media company in indonesia

How The New Investment List Liberated Media and Telecommunications Industry in Indonesia

  • InCorp Editorial Team
  • 17 February 2022
  • 4 minutes reading time

The Current State of Indonesia’s Media and Telecommunications Industry

Indonesia’s telecommunications industry has played a pivotal role in developing the country’s economy in the last few years. The billion-dollar Indonesian telecommunications landscape is nothing short of small, with over 100,000 mobile towers all over the country. Technology in the telecommunications industry moves rapidly, so it is safe to say that the current state will see constant changes as it transforms to keep up with the more digitally advanced, younger generation of users.

Indonesia’s 5G rollout plan will be a catalyst to providing faster internet speeds, lower latency, and allow more connected devices at the same time. The need for 5G is evident with the country’s growing population and the competitive prices of technology in the market nowadays.

The three leading telecommunication companies – Telkomsel, Indosat, and XL – are racing to meet the demand for affordable data prices and improved services. With the number of smartphone users only increasing by the minute, this growing market opens up many opportunities for foreign investors to pursue activities in Indonesia.

With the newly established Omnibus Law banishing the restrictions to foreign ownership, there are still some barriers to entry in the telecommunications market. Investors will need to set up a foreign-owned company and apply for a Telecommunications Service License Provider that the Ministry of Telecommunication and Informations issues. Another possibility is for foreigners to conduct a merger or acquisition of a local company.

Opening a Telecommunication and Media Company in Indonesia: 2022 Outlook

It is indisputable that trends are moving from offline activities to completely digital. The industry will see a surge in data traffic in terms of telecommunication, resulting in even more affordable data tariffs and higher investment in network capacities.

A projection by PEFINDO, one of Indonesia’s leading credit rating agencies, predicts that data traffic from the top three telecommunication operators will reach a high of 30 million terabytes (TB). This growth is 30 times that of 0.9 TB in 2015, which stems from the speedy evolution of technology.

One of the reasons for Indonesia’s digital transformation is minimizing human contact amid the 2020 pandemic. In 2025, Indonesia is projected to be the largest digital economy in Southeast Asia, with a transaction value of USD$ 130 billion. This can be seen by the high number of competitive e-commerce companies in Indonesia, with a collective transaction value of USD$27 billion. This shows the potential for opening a media company in Indonesia and capitalize on these opportunities.

Seeing that the distribution of Indonesian users is heavily concentrated in the Island of Java, foreign investors looking to focus on capital expenditure outside this region may find success in doing so.

Opening a Media Company in Indonesia: Understanding The New Investment Regime

Following Law No 11 of 2020 regarding Job Creation, also known as the Omnibus Law, the President of The Republic of Indonesia issued Presidential Regulation No 10 of 2021 (PR 10/2021) consists of the much anticipated legal framework on business investment known as the Positive Investment List.

 

Indonesia’s Business Fields According to the Positive Investment List
Business Fields Category Number of Business Lines that Open or Closed for Foreign Investment
Priority sectors 245 are open for foreign investment
Business fields that stipulate specific requirements or limitations 46 are open for foreign investment
Business fields open to large enterprises, including foreign investors, but are subject to a compulsory partnership with cooperatives and micro, small, and medium-sized enterprises (MSMEs) 51 are open for foreign investment
Business fields reserved for cooperatives and MSMEs 112 are closed to foreign investment

The PR 10/2021 serves as a hallmark in the substantial changes of the government’s approach to foreign investment in the country. The regulation says that all business sectors are 100% open to participating in the country’s growth in terms of foreign investment. The government has taken all necessary steps to speed up administrative processes by assuring business licensing and complete transparency.

In this new investment regime, telecommunication business activities that were previously restricted to 67% now have no limitations to foreign ownership. These recent changes may push foreign investors to move their business in the telecommunications sector without needing a local partner.
As for media and broadcasting activities, the new regime allows a maximum of 49% of foreign ownership for a publicly listed company. While previously, it was fully reserved for domestic investment.

Opening up the country for foreign investors will be a significant growth driver to the nation’s economy and a massive window of opportunity for foreigners as industries will receive strong support and incentives from the government.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

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Frequent Asked Questions

It should take between 30 to 45 days.

It depends on the type of company you decide to establish.
  • In a local (PT) company, a foreigner cannot become a commissioner. It is possible to have a foreign director, but there has to be at least one local Director in PT.
  • In a foreign-owned (PT PMA) company, a foreigner can be a director or a commissioner.

Foreign citizens can expand to Indonesia and establish a foreign-owned company (PT PMA). Depending on the business line you want to pursue, there are regulations for foreigners to follow when setting up a company in Indonesia. One of the most important is the so-called Positive Investment List, which is updated frequently and with other Indonesian regulations.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.