stake. For example, regarding the establishment of a new cinema, the foreigner will not be allowed to build the cinema in the proximity of an existing one as this could jeopardize the earnings of the existing (locally-owned) cinema.
The government will also offer fiscal incentives to foreigners who want to shoot a movie or television program in Indonesia. Munaf said these foreigners can count on a tax discount. The advantage for Indonesia would be that the country gets more attention abroad. For example, after the American romantic comedy-drama film 'Eat, Pray, Love' was released in 2010, starring the famous American actress Julia Roberts, there was a temporarily rise in interest in Bali (the movie's filming locations included Ubud and Padang-Padang Beach on the island of Bali).
Currently, foreigners are only allowed to own a 49 percent stake in the movie industry's technical services sector, while foreigners are banned from owning production houses in the archipelago. It remains unknown when these revisions are concluded formally.
Tourism Industry Indonesia
The government of Indonesia is also set to allow full foreign ownership in a number of sectors related to Indonesia's tourism industry and creative economy (except for those industries that are vital to Indonesia's small and mid-sized businesses).
Indonesia's Investment Coordinating Board (BKPM), the central government's investment services agency, said foreign investors will be allowed to own a 100 percent stake in bars, cafes, restaurants and sport centers (this involves swimming, soccer and tennis facilities). Foreigners may also be allowed to own a larger stake in big travel bureaus (not small ones). In combination with the government's recent decision to provide the visa-free visa facility to dozens of countries, a larger foreign stake in big travel bureaus could manage to attract more foreign visitor arrivals into Indonesia, thus generating more foreign exchange earnings.
Further Reading: Overview & Analysis of Indonesia's Tourism Industry
Chief Economics Minister Darmin Nasution added that greater foreign participation in Indonesia's tourism sector should not lead to reduced opportunities for local small- and medium sized businesses in this industry but, on the contrary, should have a positive effect on local businesses. However, there is some concern among local travel agent firms - most of which are small or mid-sized companies - about greater foreign participation in this sector as these local businesses are usually less competitive (having less financial resources and less creativity/quality to enlarge their businesses).
Previously we reported that the cold storage, e-commerce, as well as sugar and rubber businesses in Indonesia will be opened for the full 100 percent to foreign investment. The minimarket and department store sector will also be among the industries fully opened to foreign investment.
Your report on the liberalisation of ownership laws in the film industry pleased me and my colleagues at the British film company ‘In Time Pictures’ very much, as did your recognition that feature films contribute to the ‘profile’ of a country in a remarkable way. A research report by Hudson and Richie showed that locating a film in a particular site not only boosts tourism to that place but also enhances public awareness of its history and/or contemporary relevance. For example, the number of visitors to the monument to the Scottish hero William Wallace increased by 300% after the appearance of ‘Braveheart’. It is reasonable to suppose that their awareness of Scotland and its history was likewise enhanced.
Another interesting fact derived from this survey is that the attractive hotel featured in the romantic comedy ‘Four Weddings and a Funeral’ promptly became fully-booked for years to come. An interesting thought for hotel-owners in Indonesia who might consider lending their premises as a film-set! On a broader basis, major hotel chains might consider it worthwhile to take part in financing movies filmed in areas where their hotels are located. And might not the allocation of subsidies to film-productions giving a positive view of Indonesia be included in the ‘Wonderful Indonesia’ initiative.
I have to declare a personal interest in this since my company are planning a film in Java of which one of the heroes is Prince Diponegoro and the other Stamford Raffles! And that at least two of the locations designated as Tourist Centres in a recent government initiative figure in the narrative.
Susan Bennett, Scriptwriter: In Time Pictures Ltd
ps. for our observations on the liberalisation of the 'Negative Investments' list re the movies, please see our comments in Monday's 'Jakarta Posts'