What then will this new list mean for investors?
For one, the new Negative Investment List completely removes foreign ownership restrictions on several businesses in the trading, tourism, the creative economy, as well as healthcare sectors. For example, restaurants, which is classified under the sector of tourism and creative economy, can now be wholly owned by foreign investors. Previously, foreign investors could only own a maximum of 51% in a restaurant business.
In order to encourage inter-ASEAN cooperation, ASEAN investors are also allowed slightly higher ownership stakes in certain sectors. This includes the MICE sector where ASEAN investors are allowed to own up to 70% of a business classified in the sector. Comparatively, non-ASEAN investors can only own a maximum of 67% in businesses classified under the MICE sector.
The new list also opens sectors such as E-commerce (sales via electronic platforms) to foreign investors, subject to the investment value of the company. Foreign investors investing more than IDR 100 billion are allowed to wholly own E-commerce marketplaces or daily deals websites. However, foreign investors who invest below IDR 100 billion in the sector are required to have a local partner as they are only allowed to own maximum shares of 49%. This is the Indonesian government’s way of attracting investments to accelerate growth in E-commerce while protecting indigenous SMEs.
With the liberalisation of foreign ownership across various sectors, foreign investors are now able to invest more in the country. This is an indication of the urgency of the Indonesian government to boost the Indonesian economy, which has slowed in the past 2 years.