government to allow more foreign investment in indonesian airports

Currently, foreigners cannot own a majority stake in a joint venture (with an Indonesian party) to operate an airport in Indonesia. However, Indonesian President Joko Widodo seems eager to encourage more foreign direct investment (FDI) in order to boost Indonesia's overall economic growth. Infrastructure and connectivity remain key bottlenecks that need to be overcome in Indonesia in order to boost competitiveness of local businesses. Hence, the establishment of new airports or the expansion of the nation's existing airports is vital.

However, government-owned companies and the government (either central or regional) have limited financial resources for airport (expansion) development projects and therefore private investors are needed. Bayu Sutanto, Head of the Scheduled Flights Division at the Indonesian National Air Carriers Association (INACA), would support the government's plan to allow more foreign investment in Indonesian airports. He says there are many foreign investors interested to invest in the operation of airports. However, they want to be able to obtain a majority stake in the project. Currently, the maximum foreign ownership is set at 49 percent for airport operation services.