Indonesia maintains that certain industry sectors must be shielded from full foreign ownership. Consequently, the Negative Investment List (Daftar Negatif Investasi, or DNI) represents the most critical regulatory document for all current and prospective foreign investors operating within the country.
This Presidential Regulation explicitly defines the business sectors, classifying them as:
- Fully closed to all investment (foreign and domestic).
- Open, but with specific restrictions or conditions for foreign investors.
- Fully open to 100% foreign ownership.
How to Use the Negative Investment List: A Practical Guide
- Identify Your Business Code (KBLI): The Indonesian business classification system is called Indonesia Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia, or KBLI). Your first step is to find the exact 5-digit KBLI code that corresponds to your business activity. This is non-negotiable, as the DNI regulations are tied to these codes.
- Cross-Reference with the DNI: Once you have your KBLI code, you must cross-reference it with the latest Negative Investment List (PerPRES 10/2021) to see:
- Is the sector open or closed?
- What is the maximum allowed foreign shareholding?
- Are there any specific conditions (e.g., must be a partnership, minimum investment value, location requirements)?
- Check for “Priority” Status: Verify if your business activity is on the government’s “Priority List”. If it is, you may be eligible for tax allowances and other benefits, and you could potentially apply for a higher level of foreign ownership than the standard cap for that sector.
- Consider Location: Some Special Economic Zones (Kawasan Ekonomi Khusus, or KEK) and certain underdeveloped regions offer more liberal ownership rules to attract investment. For example, a hospital might be limited to 67% foreign ownership nationally but could be 100% in a designated economic zone.
- Plan for Divestment (if applicable): Some sectors (notably certain mining and plantation businesses) require a mandatory divestment schedule, where the foreign owner must gradually sell a portion of their shares to Indonesian nationals or entities over a period of time.
The list is regularly updated to reflect the government’s economic objectives. The most recent version is Presidential Regulation No. 10 of 2021, which marked a significant liberalization compared to earlier lists.
Where to Find the Official List and Get Assistance
- Official Source: The full legal text of Presidential Regulation No. 10 of 2021 is available on the website of the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal, or BKPM ).
- BKPM: The BKPM is the primary government agency for facilitating investment. They provide official guidance and can help interpret the list for your specific project.
- Legal Counsel: This is highly recommended. Navigating the DNI, KBLI, and associated regulations is a complex process. Engaging a reputable local corporate law firm with experience in FDI is crucial to ensure compliance and structure your investment correctly.
Common Foreign Ownership Restrictions (with Examples)
While the DNI document is highly specific, it establishes general foreign ownership limitations and provides illustrative examples for key economic sectors as follows:
Sector / Business Field | Common Foreign Ownership Cap | Notes & Conditions |
| Transportation | ||
| · Sea Transportation (Vessel Shipping) | 49% | |
| · Air Transportation (Scheduled Airlines) | 49% | |
| Digital & Tech | ||
| · Telecommunication Networks (Fixed/Mobile) | 65% | Requires a partnership with a local entity. |
| · Over-The-Top (OTT) Services (e.g., streaming) | 100% | Fully open. |
| Energy & Resources | ||
| · Electricity Generation (Up to 10 MW) | Closed | Reserved for MSMEs and cooperatives. |
| · Electricity Generation (> 10 MW) | 100% | Fully open, often through a tender process. |
| · Renewable Energy (Geothermal, Solar, etc.) | 100% | Highly encouraged, with various incentives. |
| Processing & Manufacturing | ||
| · Alcoholic Beverage Industry | Closed | Production is strictly controlled and limited. |
| · Crude Palm Oil (CPO) Plantations | 95% | Must divest shares to local entities over time. |
| Services | ||
| · Trading (Wholesale & Retail) | 100% | Fully open for large-scale modern retail. |
| · Construction Services (High-Rise Buildings) | 67% | |
| · Hospital Services | 67% | It can be 100% if located in specific economic zones. |
| · Tourism (4-Star and 5-Star Hotels) | 100% | Fully open. |
To address the inherent complexity of navigating the KBLI, the DNI, and associated implementing regulations, investors should strongly secure reputable local legal counsel. This specialized assistance is crucial for ensuring full regulatory compliance and correctly structuring the investment framework from the outset.
Ultimately, investors should view the DNI not merely as a register of prohibitions but as a strategic directive from the Indonesian government. By successfully navigating its conditions and leveraging potential incentives, foreign investors can efficiently and compliantly capitalize on the significant opportunities within the Indonesian market.