Investment policies

In particular due to the sharp decline of the petroleum prices in the first half of the 80s the government clearly improved its investment climate by ambitious political-economic reforms (deregulation, increasing of competition and promotion of private incentives). This shows the realization that for a continuous development of the country foreign investments are indispensable, whereby Indonesia is quite aware of a competitive position with other developing countries, in particular China and the other countries in Indochina clearly looking at this background special interest in such investments exists, for which capital, technology and management abilities are not available locally, or which lead to export promotion and to a transfer of technology to Indonesia.

In the meantime other sectors like toll roads, power stations, water supply, container ports, airports and housing were opened for private investments.

Deregulation

The policy of deregulation covers the sectors finances, trade, taxes and investments.

Their goal is it to lead to an export-oriented trade and industrial policy which energizes local and foreign investment activity and the private sector as well as is to reduce the dependence on foreign aid and on the incomes from oil production. Gradually an adjustment is to be achieved to the competition-political rules of the international economy.

The new rules in the investment law from April 16^th 1992 led to an easement of foreign financial participation with establishments of enterprises in Indonesia.

The new rules of the deregulation package passed June 10^th 1993 introduced different export promotion measures.

They eased the import of motor vehicles and car parts, lowered numerous import duty tariffs as well as non-tariff- barriers to trade and opened some of the investment areas closed for foreigners.

Company foundation regulations

Apart from few exceptions foreign (natural or legal) persons can realize their investment project in form of a joint venture as “PM”. Intended legal form of the “PM” is the limited company and / or “PT”, by the new Indonesian firm law is regulated of 1995. Afterwards at least two shareholders with a minimum investment of 20 millions IDR (Indonesian Ruphia) must (1 Euro are approximately 11,000 IDR) to have responsibility. Beyond that is 5% minimum participation of the Indonesian partner to be ensured. A Foreign Investment Corporation possible additionally with 100% foreign participation.

Despite a double taxation agreement between Germany and Indonesia exists, effective 22. November 1991.

The last agreement with German goverment has been signed during chancellor Schroeder’s Asien travel in May 2003.
 

Wages and salaries – general information

The wage and content structure exhibits large differences depending upon location and industry.

Compared with countries Indonesia paid the other ASEAN still recently the lowest wages in the processing industry.

The legal minimum wage was raised on the average to April 1 ^th 1997 over all 27 provinces around 10.07%. The annual increases of the minimum wages amounted in the year 1993 to 17.76%, 1994 to 30%. 1995 to 18.6% and 1996 to 10.63%.

The monthly minimum wages amount monthly after last conditions exemplarily in Jakarta to 172,000 IDR, in central Java to 113,000 IDR in Yogyakarta to 106.500 IDR and in east Java on the average to 124.375 IDR.
The minimum wages covered 1997 RD. 95.32% minimum physical needs off. 1996 still amounted the covering degree to only 92.49%.

The inflation rise due to the monetary crisis have at the beginning of 1998 to it led that the minimum wages the existence safety device any longer not to ensure. The necessary adjustments are examined at present by the government.

The gainful employment of women was to earn 40% less. With same activity receives to women predominantly 15 – 20%.

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