negative investment list

The Latest Regulation on Indonesia 2016 Negative Investment List

  • InCorp Editorial Team
  • 23 June 2016
  • 3 reading time

Negative Investment List 2016

The new Negative Investment list has finally been published by Indonesia Investment Coordinating Board (BKPM) on May 18th, 2016. This 2016 Negative Investment List is replacing the 2014 Negative Investment List or Daftar Negatif Investasi 2014.

There are some sectors that are closed for the foreign investment on the prior Negative List. But now those sectors are open for foreign investment. There are also some sectors that completely got removed from the list, which means the companies in those sectors could legally run as 100% foreign owned companies. It opens more possibilities for the foreign investors who want to expand or even start a new business in Indonesia..

Here are some of the most foremost industries and sectors that are affected by significant adjustments to ownership:

Agriculture

The previous regulation required a recommendation from Minister of Agriculture for several business activities. There are recommendations from the minister that removed from the Minister for the following activities:
1. Growing of food crops, including breeding/seeding with an area of more than 25 HA,
2. Processing of plantation crops with a 20% utilization of a business’s own crops, and
3. Research and development on genetically modified organisms.

Construction and Installation of High Voltage Electricity

On the prior Negative List Investment, it has no reference for the foreign investment. But on the 2016 Negative List Investment is now open 49% for foreign investment.

Marine and Fisheries

The 2016 Negative Investment List removes fishery and processing of fishery products from the list, and they are fully opens them for foreign ownership. Nevertheless, sea sand quarrying is no longer open for foreign ownership. The utilization of coral requires Minister of Environmental and Forestry’s recommendations.

Crumb Rubber Industry

It was 100% close for the foreign investment, but 100% foreign investment now permitted (provided that a special license from the Ministry of Industry of Indonesia is obtained). See how to get the import and export license in Indonesia.

Energy and Mineral Resources

There is a pretty significant change in this sector, the new regulation changes large Scale Power Plants (> 10 MW), maximum foreign ownership from 95% to 100% for PPP.

Public Works

The new regulation is aligning the requirement for investment with the relevant regulations as issued by the Minister of Public Works and the Investment Coordinating Board (BKPM). Here are the changes:

    1. Construction services (contractors) with high technology, high risks, and/or work value of more than IDR 50 billion, maximum foreign ownership is 67% or 70% for investor from ASEAN countries;
    2. Construction consultancy services with high technology, high risks, and/or work value of more than IDR 10 billion, maximum foreign ownership is 67% or 70% for investor from ASEAN countries; and
    3. Water drinking supply, maximum foreign ownership is 95%.

Biomass Pellet and Producing Industry

It was only permitted when in partnership with a local SME, the new regulation said that now it’s 100% foreign investment permitted.

Trading

Direct selling and futures brokers got removed from the updated list, automatically these activities are fully open for foreign ownership and increased minimum foreign shareholder ownership from 33% to 67% for distributors and warehousing. Find out how to establish a trading company in Indonesia and the business set up overview.

Transportation

The changes in this sector are:

  1. Land Terminal Construction for Public and Goods Facilities, from closed to open for up to 49% foreign ownership, and
  2. Vehicle Testing, from closed to open for up to 49% foreign ownership.
  3. Passenger Transportation Overland. It was 100% closed for foreign investors, but now it’s 49% foreign investment permitted.

Check the Latest Negative Investment of the Indonesia 2018.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.