Indonesian Government Planning to Revise the Negative Investment List
The Indonesian government is in the process of revising the country's Negative Investment List (the list that states which sectors of the economy are closed to foreign investment). Head of the Indonesia Investment Coordinating Board (BKPM), Mahendra Siregar, said that a number of (sub) sectors, previously closed to foreign investment, will be opened up this year. These sectors include telecommunication, financial institutions, pharmaceuticals, tourism, airport and seaport transportation services and management, healthcare, and advertising.
The government of Indonesia is particularly eager to welcome foreign investments through its public-private partnership (PPP) scheme. The PPP scheme mainly focuses on infrastructure projects.
The main reason for opening up the economy for foreign investment is to attract the influx of more investments amid slowing realized investments and slowing economic growth in the third quarter of 2013. Total realized investments in Indonesia in Q3-2013 grew 22.9 percent (yoy), which is about two percentage points lower than the growth pace in the previous year. Compared to the second quarter of 2013, total realized investments in Indonesia grew only 0.7 percent. Slowing growth in investments is one of the reasons why Indonesia's gross domestic product (GDP) has slowed down as well. Yesterday (06/11), Statistics Indonesia announced that the country's economy grew 5.62 percent in Q3-2013 from the same period in 2012, implying the fifth consecutive quarter of slowing economic growth.
The BKPM has revised down its target for total investments in 2014 by 12 percent to IDR 450 trillion (USD $40 billion) because of the current national and international context.
The revised Negative Investment List is expected to be released by the end of 2013.
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