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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 Existing 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, it quickly became apparent that the stringent rules were impacting economic growth. The slowing Gross Domestic Product growth meant something had to be done. Thus, the positive investment list was introduced. Currently, based on Presidential Regulation No. 44 of 2016, there are 20 business sectors in the negative investment lists or DNI. The government will make 14 from the 20 sectors to be in the positive list with different percentage of shareholder ownership. Below is a list of business sectors that are currently closed to investment:
- Agriculture: Cultivation of Marijuana
- Forestry: catching of fish spices listed in Appendix I
- Marine Affairs and Fisheries: lifting of valuable artefacts from
- Industry: utilization of coral from nature for construction materials/lime/calcium
- Industry: choral alkali making industry under the mercury process
- Industry: industry of pesticide active substance
- Industry: industrial chemical industry and ozone-depleting substance
- Industry: industry of chemical listed in schedule 1 of the chemical weapons convention
- Industry: alcoholic hard liqueur
- Industry: alcoholic beverages (wine)
- Industry: malt beverages
- Transportation: organization and operation of terminals for passenger land transport
- Transportation: organization and operations of weigh stations
- Transportation: Telecommunication/aids to shipping navigation and vessel traffic information system
- Transportation: provision of air navigation services
- Transportation: administration of testing of types of motor vehicles
- Communication and Information: Management and operation of the radio frequency spectrum and satellite orbit monitoring stations
- Education and Culture: public museum
- Education and Culture: historical and archaeological
- Tourism and Creative Economy: gambling/casino
The negative list is a list of business sectors that informs investors which areas they can invest in. 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.
Sectors like wildlife trade, chemical weapons trade, cannabis cultivation and gambling continue to remain off-limits. Casinos, producing alcoholic beverages, distributing coral and marine salvage, and the management of land terminals are strictly off-limits. The Government also does not allow foreign investment in anything directly related to the country’s national interest. This includes environmental and defence-related sectors.
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.
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