Indonesia has some of the best movie theaters in the world, thanks to the Subentra Group, which has invested $100 million in building new screens in the past three years.

The dominant exhib (its “21” loop currently has 470 screens) and the leading distributor of U.S. and European films, Subentra added 39 screens in 1993,29 last year, and by the end of this year will have opened the doors to another 77. Each multiplex consists of four to eight screens, and most are in shopping centers.

Harris Lasmana, Subentra exec VP in charge of European and U.S. film distribution, expects to have 700 to 800 screens operating by the turn of the century.

Lasmana notes that revenues for U.S. and European films have risen every year since Hollywood distribs struck revenue-sharing deals in 1991.

He estimates that U.S. product accounts for 45% of the total B.O., while Mandarin films claim 25% to 30%, with the rest divided between Indian, Japanese, Indonesian and other nationalities.

Last year, major studio films posted a 2% gain, and in the first six months of this year, their grosses were up 6%.

The Subentra Group also includes banking, finance and petrochemical operations. Founded in 1972, it’s a partnership between Sudwikatmono, a prominent businessman who is a cousin of President Suharto, and film importer Benny Suherman.

The government does not allow foreign ownership in the retail trade or of cinemas. Suharto has given no indication when or if he’ll open the gates, but Indonesia will be required to remove all barriers to free trade by the year 2010 as a condition of joining the World Trade Organization. And by 2003, when the ASEAN free trade area is due to be fully operational, the government will have to cut tariffs on all goods imported from outside the ASEAN member states to between zero and 10%.

When the day comes that distribution is opened up to foreigners, Lasmana acknowledges that every U.S. distrib “will make his own decision.”

The U.S. studios, in public, at least, appear happy with Subentra’s ability to exploit their product. “Subentra is very efficient and it has the best screens,” says Motion Picture Assn. Southeast Asian chief Michael Connors.

Film distribution is a costly business in a market where the average ticket price is $2.10 at first-run houses. There’s a $750 duty on each imported print, plus a levy that funds the Indonesian film industry. The levy consists of $1,750 on the first eight prints, and $500 for subsequent prints.

There’s a local government tax on tickets which averages 30%. Subentra has had some success persuading authorities in some regions to lower the tax from as high as 35%. Minus the tax, the B.O. is split evenly between exhib and distrib.

Last year, Subentra imported 106 films, of which 54 were from MPA members. That put the company well within the government-set annual quota of 88 European and U.S. titles, plus up to 40 rated for general exhibition.

Subentra’s critics within the Indonesian film industry accuse it of neglecting local films, despite the rule that obliges exhibs to play two national pics per month for a minimum of two days. They claim Subentra favors U.S. product, which throws off higher profits.

Lasmana denies that Subentra discriminates against local films, but points to their patchy B.O. results as evidence that, for the most part, audiences are not clamoring to see them. Subentra itself produced five pictures in 1992, but abandoned its production division when it failed to turn a profit.

Lasmana rejects the argument that U.S. product is behind all the problems facing the Indonesian industry, pointing out that in 1984-85,70 local pictures were produced alongside 180 imported films.

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