JAKARTA: Indonesia has announced it will allow increased levels of foreign investment in the country's power plants, advertising, and pharmaceutical industries as part of government efforts to boost the slowing economy.

Policy makers are scrambling to tempt back jaded investors who have fled South-East Asia's largest economy due to the country's sizable current account deficit, which has helped make the rupiah skid more than 20% against the dollar this year.

Indonesia fears further foreign outflows due to political uncertainty ahead of next year's elections and the reduction of US monetary stimulus, which long fuelled demand for risky assets in emerging markets.

"The commitment is to maintain Indonesia's economic growth and anticipating a slowdown in the global economy by encouraging investment, particularly in domestic and foreign investment," chief economic minister Hatta Rajasa told reporters.

After months of delays, ministers amended Indonesia's "negative investment list" of sectors in which foreign investors are either barred or restricted.

The list, which has existed for decades, limits foreign involvement in areas deemed sensitive.

No date was given on when the changes will become effective since President Susilo Bambang Yudhoyono must still formally sign the decree.

"This (list) will boost the investment climate during a political year, providing more legal certainty from a better negative investment list," said Sofjan Wanandi, head of the Employers' Association of Indonesia (APINDO).

Under the new policy, the government increased the maximum foreign investment in pharmaceutical companies to 85% from 75%, and in advertising agencies to 51% from 49%.

That means more competition could be in store for Indonesian pharmaceutical firms Kimia Farma, Indofarma and Kalbe Farma, as well as for advertising agency Fortune Indonesia.

Indonesia also allowed foreign investment of up to 100 % from 95 % for power plant projects carried out as a public-private partnership.

By Reuters

The post Indonesia eases foreign investment rules appeared first on Asean Investment | Marc Djandji Blog.