“Presidential Regulation No. 10/2021 has revoked and replaced the prior Indonesian Negative Investment List (PR 44/2016).”
Following the promulgation of Law No. 11 of 2020 on Job Creation (“Job Creation Law”), the Government has stipulated one of its derivative regulations as Presidential Regulation No. 10 of 2021 on Capital Investment Business Fields (“PR 10/2021”). PR 10/2021 has revoked and replaced the prior Presidential Regulation No. 76 of 2007 and Presidential Regulation No. 44 of 2016 on the List of Closed Business Fields and Opened Business Fields with Requirements for the Investment Sector (“PR 44/2016”).
Categorization of Business Fields
PR 10/2021 has introduced new categorization of business fields which can be found in the following table:
|PR 44/2016||PR 10/2021|
|Opened Business FieldsClosed Business FieldsOpened Business Fields, which consist of:Reserved or partnerships with Micro, Small, and Medium Enterprises and Cooperatives Conditional Requirements: limitation of foreign investment, locations, etc.||All business fields are open for capital investment activities, except: Declared closed for capital investmentFor activities which only can be conducted by Central Government The open business fields are categorized in the following fields: Priority Business Fields. Business Fields which allocated or partnership with Micro, Small, and Medium Enterprises and Cooperatives.Conditional Requirements: limitation of foreign investment, locations, etc. Business Fields which not categorized into no. 1, 2, 3.|
Conditional Requirements of Business Fields: Limitation of Foreign Investments
As one of the conditional requirements which cannot be separated in capital investment, limitation of foreign investments had still stipulated in PR 10/2021. Nevertheless, PR 10/2021 has reduced several business fields, which limited to foreign direct investments based on the business sectors.
The details can be found in the following table:
|Sectors||PR 44/2016 is regulated the limitation of foreign direct investment||PR 10/2021 is regulated the limitation of foreign direct investment|
|Marine and Fisheries||Yes||No|
|Energy and Mineral Resources||Yes||No|
|Trading, including distribution||Yes||No|
|Tourism and Creative Economic||Yes||Only business field of travel agency for Umrah and Hajj|
|Communication and Informatics||Yes||Yes|
Although many sectors have not stipulated their limitation in PR 10/2021, specific foreign direct investment limitations are stipulated by the Authorities/Ministries of each sector. For example, Indonesian Financial Service Authority (“OJK”) has stipulated specific limitation for financial services industries. Therefore, considering the Authorities/Ministries, regulations are also needed to ensure those foreign limitations for each sector.
Furthermore, PR 10/2021 has asserted foreign capital investment only can conducted business activity in the investment value of more than IDR10 billion exclude the value of lands and buildings.
Revocation of the Alcoholic Beverage Industry
By 1 March 2021, President Indonesia, Mr Jokowi, through his statement in media, revoked the alcoholic beverages sector, including its licensing mentioned in the appendix of PR 10/2021. Unfortunately, the details of the official amendment of its regulation regarding this matter have not issued yet.
Author: Kristalia Andiani Puteri