Hundreds of new business sectors will soon be open to foreign investors in Indonesia thanks to the new Indonesia Positive Investment List signed by President Joko Widodo on 2nd February 2021.
The changes replace the current Negative Investment List with a Positive Investment List.
This is one of several new legislations passed by the Indonesian government to stimulate the economy and improve international economic relations.
Positive Investment List to replace Negative Investment List (DNI)
The new Indonesia Positive Investment List affects both foreign and local investors. Not only does it open up hundreds of classifications to foreign investment, it also allows local investment in some of the activities that previously were forbidden to all investors.
Minimum capital requirements remain the same – large (which includes all foreign companies) companies paid up capital remains as 2.5 billion IDR.
Key changes to foreign investment legislation in Indonesia
The new decree places business types into three different categories:
Priority business classification
This classification is for areas of business where the Indonesian government provides additional incentives. The details of these incentives will be confirmed at a later stage but will include benefits such as tax allowances.
Reserved for domestic capital
Businesses under this classification will remain largely unchanged by the new decree.
Open or open with limitations
Hundreds of business classification will be open to investors in Indonesia that were previously closed. The following table shows some of the business classifications that will be affected by this change to the positive investment list.
|Business Classification||Previous foreign shareholder limit||Positive List|
|Content Telecommunications Service (ringtone, sms)||67%||100%|
|Internet Service Provider||67%||100%|
|Distributor||67% or 49% for medical devices||100%|
|Brokerage activity and commissioning agent||closed||100%|
|Advertising||closed, or 49% for ASEAN investor||100%|
What does this mean for foreign investors in Indonesia?
The obvious change is that foreigners can now own businesses with business classifications that the new Indonesia Positive Investment List opened up.
If your company is already registered under a classification that now allows (more) foreign ownership, you can start acquiring the rest of the local shares through a company restructuring process as follows:
- Hold a General Meeting of Shareholders to acquire local shares in the company. If locally held shares exceed 50%, a newspaper announcement needs to be formally published.
- Prepare for the transfer transaction through a notarial purchase and sell the deeds. If a Loan Agreement was used to acquire Pledged Shares from the local shareholders, then this must first be voided.
- Get approval from the Ministry of Law and Human Rights for the change in shareholding structure.
- Update the shareholding structure in all other other company licenses through Indonesia’s government OSS system, which will be updated after the implementation date of 3rd March 2021.
To talk to a consultant about the investment opportunities available in Indonesia, get in touch by filling out the form below.