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Indonesia Update: Indonesian Government Revises Negative Investment List Relating To Foreign Direct Investment Liberalising A Number Of Key Sectors

The Indonesian Government has recently issued the much anticipated new negative investment list through Presidential Regulation No. 44 of 2016 on 18 May 2016 which sets out the business sectors which are completely closed or partially open to foreign investment (the “New Negative List”). The New Negative List comes following a press release issued by the Coordinating Ministry of Economic Affairs of the Republic of Indonesia on 15 February 2016 which has provided early indications of the changes to be introduced by the New Negative List.

The negative list is a series of Presidential Regulations issued over time by the Indonesian Government which sets out an evolving list of sectors that are either completely closed or partially open to foreign direct investment where the foreign ownership level in the entity licensed by the Capital Investment Coordinating Board (“BKPM”) is capped at a certain percentage. The list of sectors described follow the classification set out in the 2015 Indonesian Standard Business Classification (or “KBLI”).

The New Negative List is not retrospective. Investments approved prior to the New Negative List coming into force are not affected by the revised rules. The New Negative List seeks to encourage partnerships between foreign investment (PMA) companies and local Micro, Small, and Medium Scale Enterprises as well as Cooperatives (“MSMEC”) by increasing the lines of business which require partnerships with MSMEC.

The New Negative List also allows higher foreign ownership levels for investors from ASEAN member States in relation to certain lines of business.

Please click here to see our observations on the key opportunities and challenges for foreign investors in certain targeted sectors, which have been liberalised by the New Negative List.

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