JAKARTA (TheInsiderStories) - President Joko Widodo government announced the 10th economic policy package with a focus on investment issues to attract domestic and foreign direct investment coming to Indonesia, while at the same time protecting small and medium enterprises (SMEs) engaging in certain sectors.
Coordinating Minister for Economic Affairs Darmin Nasution, said the government will release a president decree on Negative Investment List (Daftar Negative Investasi/DNI) later this month. Under the planned new decree announced on Thursday (Feb. 11), thirty five industrial sectors have been removed from the negative investment list, while 20 others have been added.
He added there are various reasons that prompted the the government to open 100 percent certain business sectors for foreigners, including much-needed investment such as in pharmaceutical raw material, limited interest of foreign investors such as cold storage business and a need to boost certain industry such as restaurants and cafes as well as a move to dismantle monopoly such as in film industry.
“We see that certain sectors are not well-developed, therefore the sectors are opened for foreign investment,” he said.
The business sectors in which foreign investors can own 100 percent share are including: cold storage, sport centers, laboratories, film maker, crumb rubber, management and disposal of waste that is not dangerous, direct selling, futures brokerage, restaurant, bar, cafés, studio filming, laboratory film processing, means of dubbing the film, means of printing/duplication of copyrighted movies, means of shooting a movie, a means of editing the film, means of captioning of movies, film-making, film shows, studio recordings, distribution of films, industrial raw materials, business consulting services and management/service management hospital, services supporting health services supporting health: clinical laboratory, services in support of health: clinical medical check-ups, kiosk, establishment of testing telecommunication devices, organizer of trade transactions through electronic: market place, price grabber, daily deal and online classified ads.
In addition, 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 for 85 percent ownership.
Business sectors that are allowed up to 67 percent foreign ownership are including 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.
There are seven sectors in which foreign ownership is allowed for up to 51 percent including 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.
Under the new list, 20 industrial sectors were closed or restricted for foreign direct investment, increased 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 remains 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 opened to foreigners, along with businesses with investment value of less than Rp 10 billion.
“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 told reporters at the press conference on Feb. 11.
Here’s a list of 29 types of industries that are opened 100 percent for foreigners :
Foreign Direct Investment (FDI) opened 100 percent for Communication and Information Sector
- Telecommunications stalls — originally reserved for Micro, Small and Medium Enterprises and Cooperatives (SMECs), were omitted from the Negative List (DNI)
- The establishment of telecommunications equipment testing (laboratory tests) — previously 95 percent, were omitted from the DNI.
- E-commerce is partly opened depending on the size of the e-commerce platform. Business through electronic commerce transactions (platform), marketplace, price grabber, daily deals, online classified ads were previously reserved for Domestic Investment. These e-commerce platforms with capital between Rp10 billion to Rp100 billion, foreign ownership is set at maximum 49 percent (previously in the trade sector).
FDI opened for 100 percent foreign ownership in Health Sector
- Industrial raw materials for drugs. Previously foreign ownership in the sector was capped at maximum of 85 percent, are now omitted from the DNI.
- The business consulting and management services and or hospital management services. Initially, 67 percent, were excluded from the DNI
- Health supporting services (medical equipment rental). Initially, 49 percent, were excluded from the DNI
- Health supporting services clinic laboratories. Initially, 67 percent, were excluded from the DNI
- Health supporting services, medical check-up clinic originally 67 percent, were excluded from the DNI
FDI opened for 100 percent ownership in the Manufacturing Sector:
- Crumb rubber processing — previously foreign ownership was capped at 49 percent. In the new DNI policy, crumb rubber processing is omitted from the DNI.
FDI opened for 100 percent foreign ownership in the public infrastructure sector:
- Toll road concession — previously foreign ownership was capped at 95 percent. In the new DNI policy, toll road concession is omitted from the DNI.
- The management and hazardous waste disposal — previously foreign ownership was capped at 95 percent. This business sector is now omitted from the DNI
FDI opened for 100 percent foreign ownership in the Trade Sector:
- Direct selling — previously foreign ownership was capped at 95 percent. This business is now omitted from the DNI
- Cold Storage — previously foreign ownership was capped at 33 percent. This business is now omitted from the DNI.
- Brokerage for futures trading — previously foreign ownership was capped at maximum 95 percent. This business is now omitted from the DNI
FDI opened for 100 percent foreign ownership in tourism and creative economy:
- Restaurants - previously capped at 51 percent. Now, it is omitted from the DNI
- Bar — previously capped at 49 percent. Now, it is omitted from the DNI
- Cafe - previously capped at 49 percent,. Now, it is omitted from the DNI
- Sports venues (swimming, soccer, tennis, fitness, sports centers, sports activities etc.) — previously capped at 49 percent. It is now omitted from the DNI
- Studio shooting for films — previously capped at 49 percent. Now, it is omitted from the DNI
- Laboratory film processing — previously capped at 49 percent. Now, it is excluded from the DNI
- Facility to support film dubbing — previously capped at 49 percent. Now, it is omitted from the DNI
- Facility to print or duplicating films — previously capped at 49 percent. Now it is omitted from the DNI
- Facility to shoot films — previously reserved for domestic investment (PMDN). It is now removed from DNI
- Facility to edit films — previously reserve for PMDN. It is now completely removed from DNI
- Support facility to insert film subtitles — previously reserved for PMDN. It is now completely removed from DNI
- Filming — previously reserved for domestic investment. It is now completely removed from the DNI.
- Film cinemas — previously reserved for domestic investment. It is now removed from the DNI
- Studio recording -previously reserved for domestic investment. It is now removed from the DNI.
- Film distribution — previously reserved for domestic investment. It is now removed from the DNI.
Other sectors that are fully opened for foreign ownership are physician specialist practice, dental practice, medical services by paramedics, traditional health care services and pension funds. (*)