Frequently Asked Questions: #foreign-investment-restrictions-indonesia-business-sectors

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.

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