13 February 2020 (closed)
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The new negative investment list 2016 is not yet issued by Indonesian President Joko Widodo. However along with the launch of the tenth economic policy package, the government is currently processing the new draft of this list. Although not yet issued, in this column we discuss the most likely changes to be implemented in the new negative investment list 2016. The current draft regulation removes 35 business fields form the negative investment list. Besides that, more business fields are reserved for small and medium sized companies (local companies).
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