Jakarta/Seoul. 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.
CJ CGV, which operates Indonesia's second-largest movie chain CGV Blitz, plans to more than quadruple its number of screens in the country to 600 by 2020, Cho said.
Young movie-goers, who complain that some blockbusters are slow to get a release in Indonesia, welcomed more competition.
"Sometimes the movies at Indonesian cinemas are not up-to-date enough," said student Marsya Karzinar. "If there are foreign cinemas that come in, and they can give good facilities, that would be good."
But, in a pointer to the problems that liberalization faces in a country where foreign investors have often complained of economic protectionism and nationalism, some in Indonesia's cinema industry are fuming over the decision.
Johny Syafrudin, chairman of the All-Indonesia Cinema Owners' Association, said it was "too rushed" and would bring a flood of foreign movies that could erode the country's culture.
"They think that opening the foreign tap will bring in a good opportunity, but other cultures will ride behind these investors," he told Reuters.
Indonesia has a burgeoning domestic movie scene - with films such as martial arts action flick "The Raid 2" that played at the Sundance Film Festival in 2014 - and some filmmakers, at least, say they welcome foreign investment.
"We've been lobbying for the opening of the negative list," said Mike Wiluan, CEO of Infinite Studios.
"Because as a studio, we've been heavily involved in financing the production infrastructure from ground up... That requires a lot of capital and know-how."
The stiffest competition foreign firms will face is likely to come from the Cinema 21 Group, founded by a cousin of Suharto and his business partners, which has enjoyed a near-monopoly of the lucrative movie import business for decades.
The group accounts for around 74 percent of the total movie screens in Indonesia, according to company data and industry estimates. It competes against two smaller rivals - CGV Blitz, which has about 12 percent, and Indonesian retail-to-media conglomerate Lippo Group's Cinemaxx.
Cinema 21 is ready to compete "healthily" in response to the liberalization, Corporate Secretary Catherine Keng told Reuters. But it also hopes the government will direct foreign companies to open cinemas in underserved areas to "avoid cannibalization", Keng added.
Cinemaxx CEO Brian Riady said it planned to triple its movie screens to around 250 this year.
"When you compare that demand with the supply of cinemas across the market, there is a pretty significant mismatch between demand and supply," he told Reuters.
On top of having to break the local stranglehold, foreign newcomers will have to jump other regulatory hurdles, such as restrictions on how close a foreign-owned cinema can be to a domestic operator.
The government is reviewing a rule requiring cinema operators to allocate 60 percent of their total screentime to local content, said Triawan Munaf, head of Indonesia's creative economy agency.
Tom Lembong, a former investment banker who is now President Joko Widodo's trade minister, told Reuters that ending the Hollywood movie import monopoly would lead to a huge increase in supply.
"We have a $10 billion trade surplus with the US," he said. "One of the US exports to Indonesia with the best prospects, in my view, is Hollywood movies and American entertainment content."