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Indonesia opens 35 sectors to foreigners, closes 20 others for FDI sectors in Indonesia

Tuesday, May 31, 2016

 Coordinating Economic Minister Darmin Nasution ( right ) talks to Cabinet Secretary Pramono Anung ( left ) before a press conference on the 10th economic policy package at the State Palace in Jakarta, on Feb. 11. The latest package includes the revised negative investment list.

Thirty five industrial sectors have been removed from the negative investment list ( DNI ), while 20 others have been added. The measures are stipulated in the 10th economic policy package released on Thursday.

Coordinating Economic Minister Darmin Nasution said the policy was aimed at boosting investment, both domestic and foreign direct investment ( FDI ), while providing protection to small and medium enterprises ( SMEs ).

“It means that 100 percent foreign ownership is allowed in the 35 sectors that have fully opened up to FDI,” said Darmin during a press conference at the State Palace in Jakarta on Thursday.

The 35 sectors include cold storage, sports centers, film processing labs, crumb rubber industry, warehousing, tourism, e-commerce with a marketplace value above Rp 100 billion, toll road operators, telcom device certification, non-hazardous waste management and raw medicine materials.

Plantation firms with more than 25 hectares of land integrated with a processing plant will also be allowed foreign ownership of up to 95 percent. Seven types of businesses, including leasing companies, will be allowed 85 percent ownership.

Businesses allowed up to 67 percent ownership include job training, travel bureaus, golf course developers, flight logistics supporting businesses, health care, private museums, catering, convention center and exhibition, consulting and construction businesses with contract values above Rp 10 billion, as well as telcom network providers with integrated telcom services.

The seven sectors allowed 51 percent foreign ownership include natural tourism management. Meanwhile, 32 sectors were still pegged with 49 percent maximum foreign ownership such as acupuncture, land transportation and high voltage electric installation.

“This policy is not liberalization but an effort to modernize our economy by encouraging SMEs and national companies to improve creativity, innovation and technology,” Cabinet Secretary Pramono Anung said.

On the new list, 20 industrial sectors were closed or restricted sectors for FDI, added by four new sectors from previously 16 restricted sectors under the preceding 2014 DNI regulation.

“In the revised DNI, we have added utilization of natural coral for aquariums, souvenirs and accessories. It is closed to any kind of investment for environmental protection,” Darmin added.

The remaining 19 industrial sectors, he continued, were reserved for SMEs, including pre-design and consulting services, architectural design services and architectural services. In addition, no SMEs were open to foreigners, along with businesses with investment value of less than Rp 10 billion.

Reference: Ayomi Amindoni & Anton Hermansyah The Jakarta Post Jakarta | Thu, February 11 2016.