Legal Alert – Indonesia’s New Negative Investment List · 1. Legal Alert – Indonesia’s New Negative Investment List . By Dyah Soewito, Esther J. Panggabean, Bezaliel B. Erlan

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Legal Alert – Indonesia’s New Negative Investment List By Dyah Soewito, Esther J. Panggabean, Bezaliel B. Erlan and Darrell R. Johnson

Presidential Regulation No. 44 of 2016 regarding the List of Business Fields That Are Closed

and Business Fields That Are Conditionally Open for Investment (May 18, 2016) (the “2016

Negative Investment List” or the “2016 DNI”) replaces the 2014 Negative Investment List or

“2014 DNI,” and was made public on May 24, 2016. The 2016 Negative Investment List

refers to business lines and code numbers set forth in the Indonesian Standard Industrial

Classification of 2015 (the “KBLI”).

The 2016 Negative Investment List liberalizes some areas of foreign investment in

Indonesia, including foreign investment from ASEAN countries. However, it is also true that

the 2016 DNI does not contain the dramatic changes that had been anticipated by some

members of the foreign investment community.

In this Legal Alert, we provide an overview of the 2016 Negative Investment List and a

comparison of some of its provisions against the 2014 DNI. We also discuss some of the

policy decisions of the Indonesian Capital Investment Coordinating Board (“BKPM”) under

the prior Negative Investment List that may still be applied by the BKPM under the 2016 DNI.

I. Fundamental Principle of the DNI: Pursuant to Article 3 and Article 1(2) of the 2016

Negative Investment List, business lines that are not listed in the attachments to the 2016

DNI are deemed 100 percent open for foreign investment. There is no change in this basic

concept.

The 2016 Investment Negative List sets out that if a KBLI code number includes more than

one business line, then a capital investment limitation stated in the 2016 Negative

Investment List is applicable only to the business line that is expressly mentioned. For

example, KBLI Code No. 70209 covers “other management consultancy businesses.” The

2016 DNI specifically refers to this KBLI code number and horticulture development

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consulting, which is limited to a maximum 30 percent foreign investment. That foreign capital

investment limitation applies only to horticulture development consulting and not to other

types of consulting businesses.

II. Grandfather Provisions

A. Basic Concept – Prior Investments Are Protected Against Future Changes: Similar to the 2014 Negative Investment List, the 2016 DNI provides grandfather

protection for businesses whose capital investments were approved prior to the enactment

of the 2016 Negative Investment List on May 18, 2016. The 2016 DNI is silent on what is

meant by an approved capital investment. Thus, if an application has been filed and received

a principle approval but no permanent license has been issued, which DNI will apply? The

BKPM’s approach to this issue in the past was to apply a prior DNI to any application for

which a principle approval had been given, which will also then be applicable to the later

application for a permanent business license. If no principle approval had been issued,

however, then the new DNI would be applied to a pending application. However, this

approach does not necessarily mean that an investor that received a principle approval

under the 2014 DNI cannot apply for more liberal treatment under the 2016 DNI. These and

other issues are not explicitly addressed in the 2016 DNI and a different policy could be

adopted by the BKPM.

B. Unwritten BKPM Policies on Grandfather Protection: There are also

other situations governed by the unwritten policies of the BKPM, in which grandfather

protection does not apply or conditionally applies. The situations below are based on our

experience with the 2014 DNI and its predecessors. It is likely but not certain that the BKPM

will continue such policies under the 2016 Negative Investment List.

1. Business Expansion by Adding New KBLI Code Number: If

investors wish to add a new investment activity (i.e., one covered by a new KLBI code

number) to an existing company, there are two consequences. First, the investors must

increase their investment level by a minimum investment of Rp 10 billion for each new KBLI

code number.1 Second, the maximum level of foreign investment could be affected. For

1 With a three to one debt equity ratio, the equity portion of the investment can be Rp 2.5 billion.

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example, under the 2016 Negative Investment List, the distribution business is open for

foreign investment up to 67 percent. If PT X obtained a business license in 2008 for a

distribution business with an approved foreign investment of 90 percent, then its approved

foreign capital investment is protected under the grandfather clause. PT X will not be

required to adjust its capital structure in accordance with the new DNI. However, if PT X

were to expand its business by adding another business line, e.g., electronic trading

transaction with an investment value less than Rp 100 billion, which has a maximum foreign

investment level of 49 percent, then PT X would be required to reduce its foreign investment

level to no more than 49 percent.

As another example, under the 2016 DNI, the foreign investment level is a maximum of 33

percent for the production of class A health equipment. If PT Z obtained a business license

in early 2000 with an approved foreign investment of 90 percent, it will not be required to

lower its foreign capital investment because it is grandfathered. However, if PT Z plans to

also engage in the distribution business, which is open for foreign investment up to 67

percent, the BKPM will require PT Z to decrease its foreign capital investment to 67 percent

to comply with the 2016 Negative Investment List.

2. Product Diversification: The addition of a new KBLI code number

does not always trigger the termination of grandfather protection. The BKPM is of the view

that an additional KBLI code number within the same general business field may be

permitted and will not require a foreign investor to reduce its capital to a lower level required

by the 2016 DNI. This may occur in the case of product diversification. To illustrate, PT Z is a

company engaging in the business of perfume distribution, which is classified under KBLI

Code No. 46494. PT Z obtained its business license from the BKPM in 2000 when

distribution companies were permitted to have 100 percent foreign capital investment. PT Z

plans to expand its distribution business by adding liquid shower soap, which is classified

under the same five-digit KBLI code number as perfume distribution. As one would expect,

the BKPM will not require PT Z to reduce its foreign capital investment to 67 percent.

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Product diversification without a change in the foreign investment level may also be

achieved by adding a new KBLI code number. For example, PT A is a company engaging in

distribution of batik cloth and falls under KBLI Code No. 46411. PT A obtained its business

license in 2004 and was permitted to have foreign capital investment of 90 percent. To

develop its business, PT A now plans to also distribute shoes and sandals for children.

Distribution of clothing and footwear is classified respectively under KBLI Code No. 46411

and 46413. Since both KBLI code numbers are classified under the business group of the

wholesale business of textiles, clothes and footwear and share common KBLI code numbers

for the first three digits, the BKPM may not require PT A to comply with the current DNI

limitation on foreign capital investment in distribution of 67 percent, since these code

numbers are related and involve the same general business lines.

Product diversification raises a question about how related KBLI code numbers must be to

avoid a reduction in foreign investment. For example, if a company distributes footwear, can

it also distribute computer chips? The 2016 DNI does not address this issue and there is no

absolute standard. The BKPM may have a different treatment for each product and business

line. However, the greater the disparity in the products, and thus the KBLI numbers, the

more likely the BKPM will apply the restrictions in the 2016 DNI.

3. Business Expansion by Increasing Production Capacity: In this

situation, an existing company wishes to expand its production capacity. It is not adding a

new line of business. While prior approval from the BKPM is required for an existing

company to increase its production capacity beyond 30 percent, such a production capacity

increase is unaffected by the DNI and no adjustment in foreign equity level is required.

For example, PT Y is a company engaging in the geothermal power plant business with a

capacity of less than 10MW and has an approved foreign investment level of 90 percent.

Under the 2016 DNI, such a geothermal power plant would only be approved if the foreign

capital investment level was no more than 49 percent. PT Y would like to expand its

business by increasing its production capacity by more than 30 percent. BKPM approval is

required but PT Y will not be required to reduce its foreign capital investment to 49 percent.

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4. Total Change of Business: Where an existing company intends to

change its business line entirely, then it will be required to comply with the 2016 Negative

Investment List. For example, if PT X obtained its business license in 2008 for management

consultancy with an approved foreign investment of 100 percent and now plans to engage

only in the inland freight transportation business, it must comply with the 2016 Negative

Investment List, which limits foreign capital investment in the new business line to a

maximum of 49 percent.

5. Voluntary Decrease of Foreign Capital Investment: A foreign

investor may reduce its capital investment in an Indonesian company by selling shares to a

domestic investor. In that case, it cannot thereafter increase its capital investment, whether

the increase is to the original approved level before the enactment of the 2016 Negative

Investment List or to a lower level allowed by the 2016 DNI if that level is higher than the

foreign investor’s current investment level.

For example, PT X holds a business license for the construction and installation of high-

voltage electrical utilization with an approved foreign investment of 90 percent. ABC Pte.

Ltd., a Singaporean legal entity, owns 90 percent of the shares. The 2016 Negative

Investment List sets forth a new maximum foreign capital limitation of 49 percent for the

construction and installation of high-voltage electrical utilization business. If ABC Pte. Ltd.

transfers some of its shares to an Indonesian shareholder, so that it holds less than 90

percent, it cannot later increase its foreign capital investment to its previously approved level

or any other level greater than its then current level. However, we believe if ABC Pte. Ltd.

reduces its capital investment in PT X by transferring its shares to a foreign entity or

individual or to another Indonesian foreign capital investment company or a “PMA”

company2, so that PT X’s total foreign shareholding composition is still 90 percent, ABC Pte.

Ltd. can thereafter reacquire shares from the foreign transferees up to its original 90 percent.

However, BKPM policy on this latter point is not clear. 2 Article 1(3) of Law No. 25 of 2007 Regarding Capital Investment (April 27, 2007) defines foreign capital investment to include the subsidiaries of foreign capital investment companies. Thus, any Indonesian company owned in part or entirely by a PMA company is itself a PMA company and must register as such and is treated as a foreign company. This has long been consistent with BKPM regulations and policy.

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We emphasize that most of the above rules are unwritten and have been developed

informally by the BKPM to address specific issues that have arisen over time. There is no

assurance that the BKPM will continue such unwritten policies or change them. We have

discussed these matters with BKPM officials. However, due to the fact the 2016 DNI was

recently issued, the BKPM has yet to determine its policies. We understand the BKPM will

be meeting internally over the next several weeks to determine these and other policies.

III. Policies Established by the 2016 DNI

A. Expansion to a New Area: Article 7(3) allows a PMA company located in

one area to expand to another area without establishing a new business entity, provided it

continues to comply with the Government’s spatial layout and environmental requirements.

However, there was no legal requirement to establish a new company if the investors

wanted to create an additional location for their existing business. BKPM approval is

required to add an additional location and this does not appear to be changed by Article 7(3).

B. Investments Conducted Through the Capital Market or Indirectly: Article

8 of the 2016 DNI provides that business lines that are open with requirements under Article

2(2)(b) and Attachment III (i.e., among others, foreign investment limits) are considered open

without such conditions if an investment is made indirectly or by portfolio trading on the

Indonesian stock exchange. We believe the BKPM in effect treats such shares traded as

domestic capital.

Article 8 presents some interesting issues that have not yet been resolved. Clearly, portfolio

trading is freely permitted by Article 8, but it is not clear what is meant by investments that

are “carried out indirectly.” The use of the word “or” suggests that indirect investments are to

be distinguished from portfolio investments. However, it is possible that indirectly was meant

to refer to portfolio trading as indirect, which the language “or by portfolio trading” was

intended to clarify, and that the investment is considered indirect in the sense BKPM

approval is not required. Future regulations or policy directives of the BKPM may make this

clearer.

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Article 8 is also unclear in another respect given the BKPM’s prior policies. When PMA

companies have gone public in the past and their articles of association still refer to the

original foreign investor and the PMA companies continue to hold a BKPM approval, it has

been the BKPM’s unwritten policy that such companies are still required to comply with all

reporting, approval and licensing obligations under BKPM regulations. Thus, even though

the PMA public company’s shares are treated as domestic capital, this is not true for the

original foreign investor. Its shares continue to be subject to BKPM regulatory jurisdiction as

foreign capital, even though they are also traded publicly and even though Article 8 clearly

provides that the business line of such a public company is treated as an “Open Business

Field,” meaning there are no restrictions to foreign investment. If that is the case, then why

does the BKPM continue to assert regulatory jurisdiction over the public company?

This policy has several ramifications other than the obvious different treatment of foreign

shareholders. First, if the publicly held PMA company wants to change its capital ownership

which was last approved by the BKPM, the company must seek BKPM approval (it may also

be subject to any new foreign capital investment limitations in the 2016 DNI, if other changes

such as an additional line of business are requested). This is true even though that foreign

investor could increase its shareholding by purchasing additional shares on the public

market. The conclusion appears to be that, if the original foreign shareholder wanted to

increase its ownership beyond the limitation in the 2016 DNI, it could not do so, even if a

new foreign shareholder could. If the public company still has a PMA license, and the total

foreign investment of both the original foreign shareholder and new foreign shareholder

exceeds the DNI limit on foreign investment, is there a violation of the DNI? We do not

believe this should be the result because the new foreign shareholders’ shares are treated

as domestic capital. However, is that still true if the original foreign shareholder increases its

shareholding over the 2016 DNI limit by purchasing public shares? If so, then those shares

are not, in that case, treated as domestic capital. If such shares are treated as foreign capital

in the hands of the original foreign shareholder, and therefore violate the DNI limit, is the

same true if an affiliate of the original foreign shareholder purchases such shares? If a new

foreign shareholder wants to purchase the shares of the original foreign shareholder, BKPM

approval would apparently be required since there would be a change in the shareholder

composition affecting the original foreign shareholder’s share ownership. Finally, if a new

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foreign shareholder purchases the new shares acquired by an original foreign shareholder,

BKPM approval would apparently not be required.

As seen, the BKPM’s policy raises several difficult issues that hopefully will be clarified by

further regulations.

One reason the BKPM may wish to retain regulatory jurisdiction over such a company is

because the original foreign investor with a BKPM approval could assert it is entitled to

foreign exchange repatriation guarantees in the event foreign exchange controls were

adopted or the company were nationalized, benefits that are not available to other

shareholders of public companies. The BKPM may need to know these possible claims on

the country’s forex reserves. Perhaps this legitimate concern could be addressed by simply

requiring the original foreign shareholder to report changes in its original shareholding to the

BKPM. However, this is speculation on our part and this issue can best be clarified by BKPM

regulations.

C. Special Economic Zones: Article 8(2) dispenses with DNI limitations for a

company that is open for foreign investment but with requirements if the company is located

in a special economic zone, as long as the business field is not reserved for micro, small and

medium enterprises and cooperatives (koperasi).

D. Mergers, Acquisitions and Consolidations: Article 9 of the 2016 DNI lays

out special requirements for mergers, acquisitions and consolidations:

(a) in the case of a merger, the limitation on foreign ownership is that

which is contained in the surviving company’s principle license or

business license;

(b) in the case of an acquisition, the relevant limit on foreign ownership is

that in the principle license or business license of the acquired

company; and

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(c) for a consolidation, the foreign capital limit is that which the 2016 DNI

specifies for a new company.

The result of these rules is that the only company that needs to be concerned about 2016

DNI limits on foreign capital is the consolidated company, which is a new company. In the

case of a merger or acquisition, the 2016 DNI will have no adverse effects on the foreign

capital limits, but if the 2016 DNI is more advantageous than the limits contained in their

business license, the foreign investor can apply for an increase (see Section F below).

This provision is identical to the 2014 DNI, except in the case of acquisitions. In the 2014

DNI, the foreign capital limit was that of the acquiring company. We believe such change

was necessary to clarify that when an acquisition occurs, neither the acquiring company nor

the acquired company needs to change their capital ownership.

By way of illustration, assuming PT X and PT A each hold business licenses for the

distribution business from 2005. PT X has a permitted foreign capital investment of 90

percent while PT A has 80 percent. PT X acquires PT A and as a consequence PT A’s

shareholders change. Pursuant to the 2016 Negative Investment List, the distribution

business is open for foreign capital investment up to 67 percent. Under Article 9 of the 2016

DNI, PT A does not have to decrease its foreign capital investment to 67 percent or less and

PT X may continue to hold 80 percent of PT A’s issued share capital.

E. Dilution: Article 10(1) of the 2016 DNI deals with the problem of a dilution of

the local shareholder’s equity percentage. This occurs when additional capital is required

and the domestic investor does not respond to the capital call. In that case the capital

contribution made by the foreign shareholder could cause its shareholding percentage to

exceed that permitted in the principle license or business license or the 2016 DNI.

In this situation the foreign investor is allowed to increase its percentage by subscribing to

the newly issued shares, in accordance with its pre-emptive right under Law No. 40 of 2007

Regarding Limited Liability Companies (August 16, 2007) (the “Company Law”). The foreign

shareholder’s ownership of such excess shares is limited to two years. At that time, the

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foreign shareholder must transfer the excess shares to a domestic shareholder. There are

three methods to do so:

(i) a transfer of shares directly to a domestic shareholder;

(ii) a transfer of the excess shares through a public offering made on the

Indonesian stock exchange; or

(iii) the PMA company purchases the excess shares from the foreign shareholder

and treats such excess shares as treasury stock, subject to Article 37 of the

Company Law.

As an example of how Article 10 is applied, PT X engages in the geothermal power plant

business with a capacity of less than 10MW. This is currently open for foreign investment up

to 67 percent. PT X obtained its business license in 2015, which then allowed PT X to have

an 80 percent foreign investment. A is the foreign shareholder holding 80 percent and B is

the domestic shareholder holding 20 percent of the shares in PT X. PT X needs capital and

wants to issue new shares. A wishes to subscribe to 80 percent of PT X’s new issued

shares, but B does not want to subscribe to its preemptive right allotment. PT X is required

first to offer the new issued shares to A and B in proportion to their current capital ownership,

i.e., 80 and 20 percent. Since B does not want to subscribe to the new issued shares, A,

under Article 10 of the 2016 DNI, is permitted to subscribe to B’s allotment. This transaction

is permitted, provided that A transfers its excess foreign capital to a domestic shareholder no

later than two years after A subscribes to the new issued shares. F. Advantageous Provisions: Article 13 provides that if the 2016 DNI has

provisions that are more advantageous to the foreign investor than those it now has, it is

entitled to the more advantageous provisions and can apply to the BKPM to obtain them.

G. Comparison Table: The table below is a comparison between the 2014 and

2016 Negative Investment Lists in relation to the foreign capital investment limitation on

various business lines in Indonesia:

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COMPARISON TABLE

No Matters 2016 Negative Investment List

2014 Negative Investment List Information

A. Agriculture 1 a. Plantation business with area of 25 ha or

more until certain size without processing unit b. Plantation business with area of 25 ha or

more until certain size without processing unit c. Plantation business with area of 25 ha or

more integrated with processing unit with certain capacity of more than certain capacity

a. Maximum foreign investment – 95 percent

b. Obligation of 20

percent plasma plantation

Maximum foreign investment – 95 percent

Item No. 13-60 in Attachment III

2 Plantation business of manufacture with a capacity equivalent to or exceeding the specified capacity;


b. Minimum 20 percent

of raw materials must originate from own garden


Item No. 61-74 in Attachment III

B. Energy and Mineral Resources 3 Geothermal power plant with capacity of up to

10MW


Not listed and constitute as 100 percent open for foreign investment

Item No. 144 in Attachment III

4 Construction and installation of electrical utilization Maximum foreign 100 percent domestic Item No. 150 in

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with high or extra high voltage

investment – 49 percent

capital investment Attachment III

5 Testing and analysis of construction and installation of electrical power of provision and utilization installation of electrical power with high or extra high voltage


100 percent domestic capital investment


6 Manufacture of biomass pellets for energy Not listed and constitute as 100 percent open for foreign investment

Reserved for UMKMK partnership scheme

UMKM is a small and medium scale enterprises and cooperatives

C. Industry 7 Sugar industry (white sugar, refined sugar and raw

sugar) derived from cane with partnership in the form of plasma nucleus 20 percent of the land area



b. Requires special

license

Item No. 135 in Attachment II

8 Crumb rubber industry Requires special license from the Ministry of Industry provided that the industry is integrated with rubber plantation development and: a. completes at least 10

100 percent domestic capital investment and: a. subject to the

recommendation from the Ministry of Agriculture; and


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percent of the no less than 20 percent need for raw materials from own rubber plantation; and

b. completes maximum

80 percent of the need for raw materials with partnership scheme with at least 20 percent of the plantation area being a plasma plantation.

b. no transfer of capital ownership of the company to foreign investment company (PMA) is allowed.

D. Public Works 9 Construction implementation services with high

technology and/or risk and/or work value of more than Rp.50 billion


b. Maximum 70 percent

for capital investors from ASEAN countries

Maximum foreign investment 67 percent was applied to the construction implementation services with high technology and/or risk and/or work value of more than Rp.1 billion


10 Consultancy services of construction business with high technology and/or risk and/or work value of

a. Increased foreign investment permitted

Maximum foreign investment 55 percent was


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more than Rp.50 billion

maximum foreign investment – 67 percent



applied to all construction consultancy services businesses

E. Trade 11 Retail via mail order or via internet, specifically for

goods described in KBLI Code No. 47911, 47912, 47913 and 47914


100 percent domestic capital investment

Item No. 138 in Attachment II

12 Distribution businesses with no affiliation to the production business

Increased foreign investment permitted maximum foreign investment – 67 percent



13 Warehousing




14 Direct selling through a network developed by a business partner



N/A

15 Department stores with sales floor area of 400m2 – a. Increased foreign 100 percent domestic Item No. 181 in

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2,000m2 investment permitted maximum foreign investment – 67 percent; and

b. Requires special

license from the Ministry of Trade with requirements: 1. Located in a Mall

and does not stand alone

2. Addition of outlet

store based on export performance (pay performance)

capital investment for department stores with sales floor area less than 2,000m2

Attachment III

16 Cold storage Not listed and constitute as 100 percent open for foreign investment

a. Maximum foreign investment – 33 percent in Sumatera, Java and Bali

b. Maximum foreign

investment – 67 percent in Kalimantan, Sulawesi, Nusa Tenggara,

N/A

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Maluku and Papua

F. Tourism and Creative Economy 17 Two-stars, one-star and no-star Hotel



b. Does not contradict

any local regulations

Item No. 228-230 in Attachment III Hotel business with more than two stars is not listed under the 2016 Negative Investment List. Therefore, it is open 100 percent for foreign investment.

18 Travel agency a. Increased foreign investment permitted maximum foreign investment – 67 percent







19 Catering services a. Increased foreign investment permitted maximum foreign



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b. Maximum 51 percent if

partnering with UMKMK

c. Does not contradict


20 Restaurant Not listed and constitute as 100 percent open for foreign investment




N/A

21 a. Bar

b. Café







N/A

22 a. Billiard house

Increased foreign investment permitted

a. Maximum foreign investment – 49

Item No. 232, 233 and 234 in

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b. Bowling arena c. Gold course

maximum foreign investment – 67 percent

percent b. Maximum 51 percent if




Attachment III

23 Swimming pool, football stadium, tennis court, fitness center, sports center and other sports activities







N/A

24 Management of private museums

a. Increased foreign investment permitted maximum foreign investment – 67 percent


for capital investors





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from ASEAN countries

25 Motel a. Increased foreign investment permitted maximum foreign investment – 67 percent







26 Art impresario services










27 Karaoke Increased foreign investment permitted maximum foreign investment – 67 percent



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b. Maximum 51 percent if partnering with UMKMK

c. Does not contradict any local regulations

28 Organizer of meeting, incentive trip, conference,

and exhibition (MICE)








29 Management of historical and ancient sites such as temple, keraton, inscriptions, petilasan, and ancient buildings




30 Operation of natural tourism objects outside conservation area




31 a. Movie taking studio Not listed and constitute Maximum foreign N/A

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b. Movie processing laboratory c. Movie voice dubbing facility d. Movie printing and/or duplication facility

as 100 percent open for foreign investment


32 a. Movie taking facility b. Movie editing facility c. Movie subtitling facility


100 percent domestic capital

N/A

G. Transportation 33 Supporting business in terminals Increased foreign

investment permitted maximum foreign investment – 67 percent



34 Air transportation supporting services (computer-based reservation system, passenger and cargo ground handling, and aircraft leasing)




35 Airport related services Increased foreign investment permitted maximum foreign



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36 Maritime cargo handling services with CPC 7412


b. Increased maximum

70 percent for capital investors from ASEAN countries

c. Only valid for four ports

in Indonesia eastern region, i.e., Bitung Port, Ambon Port, Kupang Port, and Sorong Port specifically for ASEAN countries





37 Transportation management services or freight forwarding business




38 Air expedition freight forwarding services Increased foreign Maximum foreign Item No. 272 in

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investment permitted maximum foreign investment – 67 percent

investment – 49 percent Attachment III

39 General Sales Agent (GSA) of foreign airline company




40 International sea transport for goods (not including cabotage)

Maximum 70 percent for capital investors from ASEAN countries

Maximum 60 percent for capital investors from ASEAN countries


41 Land-based passenger transportation on scheduled routes (intercity and interprovincial transportation, suburban transportation, in-province intercity transportation, urban/suburban transportation, and cross-countries transportation)

Increased maximum foreign investment – 49 percent

100 percent domestic capital


42 Salvage service and/or underwater works Requires special license from the Ministry of Transportation



43 Provision and operation of river and lake harbor Increased maximum foreign investment – 49 percent

Requires cooperation with the company appointed by the Government of the Republic of Indonesia


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44 Provision and operation of cross-border water harbor


Requires cooperation with the company appointed by the Government of the Republic of Indonesia


45 Provision of harbor facilities (jetties, buildings, tugs at cargo container terminals, liquid-bulk terminal, dry-bulk terminal, and roll on-roll off (ro-ro) terminal)


b. Requires special

license


b. Maximum foreign

investment – 95 percent with a public partnership arrangement


H. Communications and Informatics 46 Implementation of trading transaction through

electronic system (platform based market place, daily deals, price grabber, classified advertisement) with investment value of less than Rp.100 billion

Maximum foreign investment – 49 percent If the investment value is more than Rp.100 billion, then this business line is 100 percent open for foreign investment.


Item No. 300 in Attachment III The KBLI classifies e-commerce business for general goods in Code No. 47919. KBLI Code No. 47911, 47912, 47913 and 47914 classifies e-commerce business

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for certain goods, which are entirely close for foreign capital investment.

47 Operation of content provision telecommunication service (ringtone, premium short message services, etc.)




48 Information center (call center) and other telephone added value service




49 Internet service provider




50 Data communication system services




51 Public internet telephone services




52 Internet interconnection services (network access point), other multimedia services




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I. Finance 53 Securities company (perusahaan penjaminan) Increased maximum

foreign investment – 30 percent



J. Manpower 54 Work training (to provide, obtain, enhance and

develop work competency, productivity, discipline, attitude and work ethics among others in the area of technical and engineering, business administration, language, tourism, management, information technology, art and agriculture vocation directed to provide the work force in entering the working world)




K. Health 55 Industry of pharmacy raw materials Not listed and constitute

as 100 percent open for foreign investment


N/A

56 Consultancy services of business and management and/or hospital management services



N/A

57 Health support services (rental of medical equipment)



N/A

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58 Health support services:

a. Clinic laboratory b. Medical check-up clinic



N/A

59 Industry of class A health equipment (cotton, bandage, gauze, stick, IV pole, sanitary napkin, adult diaper, patient bed, wheelchair)


b. Requires special

license from the Ministry of Health

Business of industry of health equipment in all classes were not listed and constitute as 100 percent open for foreign investment

Item No. 346 in Attachment III Industry of class B, C and D health equipment can be found in item No. 347, 348 and 349 in Attachment III and require special license from the Ministry of Health.

60 Cell and tissue bank and laboratory

Requires special license from the Ministry of Health



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This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user’s own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

Documents

Legal Alert – Indonesia’s New Negative Investment List · 1. Legal Alert – Indonesia’s New Negative Investment List . By Dyah Soewito, Esther J. Panggabean, Bezaliel B. Erlan