Indonesian government encourages the new form of investment and the development of business activities – Friday, November 16th 2018 The Government has reformed its policy – eliminated the unnecessary regulations and simplified the inefficient bureaucracy. The Government of Indonesia issues a list of business field status in respect to their availability receive FDI (Foreign Direct Investment), and hope could boost the business opportunity in Indonesia and attract foreign investors.
In the latest regulation to date, the Presidential Regulation Number 44 of 2016, generally the business in Indonesia is classified into three categories, those are :
- Open for FDI refers to the business field which are allowed to be 100% owned by foreigners,
- Conditionally open for FDI usually relates to the ownership or percentage between foreign capital and domestic or
- Closed for FDI, the business field which are strategic to the country security, prohibited by law or hazardous.
Business Sectors open for Foreign Direct Investment
This new economic package will revise the 2016 DNI by excluding a number of business sectors, meaning that they will be open to partial or full foreign investment. Of these sectors, 54 sectors will reportedly now be fully open to foreign capital investment. These 54 newly opened sectors include all the sub sectors of Oil and gas offshore drilling, Geothermal drilling and survey, Content service provider, Power generation>10MW, Over-the-counter drug pharmaceutical industry, Internet access services, Internet and postal-based retail trading, Medical devices type B, C and D, Cigarette industry (clove cigarettes, white cigarettes, other cigarette industries), Telecommunication network providers (fixed and mobile), Internet and postal-based retail trading, Art galleries and art performance buildings.
Every foreign investor which are decide to invest in certain business field in Indonesia, have to take a closer look at the Negative Investment List (latest revision through Presidential Regulation No. 44/2016). If the sector requires partial domestic ownership, the foreign investor requires partial domestic ownership. The foreign investor needs to comply with minimum requirements stands at IDR 10 billion or the equivalent value in US dollars. The Indonesian government set a high requirement in order to attract large scale companies and investors, while protecting smaller sized local business. Paid up capital is generally set at 25% of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher.
The minimum capital of the investment should be complied by the foreign investor on the next year after the investor received Business Permit. Instead of that, the Investor is prohibited to draft business agreement or the statement asserted that the ownership of shares in a limited liability company for and on behalf of others.
That’s all about Investment in Indonesia, may this article useful for you
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Jasaparalegal, Legal Support Specialist