8/17/2014

News

Govt raises foreign ownership limit | The Jakarta Post

Views

Editor's Choice

Life

Headlines

Election Watch
Business

National

Archipelago

Jakarta

World

Outlook
Sports

Photos

Videos

Govt raises foreign ownership

limit
Satria Sambijantoro, The Jakarta Post, Jakarta | Business | Thu, December 26 2013, 10:42 AM

Foreign ownership: Local residents are given the chance to visit the Kuala Namu International Airport in Deli
Serdang, North Sumatra before the inauguration of the newly built airport on July 25, 2013. A new government
regulation allows foreigners to own as much as 49 percent of airports and 100 percent of power plants built under
public-private partnerships. (JP/Apriadi Gunawan)

After years of debate, the government has finally completed the revision
of the negative investments list (DNI) and raised the level of foreign
ownership in a number of business sectors including transportation
terminals, seaports and power plants.
Under the new DNI, which is expected to be signed soon by President
Susilo Bambang Yudhoyono, the maximum limit on foreign ownership in
land transportation facilities such as bus terminals and train stations will
be set at 49 percent, up from the previous zero, Investment Coordinating
Board (BKPM) chairman Mahendra Siregar told reporters on Tuesday.
With the new regulation, foreigners can now own up to 100 percent of
power plants built under public-private partnerships (PPPs), on the
condition that the power plants have the capacity of at least 10
megawatts (MW). For power plants with capacities up to 10 MW, foreign
ownership is limited to 49 percent.
For these PPP projects, we should have greater openness for
foreigners because we really have a pressing need to develop our
infrastructure, Mahendra said.
The new DNI would also allow foreign investors to own up to 95 percent
of shares in the management of toll roads and water utilities relatively
unchanged, but it was necessary to include the rule to provide legal
certainty for foreign investors, he said.
http://www.thejakartapost.com/news/2013/12/26/govt-raises-foreign-ownership-limit.html

1/4

8/17/2014

Govt raises foreign ownership limit | The Jakarta Post

However, the foreign ownership cap in airports, which had initially been
expected to be relaxed to 100 percent, had to be set at 49 percent due to
the conflicting Transportation Law that stipulates local investors must
still be the majority shareholders in such businesses, according to the
BKPM chief.
Meanwhile, the foreign ownership cap in the pharmaceutical industry will
be raised to 85 percent from the current 75 percent; in the venturecapital financial sector it will be raised to 85 percent from 80 percent;
while in the advertising sector it will be raised to 49 percent from zero,
specifically for ASEAN investors.
The DNI liberalization, however, was also complemented by tighter
restrictions on foreign ownership in sectors such as farming and
logistics, as the government aims to safeguard local firms from the influx
of foreign competition.
In the farming sector, maximum foreign ownership will be capped at 30
percent from the existing 95 percent, while in the distribution and storage
industry it will be set at 33 percent.
The guidance of the President in the Cabinet meeting held on Nov. 14,
2013, in which we all concurred, was that [the DNI revision] must
prioritize national interests to boost the competitiveness of local
industries, Coordinating Economic Minister Hatta Rajasa said.
Revision of the DNI was necessary to lure more foreign direct
investment (FDI), the growth of which has decelerated to a three-year
low, economists have said. More FDI will also be needed to strengthen
the countrys capital account, which is likely to face pressure due to
limited portfolio inflows amid the prevailing global uncertainty in 2014.
However, the plan to revise the DNI, which had been on the table since
2010, was met with opposition due to growing nationalistic sentiments
ahead of next years elections, with critics calling on the government to
safeguard Indonesias strategic sectors from the influx of foreign
competitors.
Indonesian Employers Association (Apindo) chairman Sofjan Wanandi
said that local businesses were quite satisfied with the new DNI, which
he argued was a win-win solution for both foreign and local investors.
I believe this will improve our investment climate ahead of the upcoming
political year, he said. The DNI will provide certainty for them [foreign
investors], so that they will not be hesitant about investing here.
The new negative list of investments (DNI)
1. Sectors that are more open to foreign investment
Land transportation facilities (new foreign ownership cap 49 percent
from zero)
Regular vehicle inspection (49 percent from zero)
Pharmaceutical (85 percent from 75 percent)
Venture capital financing (85 percent from 80 percent)

Search

2. Sectors that are more restricted to foreign investment

Distribution (33 percent, from 100 percent)
Storage (33 percent, from 100 percent)
Cold storage (Sumatra, Java, Bali maximum 33 percent, for
Kalimantan, Sulawesi, East Nusa Tenggara, Maluku and Papua
maximum 67 percent, from 100 percent)
3. New regulation for telecommunication sector
Fixed telecommunications (65 percent, previously unregulated)
Multimedia-integrated telecommunication network (65 percent,
previously unregulated)
Multimedia service provider (49 percent, previously unregulated)
4. Public-private partnerships (PPP) project
Airports (49 percent under concession period)
Seaports (95 percent)
Land transportation terminals (49 percent)
Water utilities (95 percent)
Toll road facilities (95 percent)
Power plants (49 percent for 1-10 megawatt capacity, 100 percent for
capacity of 10 megawatts above)
Electricity transmission (100 percent)
Electricity distribution (100 percent)
5. Sectors that are adjusted according to the new law
http://www.thejakartapost.com/news/2013/12/26/govt-raises-foreign-ownership-limit.html

2/4

8/17/2014

Govt raises foreign ownership limit | The Jakarta Post

Farming (30 percent from previously 95 percent, adjusted according to

the 2010 Law on horticulture)
Source: BKPM
Like

Tw eet

Bagikan

16

Paper Edition | Page: 13

Read also:
Ministry to order seaports to cease US dollar transactions
Astra bids on power plants, aims to increase grip on infrastructure
Comment: Three power plants to be built in Dumai
3 power plants worth $675m to be built in Dumai
ABMM plans several new power plants

Post Your Say

Selected comments will be published in the Readers Forum page of our print newspaper.

0 comments
Sign in

+ Follow

Share

Post comment as...

Newest | Oldest | Top Comments

Powered by Livefyre

News
Travel
Entertainment

News

Views

Life

Services

Editor's Choice
Business
National
Archipelago
Jakarta
World
Sports

Opinion
Reader's Forum
Your Voice

Digital Life
Sci-tech
Environment
Body & Soul
Art & Design
Culture
Lifestyle
Entertainment
People
Features

Contact Us
Media Kit

Jobs
Community
Forum

2014
PT. Niskala Media Tenggara

Partners:
kompas.com

tribunnews.com

kontan.co.id

http://www.thejakartapost.com/news/2013/12/26/govt-raises-foreign-ownership-limit.html

Asia News Network

Catch Asia! Media Network

3/4

8/17/2014

Govt raises foreign ownership limit | The Jakarta Post

http://www.thejakartapost.com/news/2013/12/26/govt-raises-foreign-ownership-limit.html

4/4