Agriculture - Removal of Recommendation from Minister

Under the old regulation, an recommendation from the ministry of agriculture was required for several business activities. Under the new draft the recommendation from the ministry is removed for the following activities:

1. Growing of food crops, including breeding/seeding with an area of more than 25 ha;
2. The processing of plantation crops with a 20% utilization of a business’s own crops; and
3. Research and development on genetically modified organisms (GMO).

Marine and Fisheries - Changes of Allowed and Prohibited Business Activities

The draft regulation removes the following business activities from the list, and thus fully opens them for foreign investment:

1. Fishery business;
2. Processing of fishery products;

The following business activities are no longer open for investment (both foreign investment and local investment):

1. Collection of valuable objects from sunken ships; and
2. The utilization of corals.

Public Works - Simplifying the Investment Requirements for Construction

The draft of the negative investment list 2016 simplifies the investment requirement by aligning them with the relevant ministry of public works regulations and BKPM regulations. Based on the draft the following restrictions apply for:

1. Construction Services:
    a. Low risk and/or low value projects of up to 50 Billion Rupiah are only open for local investors.
    b. High risk and/or high value projects of more than 50 Billion Rupiah are open for foreign investors

2. Construction Consultation Services:

    a. Low risk and/or low value projects of up to 10 billion rupiah are only open for local investors.
    b. High risk and/or high value projects of more than 10 billion rupiah are open for foreign investors.

Trade - Changes in Trading and Removal of 2 Business Fields

The new draft removes the business activities direct selling and futures brokering from the list, making these activities 100% open for foreign investment.

Besides that there will be a change in share ownership minimum for trading companies which is estimated to impact many companies. The new negative investment list 2016 is expected to increase minimum foreign shareholder ownership from 33% to 67%, for distributors, cold storage and warehouses.

New Negative Investment List 2016

It is not yet clear when the New Negative Investment List 2016 will be issued, however we will provide an update once there are any developments.

This column is provided by PNB Law Firm Jakarta

Discuss