Frequently Asked Questions: #restrictedsectors

Yes, there are restrictions on foreign ownership in certain business sectors in Indonesia. These restrictions are outlined in the Negative Investment List (DNI), which is a key regulation that foreign investors must consider when establishing a PMA company. Here are the main points to understand:

• The DNI categorizes business sectors into three main groups:

  • Open sectors: Fully open to foreign investment
  • Restricted sectors: Open to foreign investment with certain conditions or limitations
  • Closed sectors: Not open to foreign investment

• Restricted sectors may have limitations such as:

  • Maximum percentage of foreign ownership allowed
  • Requirements for partnerships with local companies
  • Specific location restrictions
  • Special licensing requirements

• Some examples of restrictions include:

  • Certain retail trade sectors: Limited to 67% foreign ownership
  • Construction services: Various ownership limits depending on the specific service
  • Tourism-related businesses: Some subsectors have ownership limits

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

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

• Some sectors considered strategic or vital to national interests may have more stringent restrictions or be completely closed to foreign investment

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

• The full DNI list and detailed explanations can be found on the BKPM (Indonesian Investment Coordinating Board) website or through authorized investment consultants

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

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Foreign investment restrictions in Indonesia are governed by the Negative Investment List (DNI), which outlines sectors that are closed or have limitations for foreign ownership. Key points to consider:

• The DNI is periodically updated by the Indonesian government to reflect changes in investment policies.

• Sectors are categorized as:

  • Fully closed to foreign investment
  • Open with certain restrictions (e.g., maximum foreign ownership percentage)
  • Open with specific requirements (e.g., partnerships with local SMEs)
  • Fully open to foreign investment

• Some commonly restricted sectors include:

  • Media and broadcasting
  • Certain retail and distribution activities
  • Some transportation services
  • Specific agricultural products

• Restrictions can vary based on:

  • Percentage of allowed foreign ownership
  • Minimum capital requirements
  • Location (e.g., special economic zones may have different rules)
  • Specific licensing or partnership requirements

• It's crucial to consult the most recent version of the DNI before planning any foreign investment in Indonesia.

• Some sectors may require a combination of foreign and local ownership, promoting partnerships with Indonesian entities.

• Certain strategic industries (e.g., defense, natural resources) often have more stringent restrictions or are entirely closed to foreign investment.

• The Indonesian Investment Coordinating Board (BKPM) can provide guidance on interpreting the DNI for specific business activities.

• Even in open sectors, there may be additional licensing or operational requirements for foreign-owned companies.

• The government occasionally introduces new policies or incentives to attract foreign investment in priority sectors, which may override some DNI restrictions.

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

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