The Negative Investment List (Daftar Negatif Investasi) is compiled by Indonesia’s Capital Investment Coordinating Board (BKPM). It specifies which sectors are open to foreign investment in Indonesia as well as the percentage of foreign ownership permitted. This list is regularly revised with the most recent version being Presidential Regulation No. 39 of 2014.

The list of business sectors is split among the following categories:

1. Closed to Investment

   e.g. marijuana cultivation, harvesting of endangered fish species, coral mining, environmentally-hazardous chemicals, alcoholic beverage production, land transportation terminals, aviation and marine navigation systems and services, satellite orbit and radio frequency monitoring stations, casinos, government museums, historical and prehistoric sites.

2. Reserved for Small and Medium Enterprises (SMEs) and Cooperatives

   e.g. agriculture for primary food sources under 25 hectares, seed production for plantation crops under 25 hectares, plantations under 25 hectares, plantation yield processing under a certain capacity, pig farming with less than 125 pigs, free-range chicken farming, capture and trade of wild animals, lumber production under 2,000 cubic metres per year, painted batik industry, pottery industry, travel agencies, art studios, low-technology and low-risk construction services.

3. Through Partnerships with Local SMEs and Cooperatives

   e.g. industries related to silk cocoons, rattan and bamboo; aquaculture and fish hatcheries; biomass pellets and essential oils; fish wholesale, distribution and export; agriculture machinery with intermediate technology; pumps and compressors; components and accessories for bicycles, two-wheeled and three-wheeled motor vehicles; jewellery and wooden boat industries; non-metal recycling.

   Partnerships with local SMEs and cooperatives are defined by Presidential Regulation No. 76 of 2007 as a non-equity arrangement between SMEs or cooperatives with larger businesses for “strengthening and mutual benefit".

4. Limited Foreign Ownership

   e.g. horticulture germination, cultivation, processing, laboratories or services up to 30%; oil and gas platform construction services up to 75%; oil and gas spherical tank construction services up to 49%; oil and gas, geological and geophysical survey services up to 49%; geothermal survey and drilling services up to 95%; oil and gas deep-water drilling services up to 75%; 1-10MW power plants up to 49%; automobile maintenance and repair up to 49%; toll roads up to 95%; direct selling up to 95%; distributors and warehousing services up to 33%; futures brokerage firms up to 95%; art galleries and theatres up to 67%; film studios, film processing laboratories and dubbing studios up to 49%; land and domestic sea transportation services up to 49%; marine salvage and other underwater services up to 49%; air and maritime cargo, airport support, ground handling and aircraft leasing services up to 49%; telecommunication network providers up to 65%; telecommunication services up to 49%; leasing companies up to 85%; consumer financing services up to 85%; insurance companies up to 80%; venture capital up to 85%; actuarial consultancy services up to 80%; pharmaceutical companies up to 85%; power plants above 10MW up to 95% (100% if using the PPP scheme); electric power transmission and distribution projects up to 95% (100% if using the PPP scheme).

5. Defined Location

   e.g. pig farming with more than 125 pigs provided that local regulations allow.

6. Requires a Special License

   e.g. capture and trade of reptile animals (snakes, turtles, alligators, etc.) from the wild which require a recommendation letter from the Ministry of Forestry; the timber industry which requires a recommendation letter from the Ministry of Forestry regarding the sustainable supply of raw materials; fishing companies that operate 100GT and above vessels which must abide by specific provisions set by the Ministry of Maritime Affairs and Fisheries; the cigarette industry which requires a recommendation letter from the Ministry of Industry; the sodium cyclamate and saccharin industry which must comply with regulations from the Ministry of Trade and the National Drug and Food Control Agency (BPOM); lead smelting operations; providers and operators of ferry, river and lake ports; banks; financial market brokerage firms; early childhood, primary, secondary and tertiary education institutions.

7. 100% Domestic Capital

   e.g. harvesting and utilization of wood sourced from natural forests; fishing companies that operate vessels over 30GT beyond 12 nautical miles off the coast; ocean sand mining; onshore upstream oil and gas production installations; onshore oil and gas storage and marketing facilities; onshore oil and gas drilling services; oil and gas well operators and maintenance service providers; oil and gas design, engineering and technical inspection services; power plants under 1MW capacity; retail businesses such as supermarkets below 1,200 square metres, department stores below 2,000 square metres, and convenience stores below 400 square metres; survey services; equipment, machinery and vehicle rental services; cleaning, laundering and tailoring services; barber shops and beauty salons; movie theatres, recording studios and film distribution companies; land transportation services for passengers; telecommunication tower providers, operators or contractors; media publications (newspaper, magazine, bulletin, etc.); pension fund management; foreign exchange traders; traditional medicine processing; pharmaceutical wholesalers; maternity hospitals; drugstores; general hospitals or clinics.

8. Limited Foreign Ownership and Defined Location

   e.g. cold storage services which can be up to 67% foreign-owned on the islands of Kalimantan, Sulawesi, Nusa Tenggara, Maluku and Papua but is limited to a maximum of 33% in Sumatra, Java and Bali; restaurants, catering services, private-owned museums and private-managed historical sites up to 51% and not in violation of local regulations; bars and cafes up to 49% (51% if in partnership with local SMEs) and not in violation of local regulations; one and two-star hotels up to 51% and not in violation of local regulations; motels, sports facilities and karaoke facilities up to 49% (51% if in partnership with local SMEs) and not in violation of local regulations; MICE services up to 51% and not in violation of local regulations.

9. Limited Foreign Ownership and Special License

   e.g. agriculture of primary food sources over 25 hectares, up to 49% foreign ownership and having obtained a recommendation letter from the Ministry of Agriculture; seed production for plantation crops over 25 hectares, up to 95% foreign ownership and having obtained a recommendation letter from the Ministry of Agriculture; plantations over 25 hectares up to 95% foreign-owned and having obtained a recommendation letter from the Ministry of Agriculture; research and development for GMOs up to 49% foreign-owned with recommendation from the Ministry of Agriculture; production of explosives, raw materials and components up to 49% foreign ownership with recommendation from the Ministry of Defence; security services up to 49% with an operating license from the Indonesian Police; land transportation terminal contractors up to 49% foreign-owned and having obtained a recommendation letter from the Ministry of Transportation; postal services up to 49%; commercial airlines up to 49% foreign-owned but subject to a domestic shareholder always holding a single majority.

10. 100% Domestic Capital and Special License

    e.g. crumb rubber industry; production of weapons and ammunitions which require a recommendation letter from the Ministry of Defence; alcoholic beverage wholesalers and retailers which must comply with a number of special requirements.

11. Limited Foreign Ownership/Defined Location for Capital Investment from ASEAN Countries

    e.g. golf courses can be 100% owned by ASEAN investors if located outside of the islands of Java and Bali, but otherwise limited to 70%; maritime cargo handling services up to 60%; specialised hospital services in provincial capital cities up to 70%; specialised medical and dental clinics up to 70% in provincial capital cities in Eastern Indonesia except for Makassar and Manado; nursing services in Makassar and Manado up to 51%, other provincial capital cities in Eastern Indonesia up to 70%.

Sectors that are not mentioned in the list are 100% open to foreign ownership. As a periodically updated list, a revised Negative Investment List is due to be released in April 2016. See Presidential Regulation No. 39 of 2014 for the complete list of business sectors.

For more information about the Negative Investment List or finding a local partner in Indonesia, contact GBG Indonesia

Global Business Guide Indonesia - 2016

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)

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