Indonesia’s government is preparing to issue Presidential Regulation (PR) on investment business fields — dubbed the positive investment list — which aims to reduce the number of business sectors restricted to foreign investors.
The positive investment list is part of the sweeping reforms introduced in Indonesia’s omnibus bill — currently being challenged at the Constitutional Court — is set to replace the negative investment list.
This latest regulation will promote investments in priority industries, simplify investment requirements, and provide greater protection to cooperatives and micro, small, and medium-sized enterprises (MSMEs). Foreign investors should note that the regulation is still being drafted and therefore further changes could be introduced.
The draft regulation stipulates that foreign investors can only carry out business activities in the form of a foreign investment company (PT PMA), and must be large-scale companies, willing to invest over 10 billion rupiah (US$709,000). This is excluding the value of land and property.
They, therefore, are obligated to establish partnerships with such SMEs. This can be in the form of human resources training, market growth endorsements, easing access to financing, and enhancing the competitiveness of the SME, among others.
Foreign investors that can invest below the 10 billion-rupiah (US$709,000) threshold are those with business activities in special economic zones or are engaging in technology-based startups.
(Source: Asean briefing)