Frequently Asked Questions: #negativeinvestmentlist

Yes, but far fewer than in the past. Foreign ownership conditions are set by the Positive Investment List (Presidential Regulation No. 10/2021, as amended by No. 49/2021), which in 2021 replaced the old Negative Investment List (DNI). The default is now openness: all business sectors are open to 100% foreign ownership unless specifically listed otherwise. Here are the main points to understand:

• The Positive Investment List categorizes business sectors into four main groups:

  • Fully open sectors: The default — open to 100% foreign ownership
  • Conditionally open sectors: Open to foreign investment with certain conditions, such as ownership caps or special licensing (e.g. postal services, domestic air transport)
  • Sectors reserved for, or requiring partnership with, cooperatives and micro, small and medium enterprises (MSMEs)
  • Closed sectors: Not open to any investment

• The closed list is short, covering activities such as:

  • Gambling and casinos
  • Cultivation of class-I narcotics
  • Capture of protected species and coral extraction
  • Chemical weapons production
  • New alcoholic-beverage manufacturing

• Many sectors that were restricted under the old DNI are now fully open — for example, restaurants, bars, spas and travel agencies can now be 100% foreign-owned

• Your business activities are defined by KBLI codes selected during registration in the OSS (Online Single Submission) system, which checks compliance with the Positive Investment List automatically

• Even in fully open sectors, there may be additional regulations or licensing requirements that affect foreign investors

• The list is periodically updated by the Indonesian government, so it’s crucial to check the most recent version when planning your investment

• It’s highly recommended to consult with legal experts or investment advisors familiar with the current regulations before proceeding with your investment plans

• The full list and detailed explanations can be found via the OSS system and the Ministry of Investment and Downstream Industry (BKPM) website, or through authorized investment consultants

Always verify the current status of your intended business sector under the Positive Investment List before proceeding with PMA company establishment to ensure compliance with Indonesian foreign investment regulations.

#foreignOwnershipRestrictions   #NegativeInvestmentList   #investmentIndonesia   #PMAcompany   #restrictedSectors  

In Indonesia, foreigners can establish several types of business entities, each with its own characteristics and requirements:

1. PT PMA (Perseroan Terbatas Penanaman Modal Asing)
   • This is the most common form for foreign investment
   • A limited liability company with foreign shareholders
   • Subject to the Positive Investment List (Presidential Regulation 10/2021, as amended), which opens most sectors to full foreign ownership
   • Minimum capital requirements apply
2. Representative Office
   • Types include:
     • Foreign Company Representative Office (KPPA)
     • Foreign Trade Company Representative Office (KP3A)
     • Foreign Construction Services Representative Office (BUJKA)
   • Cannot engage in direct commercial activities or generate revenue in Indonesia
   • Useful for market research, liaison, and promotional activities
3. Branch Office
   • Only available in certain sectors (e.g., banking, oil and gas)
   • Directly controlled by the foreign parent company
   • Limited availability and subject to specific regulations
4. CV (Commanditaire Vennootschap - Limited Partnership)
   • Available to Indonesian citizens only
   • Foreign direct investment must take the form of a PT PMA under Law 25/2007, so a CV is not an option for foreign investors
5. Foundation (Yayasan)
   • Non-profit organization
   • Can be established by foreigners for social, religious, or educational purposes
   • Cannot engage in commercial activities
6. Permanent Establishment (Bentuk Usaha Tetap - BUT)
   • A permanent establishment for tax purposes
   • Not a separate legal entity
   • Typically used for specific projects or contracts

When considering which entity to establish, foreigners should:

• Consult the latest Positive Investment List (which replaced the Negative Investment List in 2021) to check sector conditions
• Consider the nature and scope of their intended business activities
• Evaluate minimum capital requirements and investment plans
• Assess long-term business goals and expansion plans in Indonesia

It’s important to note that regulations and requirements can change, so it’s advisable to consult with a professional service provider like Okusi Associates for the most up-to-date information and guidance tailored to your specific business needs.

#businessEntities   #PMAcompany   #foreignInvestmentIndonesia   #NegativeInvestmentList   #companyEstablishment  

The Negative Investment List (DNI) was Indonesia’s former list of business sectors closed or restricted to foreign investment. In 2021 it was replaced by the Positive Investment List (also called the Priority Investment List, Daftar Prioritas Investasi), issued under Presidential Regulation No. 10/2021 as amended by No. 49/2021. Key points for foreign investors:

• The default flipped: under the DNI, sectors were assumed restricted unless listed as open; under the Positive Investment List, all business sectors are open to 100% foreign ownership unless specifically listed otherwise.

• Closed sectors: only a small set of activities remains completely closed to investment — for example gambling and casinos, cultivation of class-I narcotics, capture of protected and endangered species, coral extraction, and chemical weapons production. The alcoholic beverage manufacturing industry also remains closed to new investment.

• Conditional sectors: a limited number of sectors keep foreign ownership caps or special requirements (for example postal services and domestic air transport), or are reserved for — or require partnership with — Indonesian cooperatives and micro, small, and medium enterprises (MSMEs).

• Priority sectors: several hundred business fields are designated as priority sectors and qualify for incentives such as tax holidays, tax allowances, and customs facilities.

• Impact on PMA companies:

  • Far more sectors are available for wholly foreign-owned PMA companies than under the DNI
  • Business activities are defined by 5-digit KBLI classification codes chosen at registration through the OSS (Online Single Submission) system
  • Compliance with the list is checked automatically during OSS registration

• Seeking professional advice:

  • Sector conditions still change from time to time, so it’s advisable to consult with experts like Okusi Associates for the most current information and guidance on how the Positive Investment List affects specific investment plans.

By understanding the Positive Investment List, foreign investors can confirm early whether their planned activities allow full foreign ownership and structure their PMA company accordingly.

#NegativeInvestmentList   #foreignInvestmentIndonesia   #investmentRestrictions   #PMAcompany   #businessSectors  

Foreign investment restrictions in Indonesia are governed by the Positive Investment List (Presidential Regulation No. 10/2021, as amended by No. 49/2021), which in 2021 replaced the old Negative Investment List (DNI). The default is now openness: all sectors are open to 100% foreign ownership unless specifically listed. Key points to consider:

• Sectors are categorized as:

  • Fully open to foreign investment (the default — most sectors)
  • Open with conditions (e.g., maximum foreign ownership percentage, special licenses)
  • Reserved for, or requiring partnership with, Indonesian cooperatives and MSMEs
  • Closed to investment entirely (a small list)

• Sectors closed to investment include:

  • Gambling and casinos
  • Cultivation of class-I narcotics
  • Capture of protected and endangered species, and coral extraction
  • Chemical weapons production
  • New investment in the alcoholic beverage manufacturing industry

• Conditions in the remaining restricted sectors can involve:

  • A maximum foreign ownership percentage (e.g., postal services, domestic air transport)
  • Partnership or reservation requirements protecting local MSMEs
  • Location-specific rules (special economic zones may have different treatment)
  • Additional sectoral licensing requirements

• Business activities are defined by 5-digit KBLI classification codes selected during registration in the OSS (Online Single Submission) system, which checks Positive Investment List compliance automatically.

• Several hundred priority sectors qualify for investment incentives such as tax holidays, tax allowances, and customs facilities.

• The Ministry of Investment and Downstream Industry (BKPM) provides guidance on interpreting the list for specific business activities.

• Even in fully open sectors, foreign-owned companies must meet PMA capital requirements (investment plan above IDR 10 billion per KBLI per location; paid-up capital of at least IDR 2.5 billion) and any risk-based licensing conditions.

Always consult with legal experts or investment advisors familiar with the latest Indonesian regulations to ensure compliance with current foreign investment conditions.

#NegativeInvestmentList   #foreignOwnershipRestrictions   #investmentRestrictions   #FDIcompany   #restrictedSectors