Indonesia is one of the countries that is attractive as an investment destination for world investors, given that Indonesia has a large population (the 4th largest in the world 279,390,258 based on data from the World Population Review) which makes Indonesia a very popular investment destination.
Indonesia is the second largest investment destination in ASEAN in 2022, based on information from UNCTAD with the results of the World Investment Report, the total investment in ASEAN is $222.56 billion and Indonesia is the second with a total investment of $21.96 billion.
According to the facts, it can be concluded that Indonesia is one of the largest investment destination countries, but for the investors who are thinking of investing in Indonesia, there are several things that you need to know, especially regarding the restrictions on investing in Indonesia.
We will provide general information about the provisions of the Negative Investment List in Indonesia for foreign investors.
INVESTMENT NEGATIVE LIST
What is an investment negative list?
The negative investment list is a policy and regulation that prohibits investors (especially foreign/non-Indonesian investors) from investing in certain sectors in Indonesia.
Legal basis for negative investment list in Indonesia
Law Number 11 of 2020 on Job Creation ( Job Creation Law) / UU Cipta Kerja;
Presidential Regulation Number 10 of 2021 on Investment Business Sector;
Presidential Regulation Number 49 of 2021 amending Presidential Regulation Number 10 of 2021 on Investment Business Sector.
The following are some types of negative investment lists:
Open Line of Business
Line of business that is allowed to be attempted without any requirements in the context of investment.
The open line of business consists of Priority Line of Business, Line of Business allocated or partnership with cooperatives and MSMEs and Line of Business with certain requirements, or other Line of Business that can be operated by all Investors.
Closed Line of Business
Closed Line of Business is a certain line of business that is prohibited to be attempted as an investment activity.
In other words, a closed line of business is a line of business for activities that can only be carried out by the Central Government in the nature of services or in the context of strategic defense and security and cannot be carried out or cooperated with other parties.
Open Line of Business with Requirements
Open business fields with requirements are reserved or Micro, Small and Medium Enterprises as well as Cooperatives and Partnerships. (MSMEs)
Open lines of business with certain requirements:
a. Limitation of foreign capital ownership;
b. Certain location;
c. Special licensing;
d. 100% (one hundred percent) domestic capital; and
e. Limitation of capital ownership within the framework of the Association of South East Asean cooperation.
Meanwhile, partnership is cooperation in Investment activities for business fields that are open with both direct and indirect requirements, on the basis of the principles of mutual need, trust, strengthening and benefit involving Micro, Small and Medium Enterprises and large businesses.
We hope this article has been helpful and provided you with an understanding of the terms of investment in Indonesia.
If you find difficulties in investing in Indonesia, you can always consult with us, we provide free consulting services and are ready to help you with your business needs.