Coming soon to Indonesia: a battle over the cinema industry

Fri Feb 19, 2016 12:19am EST
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By Eveline Danubrata and Hooyeon Kim

JAKARTA/SEOUL (Reuters) - Indonesia's opening of its fiercely protected cinema industry is whetting the appetite of overseas firms such as South Korea's CJ CGV Co Ltd, looking to profit from an increase in the supply of foreign movies to a vast, underdeveloped market.

The movie market is one of dozens of industries Indonesia liberalized last week in a "Big Bang" shake-up that one minister called the largest opening of Southeast Asia's biggest economy to foreign investors in 10 years.

Under the new rules, foreign firms can hold 100 percent stakes in the film industry, including production, distribution and exhibition. Previously, the so-called "negative investment list" shut foreigners out of much of the industry.

Tight regulation and censorship under autocratic former President Suharto left Indonesia's cinema industry stunted - but ripe with potential.

"Indonesia has long been a sleeping giant in cinema terms," said David Hancock, head of film and cinema at research provider IHS Technology. "For such a populous country, it has a low number of cinema screens and therefore a low number of visits."

The sprawling archipelago is home to 250 million people - many young and tech-savvy with a median age of 29. They are served by slightly more than 1,100 movie screens and go to the cinema less than once a year on average, according to IHS data.

South Korea, by comparison, with a population one-fifth of Indonesia's, has 2,400 screens and saw movie goers reaching almost 220 million last year, according to the Korean Film Council.

"We welcome the decision since it will become much easier for foreign firms to invest in Indonesia. We will continue to actively do our business there," said CJ CGV spokesman Cho Sung-jin.   Continued...

An employee at a Cinemaxx theatre cleans up between screenings in Lippo Karawaci, near Jakarta, Indonesia February 17, 2016. REUTERS/Darren Whiteside