JAKARTA (TheInsiderStories) - The Indonesian government considers allowing foreign investors to own stakes in e-commerce, information & technology (IT), health, tourism and defense businesses, which were previously closed for foreign investors.
Currently, the Investment Coordinating Board (BKPM), ministries and government agencies are conducting a review on the investment guidelines as the revision of Presidential Decree Number 39 Year 2014 on the list of business fields closed and open with the stated requirements.
The government expects the new investment guideline to be completed by April 2016.
Chairman of BKPM Franky Sibarani said in a statement, the decree on new list is created with an aim to protect local businesses against foreign competition.
He said the government considers allowing foreigners to own up to 33 percent stake in e-commerce businesses. In addition to these sectors, several businesses in telecommunications and IT are expected to remain unchanged.
Some examples are business providers, operations and leasing business, construction service for telecommunication tower, institute of community broadcasting radio and television (reserved for SMEs), as well as the telecommunications networks which are integrated with telecommunication services are now capped at 65 percent owned by foreign investors.
BKPM wants foreign investment valued at a minimum of $15 million are directed to middle to large e-commerce, therefore prohibit foreign investors to acquire and own stakes in local startups.
“We also received suggestions to cap the investment at a minimum of $15 million (in e-commerce) to make sure the investment will directed to the middle-upper scale, and therefore let local startups to grow,” Franky said.
Observers have said foreign investors should be allowed to own stakes in startups as they are usually risk-takers, while local investors are reluctant to invest in startups due to the risky nature of investing in startups.
The government also considers allowing foreign investors to own majority stakes in armored transportation service companies in the country. Under current rules, foreigners can own up to 49 percent in armored-car businesses, which typically cater to banks and other financial services firms.
Franky said the BKPM would discuss the latest plan with the police, Bank Indonesia and the Financial Services Authority (OJK), who have the interest in the armored-car business.
He added several businesses in health sector will be further regulated, including acupuncture, which is capped at maximum of 49 percent ownership by foreign investor.
“The proposal of the health ministry categorizes acupuncture service to be under the business of specialist clinics, whereas the rules regarding acupuncture therapist would be further regulated under labor regulations,” he stated.
As for the tourism sector, homestay business is reserved for SMEs, while business leisure and entertainment (karaoke) is capped at a maximum of 49 percent for foreign ownership and travel agents is reserved for SMEs. (*)