THE INVESTMENT NEGATIVE LIST 2014

The new Investment Negative List is issued to create legal certainty as well as one of the pursuits to attract investors in order to invest in Indonesia. Investment Negative List is the implementation of the transparency in order that investors can easily acknowledge the list of close business fields to foreign investment or open business fields with conditions to foreign investment. The Business Fields which is established by DNI is arranged based on Indonesian Standard Business Classification (“KBLI”) which is released by The Central Bureau of Statistics.

In the effort to increase investment in Indonesia and to execute the ASEAN Economic Community (AEC), the Government of Indonesia had done amendment to the provision list of close business fields and open with certain requirements in the field of investment. The amendment of Investment Negative List is on business fields such as agriculture, forestry, industry, maritime and fisheries, transportation, energy and mineral resources, healthcare, education, communication and information, finance, banking, trading among others. In Presidential Regulations No. 39/2014 (“Investment Negative List 2014”) which revokes Presidential Regulations No. 36/2010 (“Investment Negative List 2010”) is divided into the three groups of business areas :

  1. Close business fields;
  2. Open business fields with conditions;
  3. Open business fields without conditions.

 

I.  Close Business Fields

Business fields that now confirmed closed to foreign investment based on Annex 1 Investment Negative List 2014 are :

  1. Chemicals Industry which regulated in Annex 1 Law Number 9/2008 regarding The Use of Chemicals as Chemicals Weapons;
  2. Alcohol Liquor Industry (liquor, wine, malr);
  3. Performances and Operating Land Transport Passenger Terminal;
  4. Performances and Operating Motor Vehicles Weighing;
  5. Telecommunication/Voyage Supporting Services;
  6. Performances of Flight Navigating Services;
  7. Performances of Periodic Testing of Motor Vehicles;
  8. Management and Performances of Radio Frequency Monitoring Station and Satellite Orbit;
  9. Government Museum;
  10. Historical Relics and Archeological Evidence (temples, palaces, inscriptions, and ancient buildings); and
  11. Casino.

Close Business Fields can be utilized for non commercial purposes such as, research and development after being approved by the government which has responsibility to such business fields.

 

II. Capital Ownership Changes

Investment Negative List 2014 has differences with Investment Negative List 2010 in relation to both foreign and domestic capital for some business fields particularly to the number/percentage of foreign ownership.

The following are business fields with increasing foreign ownership:

investment-tabel1

The following are business fields with decreasing foreign ownership:

investment-tabel2

III. New Businesses in Investment Negative List 2014 that are open with Conditions to Foreign Investment

In addition to the policy of an amendment related to increased and decreased foreign capital, there are also new business fields which were unregulated in Investment Negative List 2010 are now becoming open with conditions in Investment Negative List 2014. The New Business Fields are energy and mineral resources, public works, trading, and transportation.

The following are business fields that previously not regulated in Investment Negative List 2010 which are becoming business fields open with conditions in Investment Negative List 2014:

investment-tabel3

IV. IMPLEMENTATION/APPLICABILITY

Article 9 of Investment Negative List 2014 stating that the Negative List is not retroactive, which means foreign investors that have been approved prior to the issuance of Investment Negative List 2014 are not required to comply with categories and/or foreign ownership limitation set out in the Annexure of Investment Negative List 2014, except if the new categories and/or limit are more beneficial in nature.

However, article 6 Investment Negative List 2014 also requires that share ownership as a result of merger, acquisition and consolidation have to observe the foreign ownership limitation set out in the Annexure of DNI 2014, in the event of:

1. Merger
The surviving company’s percentage of foreign shareholder must comply with the foreign shareholding limit stated in the surviving company’s investment approval;

2.Acquisition
The percentage of foreign ownership in the acquired company after acquisition must comply with the investment approval of the said company;

3.Consolidation
Foreign shareholder of the new company formed as a result of consolidation must be in accordance with prevailing regulations at the time the new company is formed.

 

Fanri Tamara
Junior Associate – f.tamara@legisperitus.co.id

The foregoing material is the property of Legisperitus Lawyers.

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