Indonesia: Indonesia's Revised Negative Investment List

Recent changes to Indonesia's revised Negative Investment List have largely been positive, with relaxation being the order of the day. In this briefing we look at some of the key changes and their likely impact on foreign investors.

Negative Investment List

Foreign investment in Indonesia is regulated by a negative investment list which is maintained by the Indonesian Investment Coordinating Board (BKPM). The list is regularly reviewed and updated to take into account policy reviews, legislative changes and the prevailing economic landscape, among other things.

On 18 May 2016, a revised negative list (the Negative Investment List), which was introduced by President Regulation Number 44 of 2016, became effective. The new Negative Investment List is the first since President Joko "Jokowi" Widodo took office late in 2014. It had been the subject of some anticipation in light of Jokowi's commitment to public spending and economic growth, which was set against the backdrop of the increasingly nationalistic sentiments that had pervaded the final years of President Susilo Bambang Yudhoyono's second term. This had resulted in largely negative law-making in relation to foreign investment.

On the whole, the new Negative Investment List is positive news. It appears to show an increasing willingness by the Indonesian government to allow foreign investment, and opens up the market somewhat in a number of areas.

Opening of sectors previously closed to foreign investors

A number of sectors in which no foreign investment was previously allowed have been opened up to foreign investment. Examples include:

Sector 2014 Negative List 2016 Negative List
Construction and installation of high voltage electricity No reference included 49% foreign investment now permitted
Crumb rubber industry Foreign investment expressly prohibited 100% foreign investment now permitted (provided that a special licence from the Minister of Industry is obtained)
Passenger transportation over land Foreign investment expressly prohibited 49% foreign investment now permitted
Biomass pellet producing industry Only permitted when in partnership with a local SME 100% foreign investment now permitted

Complete opening of certain sectors to foreign investment

Several sectors which were previously only partially open to foreign investment have now been completely opened up, such that foreign investors can enjoy 100 per cent ownership. Some of the sectors which are included are as follows:

Sector 2014 Negative List 2016 Negative List
Futures broking Limited at 95% foreign investment 100% foreign investment now permitted
Business related to toll roads Limited at 95% foreign investment 100% foreign investment now permitted
Salvage service and/or underwater work Limited at 49% foreign investment 100% foreign investment now permitted (provided that a special licence from the Ministry of Transportation is obtained)
Non-hazardous waste management and disposal Limited at 95% foreign investment 100% foreign investment now permitted

Relaxation of foreign investment requirements in certain sectors

Certain sectors have had the percentage of allowed foreign investment increased to allow majority foreign ownership for the first time – often regarded as a must-have by many investors. Examples of such increases include:

Sector 2014 Negative List 2016 Negative List
Provision of airport services Limited at 49% foreign investment 67% foreign investment now permitted
Provision of fixed and mobile telecommunications Limited at 65% foreign investment 67% foreign investment now permitted
Internet services Limited at 49% foreign investment 67% foreign investment now permitted


It is interesting to note that a number of the sectors that have been opened up under the new Negative Investment List, either partially or wholly, are infrastructure related. This is no doubt a result of the commitment by the Jokowi government to spend US$22.5 million on building infrastructure in: (i) the outskirts of developed areas; (ii) villages outside Java; and (iii) other remote and border areas – a goal that can only be reached with significant foreign support.


As demonstrated in the tables above, there is increased flexibility for foreign investors across the transportation sector. This ties in with the Jokowi government's commitment to increased spending on building infrastructure, as any infrastructure improvements are unlikely to have the desired effect if they are not backed up by the requisite transport links.

Energy and natural resources

The new Negative Investment List provides that large scale power plants (>10MW) can now have up to 100 per cent foreign investment compared with the previous 95 per cent. This is likely to encourage foreign investment in this sector, as full control over such investments can be paramount for many investors.

Marine and fishing industries

The new Negative Investment List opens up fishery, and the processing of specific fishery products, to 100 per cent foreign investment. However, sea sand quarrying is no longer open for foreign investment. Therefore, this is one of the sectors where there is both forward and backward movement.

Closure of business sectors

In further good news, only one activity has been added to the list of sectors which are closed for foreign investment – the collection of valuable objects from sunken ships.

The new Negative Investment List sets out 145 sectors which are reserved for SMEs or which require a partnership with them in order to invest. This effectively closes off these sectors to foreign investors as they are prohibited from owning SMEs.

Higher foreign ownership percentage for those from ASEAN member states

In accordance with the ASEAN Comprehensive Investment Agreement (2009), natural persons or juridical persons who are investors in Indonesia and from an ASEAN member state (ASEAN investors) can have the benefit of a higher foreign ownership percentage across categories within the following sectors: (i) manufacturing; (ii) tourism; (iii) agriculture; (iv) forestry; (v) tourism; (vi) trade; (vii) transportation; and (viii) health.

Where the percentage of ownership available to foreign investment has been increased as a result of the new Negative Investment List, the percentage available to ASEAN investors has also increased. For example, the unloading/loading of cargo is limited to 67 per cent foreign investment (previously 49 per cent) but this increases to 70 per cent (previously 51 per cent) for investors from ASEAN member states (however, this is limited to four ports only).

Grandfathering provisions

All existing investments are grandfathered, such that all prior approved investments are protected where there has been a subsequent reduction in the allowed level of foreign investment.


On the whole, the new Negative Investment List is to be welcomed, both generally - in that it signals a more permissive approach to foreign investment as a whole - and specifically in those sectors to which the changes primarily relate. It will be interesting to see how foreign investors react to the opportunities presented and whether this will lead to an influx of much needed capital.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.