PRESIDENTIAL REGULATION NO. 44 OF 2016

July 28, 2020 | Regulatory Updates


INDONESIA HAS ISSUED THE NEGATIVE INVESTMENT LIST OF 2016

To increase the foreign and domestic capital investment activities in Indonesia and accelerate the development while increasing the protection for micro, small, and medium enterprises and cooperatives and various national strategic sectors and to improve the economic competitiveness in facing the economic society of the Association of Southeast Asian Nations (“ASEAN”) and the dynamics of economic globalization, the President of the Republic of Indonesia has issued Presidential Regulation No. 44 of 2016 concerning the List of Business Activities that are Closed or Open With Requirements in the Sector of Investment (“Negative List of 2016”). The Negative List of 2016 has revoked Presidential Regulation No. 39 of 2014 concerning the List of Business Activities that are Closed or Open With Requirements in the Sector of Investment (“Negative List of 2014”). All implementing regulations of the Negative List of 2014 shall remain valid as long as it is not contrary to the Negative List of 2016.

The Negative List of 2016 is divided into 3 groups of business activities, which are as follows: (i) Business activities that are open for capital investment; (ii) Business activities that are closed for capital investment; and (iii) Business activities that are open for capital investment with certain conditions, such as: (a) Certain business activities that can be carried out as capital investment activities with certain conditions, such as business activities that are categorized as micro, small, medium enterprises and cooperatives; (b) Business activities with foreign capital ownership restrictions; (c) Business activities with specific location requirement(s); (d) Business activities with special permit requirement(s); (e) Business activities with 100% of domestic capital ownership requirement; and (f) Business activities of capital ownership restrictions in the framework of ASEAN cooperation. 

The changes in the Negative List of 2016 include certain increase and/or decrease in the ownership percentage limitation of foreign capital investment in specific business activities, further descriptions on certain category of activities/business sectors and certain changes in some areas that previously were open with certain conditions for capital investment (becoming open without any certain conditions), such as set out below: 

1. Agriculture Sector

 

No.

Business Activities

Negative List of 2014

Negative List of 2016

1.

Plantation with an area of 25 Ha or more up to a size of specified area without processing unit

Foreign capital ownership maximum 95% and recommendation from Ministry of Agriculture

Foreign capital ownership maximum 95% and obligation of 20% plasma plantation

2.

Cultivation of staple plant with an area of more than 25 Ha

Foreign capital ownership maximum 49% and recommendation from Ministry of Agriculture

Foreign capital ownership maximum 49%

3.

Plantation breeding industry with an area of 25 Ha or more

Foreign capital ownership maximum 95% and recommendation from Ministry of Agriculture

Foreign capital ownership maximum 95% and obligation of 20% plasma plantation

 

2. Energy and Mineral Resources Sector

 

No.

Business Activities

Negative List of 2014

Negative List of 2016

1.

Geothermal Electricity Power Plant with a capacity of ≤ 10 MW

Foreign capital ownership maximum 49%

Foreign capital ownership maximum 67%

2.

Testing and Analysis of Electrical Installation

Domestic capital ownership 100%

Divided into:

 - Testing and Analysis of Electrical Installation of Electrical Power Supply, foreign capital ownership maximum 49%

- Testing and Analysis of Electrical Installation of Installation of Utilization of High/Extra Voltage electricity power, foreign capital ownership maximum 49%

- Testing and Analysis of Electrical Installation of Installation of Utilization of Middle/Low Voltage electricity power, domestic capital ownership 100 %

 

3. Public Works Sectors

 

No.

Business Activities

Negative List of 2014

Negative List of 2016

1.

Operation of toll roads

Foreign capital ownership maximum 95%

Foreign capital ownership maximum 100% (revoked from Negative List of 2016)

 

4. Trade Sector

 

No.

Business Activities

Negative List of 2014

Negative List of 2016

1.

Warehousing

Foreign capital ownership maximum 33%

Foreign capital ownership Maximum 67%

2.

Distributors that are not affiliated with manufacturing

Foreign capital ownership maximum 33%

Foreign capital ownership maximum 67%

3.

Distributors that are affiliated with manufacturing

Foreign capital ownership maximum 33%

Foreign capital ownership Maximum 100%

(revoked from Negative List of 2016)

4.

Cold storage

Foreign capital ownership maximum 33% in Sumatera, Java, and Bali

Foreign capital ownership maximum 67% in Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua

Foreign capital ownership maximum 100%

(revoked from Negative List of 2016)

5.

Department store with retail space of 400 m2 - 2,000 m2

Domestic capital ownership 100%

Foreign capital ownership Maximum 67% and require special permit from the Ministry of Trade with the requirements as follows:

Located inside of mall and shall not stand alone; and improve the outlet stores under the export performance (pay performance)

 

5. Tourism and Creative Economy Sector

 

No.

Business Activities

Negative List of 2014

Negative List of 2016

1.

Filmmaking

Domestic capital ownership 100%

Foreign capital ownership Maximum 100%

(revoked from Negative List of 2016)

2.

Cinema

Domestic capital ownership 100%

Foreign capital ownership Maximum 100%

(revoked from Negative List of 2016)

3.

Football Stadium

Foreign capital ownership maximum 49% and not contrary to the regional regulations/ foreign capital ownership maximum 51% if partnership with micro, small, and medium enterprises and cooperatives

Foreign capital ownership maximum 100%

(revoked from Negative List of 2016)

4.

Fitness Center

Foreign capital ownership maximum 49% and not contrary to the regional regulations/ foreign capital ownership maximum 51% if partnership with micro, small, and medium enterprises and cooperatives

Foreign capital ownership maximum 100%

(revoked from Negative List of 2016)

 

6. Transportation Sector

 

No.

Business Activities

Negative List of 2014

Negative List of 2016

1.

Maritime Cargo Handling Services

Foreign capital ownership maximum 49%

Foreign capital ownership maximum 67% and maximum 70% for investors from ASEAN countries

The provisions in the Negative List of 2016 do not apply to investors that have been granted approval prior the issuance of Negative List of 2016, unless such provisions are more beneficial for the investors.

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