negative investment list

The Latest Regulation on Indonesia 2016 Negative Investment List

  • InCorp Editorial Team
  • 23 June 2016
  • 3 minutes reading time

Negative Investment List 2016

The new Negative Investment list has finally been published by Indonesia Investment Coordinating Board (BKPM) on May 18th, 2016. This 2016 Negative Investment List is replacing the 2014 Negative Investment List or Daftar Negatif Investasi 2014.

There are some sectors that are closed for the foreign investment on the prior Negative List. But now those sectors are open for foreign investment. There are also some sectors that completely got removed from the list, which means the companies in those sectors could legally run as 100% foreign owned companies. It opens more possibilities for the foreign investors who want to expand or even start a new business in Indonesia..

Here are some of the most foremost industries and sectors that are affected by significant adjustments to ownership:

Agriculture

The previous regulation required a recommendation from Minister of Agriculture for several business activities. There are recommendations from the minister that removed from the Minister for the following activities:
1. Growing of food crops, including breeding/seeding with an area of more than 25 HA,
2. Processing of plantation crops with a 20% utilization of a business’s own crops, and
3. Research and development on genetically modified organisms.

Construction and Installation of High Voltage Electricity

On the prior Negative List Investment, it has no reference for the foreign investment. But on the 2016 Negative List Investment is now open 49% for foreign investment.

Marine and Fisheries

The 2016 Negative Investment List removes fishery and processing of fishery products from the list, and they are fully opens them for foreign ownership. Nevertheless, sea sand quarrying is no longer open for foreign ownership. The utilization of coral requires Minister of Environmental and Forestry’s recommendations.

Crumb Rubber Industry

It was 100% close for the foreign investment, but 100% foreign investment now permitted (provided that a special license from the Ministry of Industry of Indonesia is obtained). See how to get the import and export license in Indonesia.

Energy and Mineral Resources

There is a pretty significant change in this sector, the new regulation changes large Scale Power Plants (> 10 MW), maximum foreign ownership from 95% to 100% for PPP.

Public Works

The new regulation is aligning the requirement for investment with the relevant regulations as issued by the Minister of Public Works and the Investment Coordinating Board (BKPM). Here are the changes:

    1. Construction services (contractors) with high technology, high risks, and/or work value of more than IDR 50 billion, maximum foreign ownership is 67% or 70% for investor from ASEAN countries;
    2. Construction consultancy services with high technology, high risks, and/or work value of more than IDR 10 billion, maximum foreign ownership is 67% or 70% for investor from ASEAN countries; and
    3. Water drinking supply, maximum foreign ownership is 95%.

Biomass Pellet and Producing Industry

It was only permitted when in partnership with a local SME, the new regulation said that now it’s 100% foreign investment permitted.

Trading

Direct selling and futures brokers got removed from the updated list, automatically these activities are fully open for foreign ownership and increased minimum foreign shareholder ownership from 33% to 67% for distributors and warehousing. Find out how to establish a trading company in Indonesia and the business set up overview.

Transportation

The changes in this sector are:

  1. Land Terminal Construction for Public and Goods Facilities, from closed to open for up to 49% foreign ownership, and
  2. Vehicle Testing, from closed to open for up to 49% foreign ownership.
  3. Passenger Transportation Overland. It was 100% closed for foreign investors, but now it’s 49% foreign investment permitted.

Check the Latest Negative Investment of the Indonesia 2018.

Verified by

Hotdo Nauli

Senior Legal & Delivery Manager at InCorp Indonesia

Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). 

Frequently Asked Questions

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.
    • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

    The government will check the minimum paid-up capital, IDR 10,000,000,000. Fulfilling this requirement is a must.

    The minimum number of shareholders to incorporate a PT is two

    For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance.

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