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IFCCI Forum Group Discussion - New Negative Investment List: New Hope for Indonesia?

IFCCI recently organized a Forum Group Discussion on “New Negative Investment List: New Hope for Indonesia?” on 31 May 2016 at Lotus 7 at M Floor, Intercontinental Jakarta Midplaza.

 

The new Negative Investment List has recently been revised and regulated by Presidential Regulation No. 44 of 2016 which makes foreign investments more open to have 100 percent ownership in certain business sectors, especially in the industrial sectors and creative industry. The main objectives of these revisions are to achieve the national target of economic and infrastructure development, enhance domestic and foreign investments in Indonesia, create new employment opportunities for locals, increase value of national exports which will ultimately increase the state revenue.

BKPM has invited all stakeholders (associations, companies, foreign chambers, embassies, and domestic and international businesspeople) since October 2015 in making the revisions to the Negative Investment List while also consulting related Ministries so that they could find out what was really needed from each business sector. The new regulation is the result of all the points that have been thoroughly discussed during the meetings. However, considerations had to made concerning other sectors. This Presidential Regulation makes it so that there will be no further regulations under it, so all regulations from the Ministries have to be in accordance with the new Presidential Regulation. As a new regulation, it is still in process and BKPM is still meeting with Ministries to discuss how it will affect future regulations and implementation.

The business field is now divided into three categories: (1) business fields closed for investment; (2) business fields allocated for SMEs; and (3) business fields which are open conditionally to foreign investment.

There are several changes made in certain business sectors, such as distribution, pharmacy, e-commerce, film, transportation, and tourism. These sectors mentioned are now open conditionally to 100 percent foreign ownership. Others, such as transportation, manpower, trading and renewable energy, are open to up to 67 percent of foreign ownership. Full foreign ownership can now be attained in market places under the condition that the investment being made is a minimum of IDR 100 billion or roughly USD 8 million. For investments below the minimum, up to 49 percent foreign ownership can be obtained.

The Presidential Regulation has made the process of doing business in Indonesia much easier by deleting all previous technical recommendations from Ministries, such as for agriculture. Processes related to the regional government have now been deleted which was previously needed for the tourism industry. However, it should be noted that the Negative Investment List is not applicable in special economic area zones in Indonesia, except for the fields allocated for SMEs.

Thank you to Mr. Alma Karma, Director of Regional Potential Development from the Indonesian Investment Coordinating Board (BKPM), Mr. Puji Atma, Senior Associate from Makarim & Taira, and also Mr. Lucas Mascarade from DS Avocats as the moderator of this event.

We believe the participants found the discussion informative. Hence, we appreciate the valuable contribution of each speaker’s presentation which have given us a better understanding of the newly revised Negative Investment List and its implications.

Along with this event review, we have also attached the bilingual version of Presidential Regulation No. 44 of 2016 for your perusal.

Once again, thank you to those who attended this forum group discussion. We look forward to having another fruitful discussion with all of you in the next IFCCI forum group discussion!

 

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