Negative Investment List in Indonesia to Be Replaced With Positive Investment List
The New Positive Investment List Will Be Issued to Encourage More Investment
A new positive investment list will be issued to balance out the negative investment list in Indonesia. The new list is meant to encourage and entice foreign investors. Previous sectors that were partially closed off to investors are now sectors investors are encouraged to foray into. The Government hopes the influx of investments will help promote financial stability and decrease the existing account deficit. Finally, the country’s economy has a chance to be boosted in a positive way.
About the Positive Negative Investment List
The negative investment list in Indonesia is known as DNI. It was introduced to help protect local companies from competition with foreign firms. However, the stringent rules slowed economic growth prompting the introduction of the Positive Investment List. Under Presidential Regulation No. 49 of 2021, most sectors are now open to investment, but certain sectors remain closed to all investment or restricted to the Central Government only. Below is a list of business sectors that are currently closed to investment:
- Agriculture: Cultivation of Marijuana
- Marine Affairs and Fisheries:
- Capture of fish species listed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)
- Utilization or extraction of natural coral/reef materials
- Industry:
- Chemical weapons manufacturing industry
- Industrial chemical industry and ozone-depleting substance
- Tourism and Creative Economy: gambling/casino
Some sectors in Indonesia’s Positive Investment List are open for investment but come with restrictions on foreign ownership limits, as follows:
| No | Business Field | KBLI | Requirements |
| 1 | Traditional medicine products industry for human use | 21022 | 100% domestic capital |
| 2 | Primary defense equipment industry: Military vehicle industry | 30400 | Max 49% foreign ownership; or if strategic, >49% with Minister of Defense approval |
| 3 | Pioneer domestic sea transportation for passengers | 50114 | Max 49% foreign ownership |
| 4 | Public cross-district/city ferry transportation | 50216 | Max 49% foreign ownership |
| 5 | River and lake transportation (non-scheduled, non-fixed routes) for tourism | 50213 | Max 49% foreign ownership |
| 6 | River and lake transportation for hazardous goods | 50223 | Max 49% foreign ownership |
| 7 | Scheduled commercial air transportation | 51101 | Max 49% foreign ownership; domestic shareholders must remain majority |
| 8 | Air transportation activities | 51109 | Max 49% foreign ownership; domestic shareholders must remain majority |
| 9 | Courier activities | 53201 | Max 49% foreign ownership |
| 10 | Private Broadcasting Institutions (LPS) | 60102 | 100% domestic capital for establishment; foreign ownership up to 20% for expansion |
| 11 | Wholesale trade of alcoholic beverages (importers, distributors, sub-distributors) | 46333 | Restricted, strictly supervised, regulated under specific laws |
| 12 | Coffee processing industry with Geographical Indication | 10761 | 100% domestic capital |
| 13 | Primary defense equipment industry: Weapons and ammunition | 25200 | Max 49% foreign ownership; if strategic, >49% with Minister of Defense approval |
| 14 | Primary defense equipment industry: Defense radar for weapon systems | 26513 | Max 49% foreign ownership; if strategic, >49% with Minister of Defense approval |
| 15 | Primary defense equipment industry: Warship industry | 30111 | Max 49% foreign ownership; if strategic, >49% with Minister of Defense approval |
| 16 | Shipbuilding industry: Pinisi, Outrigger, and other traditional wooden vessels | 30111 | 100% domestic capital |
| 17 | International sea transportation for special cargo | 50142 | Max 49% foreign ownership |
| 18 | Pioneer cross-district/city ferry transportation | 50217 | Max 49% foreign ownership |
| 19 | River and lake transportation for general goods and/or livestock | 50221 | Max 49% foreign ownership |
| 20 | Publishing of newspapers, magazines, and bulletins (press) | 58130 | 100% domestic capital for establishment; foreign ownership up to 49% via capital market for expansion |
| 21 | Umrah and Hajj travel agency activities (specialized) | 79122 | 100% domestic capital; must be Muslim-owned |
| 22 | Retail trade of alcoholic beverages | 47221 | Restricted, strictly supervised, regulated under specific laws |
| 23 | Street vendor retail trade of alcoholic beverages | 47826 | Restricted, strictly supervised, regulated under specific laws |
| 24 | Batik industry: Cap batik industry | 13134 | 100% domestic capital |
| 25 | Primary defense equipment industry: Military aircraft | 30300 | Max 49% foreign ownership; if strategic, >49% with Minister of Defense approval |
| 26 | Domestic sea transportation, liner and tramp for passengers | 50111 | Max 49% foreign ownership |
| 27 | Domestic sea transportation for tourism | 50113 | Max 49% foreign ownership |
| 28 | Domestic sea transportation, liner and tramp for goods | 50131 | Max 49% foreign ownership |
| 29 | Domestic sea transportation, pioneer routes for goods | 50134 | Max 49% foreign ownership |
| 30 | Domestic sea transportation by community shipping (pelayaran rakyat) | 50135 | Max 49% foreign ownership |
Before venturing into the country, it is important that every investor familiarise themselves with this list. You don’t want to be caught off guard and realise that your intended sector is off-limits.
Encouraging More Foreign Investment
Many new sectors are now opened to foreigners under the positive list. The focus has now shifted to encouraging export-oriented and import-substitution industries on the new list. The Government’s aim is to strengthen the country’s value-added chains. Automotive, electronics, and coal gasification are sectors now being proposed under the new list.
Sectors, where the country is encouraging more foreign investment (100% ownership), include hospital services and hospital consultancy and management. They are also encouraging investors to venture into manufacturing of raw materials for pharmaceuticals. Clinic labs, renting medical equipment, and check-up clinics are now open for foreign investment. Other sectors include bars, restaurants, cafés, sports facilities, film studios, cinemas, editing, dubbing, and subtitling.
Many investors are welcoming this news. It is viewed as a positive step by the Government to encourage more investment options. This is the Government’s way of improving its investment procedures and policies. The new list is set to improve Indonesia’s investment climate.
Looking to Incorporate in Indonesia?
3E Accounting can lead you down the right path of your journey. We are well-versed in the local business climate. We can help you incorporate your company in Indonesia and choose the best business entity to suit your needs. Start your new venture off on a strong footing with the 3E Accounting experts.
For more information about our range of services, contact our team today.
