Indonesian Government Relaxes Negative Investment List 2018

Background

The Indonesian government has given authority to additional 54 industry sectors by releasing those from the Negative Investment List – Dafter Negatif Investasi (DNI) on Friday, 17 November 2018. In effort to optimize the relaxation and openness for business sectors within President Decree No. 44 Year 2016 and to increase the investment appeal and competition, the Indonesian Government is opening up some sectors to PMA that brings technology, innovation, efficiency and expanding export with also to strengthen big companies, SMEs (UMK & UMKM) and Koperasi.

Aim & Benefits

The decision was included within the Economic Policy Volume XVI (16). This means the sectors within the list are allowed to be 100% foreign-owned. However, some exceptions may apply as some sectors still need to be harmonized. The DNI Policy 2018 is meant to increase appeal and competition that will be the main selling point to increase and expand new investment and development for people’s economic activities are to:
  • Accelerate reduced industry sectors that are still dictated by expanding investment opportunities for SMEs (UMK & UMKM) and Koperasi.
  • Push the spread of investment through parts of the economy;
  • Simplify and clarify provisions of the Negative Investment List (DNI);
  • Execute investment implementation.

Policy Principles

The changes within the DNI in 2018 are hoped to be one of the vital tools that can contribute to ending some main issues within the national economic situation in the globalized economy. Those issues are a deficit on Neraca Pembayaran (The Balance of Payment), late export, dependency on import, and costly logistical expenditures.

Within the decision, 138 industries are combined while in total industries within the Negative Investment List 2018 are 392 industries. In order to increase and expand capital investment, further changes to the Negative Investment List are encouraged. There is also a need to expand industries oriented within export, import substitution, and attract investment by Merger and Acquisition or Greenfield FDI – which Indonesia has a considerable comparative advantage. For example, Pharmaceutical Drugs Industry (investment above Rp. 100 Billion); Oil & Gas Surveyor Industry; Offshore Mining Industry; Dairy Industry; Plywood Industry; Nature Tourism Industry.

The additional 54 industries are:

1.    Paring & Cleaning Tuber Crops Industry;
2.    Cloth Printing Industry;
3.    Fabric Knitting Industry, specifically Laces;
4.    Retail through Postage and Internet;
5.    Internet cafés;
6.    Lumber Sawing Industry with production capacity above 2,000 m3/year;
7.    Lumber Veneer Industry;
8.    Plywood Industry;
9.    Laminated Veneer Lumber Industry (LVL);
10.    Lumber Wood Chips Industry;
11.    Wood Pellet Industry;
12.    Nature Tourism Business with Forest as medium, activities and Ecotourism Services;
13.    Coral/Ornamental Coral Cultivation Industry;
14.    Oil & Gas Construction Service: Platform;
15.    Geothermal Survey Service;
16.    Offshore Oil & Gas Drilling Service;
17.    Geothermal Drilling Service;
18.    Geothermal Operation & Maintenance Service;
19.    Power Plants with production above 10 MW;
20.    Electricity Installation Inspection and Testing or High/Extreme Voltage Utilization;
21.    Clove Tobacco Industry;
22.    Tobacco Industry;
23.    Other Tobacco Industry;
24.    Lumber Paper Pulp Industry;
25.    Crumb Rubber Industry;
26.    Warehouse Financing or Supervision Survey Service;
27.    Destructive/Non-Destructive Survey Service;
28.    Quantitative Survey Service;
29.    Quality Assurance Service;
30.    Supervision Survey Service on Processes based on Established Standards or Agreed upon;
31.    Community Opinion and Market Research Survey Services;
32.    Construction Machinery & Civil Engineering and Tools Rental Services;
33.    Other Machinery that is not classified in others (Power Plant, Textile, Metal/Wood Processor, Printing and Electrical Weld);
34.    Art Gallery;
35.    Art Performance Theatre;
36.    Land Transportation not within route: Tourism Transportation and Various Transportation;
37.    Passenger Overseas Sea Transportation (CPC 7211);
38.    Data Communications System Service;
39.    Fixed Telecommunication Network Organization;
40.    Mobile Telecommunication Network Organization;
41.    Content Services Telecommunication Network Organization;
42.    Information Centre and Other Additional Phone Services;
43.    Internet Service Provider;
44.    Phone Internet Service Provider for Public Services;
45.    Network Access Point Services and Other Multimedia Services;
46.    Work Training (Vocational training including Vocational Engineering, Commerce, Language, Tourism, Management, Information Technology, Art and Agriculture);
47.    Pharmaceutical Drugs Industry;
48.    Acupuncture Service Facilities;
49.    Pest Control or Fumigation Service;
50.    Medical Equipment Industry: Class B (surgical mask, syringe, patient monitors, condoms, medical gloves, hemodialysis fluid, PACS, surgical knives);
51.    Medical Equipment Industry: Class C (IV Catheter, X-Ray, ECG, Patient Monitor, Implant Orthopedic, Contact lenses, Oximeter, Densitometer);
52.    Medical Equipment Industry Class D (CT Scanner, MRI, Heart Catheter, Heart Stent, HIV Tests, Pacemaker, Dermal Filler, Ablation Catheter);
53.    Network Laboratory and Cell Banks.

There are still few industry sectors to be reclassified in order for it to be 100% hence investment shown within the sector can be seen by the effectiveness and revision of DNI – whether foreign or locally sourced. The decision was included in Regulatory Chief BKPM 6/2016 about Changes to Regulatory Chief BKPM 14/2015 about Guidelines and Procedures on Principal Permit for Capital Investment.


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