The Indonesian government has enacted Presidential Regulation No. 10 of 2021 on Investment Business Lines (“Priority List“) as one of the implementing regulations of the job creation law (“Omnibus Law“). The new investment list replaces the current negative list (under Presidential Regulation No. 76 of 2007 and Presidential Regulation No. 44 of 2016). This priority list states that all business sectors are open for capital investment activities, with some restrictions and conditions for certain aspects.
This new investment list has been effective since 4 March and represents a big development in the opening up of Indonesia’s economy to foreign investment. It appears that this new list is trying to to significantly reduce the number of sectors that are subject to foreign ownership restriction. This Indonesian government’s policy is seen to be in line with their intention to encourage more foreign investments in Indonesia and create jobs to offset the impact from Covid-19.
The changes include removing some of the business lines that were in the negative list since it was first introduced, e.g. telecommunication. The technology, media, and telecommunication sector is one of the sectors that is now open to foreign investment. All telecommunication network and service activities, which include telecommunication activities with or without cable, satellite telecommunication activities, premium call services, premium SMS content services and other multimedia services were subject to a 67% foreign investment restriction, but now are open for 100% foreign investment.
Under Article 7 of Priority List, there is still a minimum investment requirement for foreign investors where they can only carry out business activities for large enterprises with minimum investment value of IDR 10 billion (excluding land and buildings).
Furthermore, it is important for investment certainty that changes of law do not result in divestment obligations for structures that were allowed under the previous regime. The Priority List accommodates this by maintaining a grandfathering principle, where all provisions of laws and regulations regulating the Capital Investment Business sector will remain valid insofar as they do not contradict the provisions of the new priority list.