Disclaimer:
This article is intended for informational purposes only and does not constitute any legal advice.
It is the government’s commitment to create a friendly-investor country. Indonesia has released a positive investment through Presidential Regulation No. 10 Year 2021 that was amended by Presidential Regulation No. 49 Year 2021 investment business (“Positive Investment”) which also revokes the negative investment list based on Presidential Regulation No. 44 Year of 2016 (“Negative Investment List”).
Specifically for the foreign investment, below are the requirements under the Positive Investment:
- the foreign investment must be in the form of a limited liability company based on the Republic of Indonesia’s law and domiciled in the territory of the Republic of Indonesia, unless specified otherwise based on the applicable regulation.
- foreign investment may only conduct business activities on a large scale with an investment value of more than Rp. 10,000,000,000.00 (ten billion rupiahs) excluding the value of land and buildings.
- If the investment is in the special economic zones in technology-based startups, foreign investment can make investments with an investment value equal to or less than Rp10,000,000,000.00 (ten billion rupiah) excluding the value of land and buildings.
Under the Positive Investment, most of the businesses are open to be owned by foreigners unless for the activities that are declared closed for investment or activities that can only be carried out by the government. The business activities that are closed for investment are as follows:
- narcotics cultivation and industry class I;
- all forms of gambling and/or casino activities;
- catching fish species listed in Appendix I Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
- utilization or taking of coral and utilization or taking of corals from nature used for building materials / lime / calcium, aquariums, and souvenirs / jewelry, as well as live or dead coral (recent death coral) from nature;
- chemical weapons manufacturing industry;
- industrial chemical industry and industrial ozone depleting substances; and
- Alcoholic Beverage Industry (KBLI 11010), Alcoholic Beverage Industry: Wine (KBLI 11020), and Malt Containing Beverage Industry (KBLI 11031)
Meanwhile, the activities that can only be carried out by the government are the activities relating to public service or in defense and security sectors that are strategic in nature and cannot be carried out or cooperated with other parties.
Further on the Positive Investment, the business activities are divided into 4 (four) categories which are elaborated in the table below:
| Positive Investment List Categories | Explanation | Incentive for the investor |
| Priority Sectors | The business that meets with the following criteria:Program/strategic national projectcapital intensivelabor intensivehigh technologypioneer industryexport oriented; and/ororientation related to the research, development, and innovation activities. | Fiscal Incentive:tax allowancetax holidayinvestment allowancecustom incentiveNon-fiscal Incentive:Ease of business licensing, provision of supporting infrastructure, guarantee of energy availability, guarantee of the availability of raw materials, immigration, employment |
| Business activities which allocated or in cooperation with SME (small, medium enterprise) | business activities that are allocated for cooperation and small medium enterprise; andbusiness activities that are open for large scale business that is in partnership with Cooperation and medium, small enterpriseThis requirement does not apply to Investment activities carried out indirectly/portfolios whose transactions are carried out through the domestic capital market | N/A |
| Business activities with requirements | Investment requirements for domestic investors;Investment requirements with restrictions on foreign capital ownership;Investment requirements with special permits; orOther Investment requirements are the business activities that is limited and closely monitored and regulated in separate laws and regulations in the field of control and supervision of alcoholic beverages which comprises: (i) wholesaler (importer, distributor, sub-distributor); (ii) retailer; and (iii) street retail trade on liquor or alcoholThis requirement does not apply to Investment activities carried out indirectly/portfolios whose transactions are carried out through the domestic capital market | N/A |
| Business activities that are not listed in the above | Business activities in this category are open to all investors without any additional requirements. | Fiscal and non-fiscal incentive will be granted as long as it has been regulated in the provisions of the laws and regulations related to the said business activities |
Specifically for the investment with restrictions on foreign capital ownership do not apply toward:
- the investments that have been approved in certain business activities prior to the promulgation of this Presidential Regulation, as stated in the business license, except that the provisions in this Presidential Regulation are more favorable for the investor; or
- Investors who obtain special rights based on an agreement between Indonesia and the country of origin of the said Investor, except for the provisions on the same business activities as regulated in this Presidential Regulation, are more profitable for the Investor.
Companies whose the business activities that are with the restrictions on foreign capital ownership and will make changes to foreign capital ownership due to a merger, acquisition, or consolidation in the same business activities, the following provisions shall apply:
- limits on foreign capital ownership in the company that receives the merger as stated in the business license of the company that receives the merger;
- limits on foreign capital ownership in the company being taken over as stated in the business license of the company being taken over; or
- limits on foreign capital ownership in the new company resulting from the consolidation in accordance with the provisions of the laws and regulations at the time the new company resulting from the consolidation is formed.
The lists of the category of the business activities as referred to in the Positive Investment are provided in the attachment of the Positive Investment in this link.
