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The World Bank once says that Indonesia’s negative list is by no means a simple system. Here’s a list of news and analysis discussing the 2010 negative list:

There’s a good article about this in HPLaw’s website:

PR No.36/2010 regulates 17 business fields that are conditionally open to capital investment, namely agriculture, banking, communications & information technology, culture & tourism, defense, education, energy & mineral resources, finance, forestry, health, industry, manpower & transmigration, marine & fisheries, public works, trading, transportation, and security.

Ebeling Heffernan (probably sourced from the Jakarta Post) tries to explain the ‘hierarchy of law’, operating with the DNI:

The regulation also recognizes a grandfather clause, meaning the new regulation will not affect investors that have complied with the previous regulation issued in 2007, he added. "This regulation also recognizes law hierarchy, so other regulations whose hierarchies are below this regulation are not effective," said Gita, adding that Indonesia wanted to eliminate investment uncertainties.

The Jakarta Globe details the ‘ownership percentage’ :

It permits, for example, foreign companies to own 67 percent of construction businesses, up from 55 percent. Meanwhile, foreign companies will be able to own 67 percent stakes in hospitals nationwide, up from 65 percent in specific health-related enterprises that were restricted to a few cities. Desperate to address a power shortage, however, the government has granted foreign investors the right to own up to 95 percent of joint ventures in power plants with a capacity above 10 megawatts.Meanwhile, in movie production, the government is allowing foreigners to own 49 percent of such companies, up from zero.

I found that this article from the Singaporean Law Firm O’Melveny to be particularly helpful and quite detail. It also addresses the BTS antenna controversy. As you might be aware, the current DNI resolves the overlap by siding with the Communication Ministry by forbidding foreign investment in Telecom Towers:

One significant area of difficulty in determining the Indonesian foreign ownership regime has been the existence of conflicting regulations issued by various different regulatory bodies. The most well known example is the telecommunications tower industry, which was opened to 100% foreign investment by BKPM under the 2007 Negative List, but which was declared closed to foreign investment by regulation of the Communications Ministry. The revised Negative List resolves this particular debate in favor of the Communications Ministry by closing the telecommunications tower industry to foreign investment. It was hoped that the New Regulations would address these conflicts by reconciling all foreign ownership issues to a single regime.

Meanwhile, Bisnis daily focuses on the overlap between the current DNI and the Shipping Law:

Johnson reminded the relaxed requirement for international route sea transportation was overlapping with Law 17/2008 on Shipping. "In implementing the presidential regulation, please don't violate Article 29 clause 2 of the Shipping Law." The article reads Indonesian citizens or business agencies can establish joint ventures with foreigners in forms of sea transportation companies. "To get business permit in Indonesia based on the law, foreign investors should at least have one Indonesia-flagged ship weighed 5,000 gross tonnage (GT) and the ship has to be registered to the government," he said.

 
Overlaps are quite normal for DNIs. But it can be a problem too if the industry sector is tightly regulated by a department or a ministry or especially, if it is correlated with license conditions. This is where potential investors normally requires an advice.

To read the Presidential Regulation 36 Year 2010 on Investment’s Negative List, click on my previous post here. Contact me at movanet(at)gmail.com for queries.

Related Posts:
The New Negative List for Foreign Direct Investment 2010 (Confirmed)
The new investment negative list (2010)
The New Negative List of Investment (2007)
How to set up a company in Indonesia
Geothermal projects in Indonesia
Water investment in Indonesia
Some note on Indonesian Investment Law
Living with the Other Fishes
Guide to doing business in Indonesia

On my previous post, I blogged about the new rule on negative list of investment (Daftar Negatif Investasi or “DNI”). The BKPM recently issued a press release about this. Here’s a snippet:

8)  Several sectors give opportunities for foreign capital to more help strengthening the financing capacity for domestics:
a.  Industrial sectors in siklamat and saccharine were previously closed for investment and now they are opened with certain license.
b.  Public works industries in construction have an upgrade of foreign capital ownership from 55% to 67%.
c.  Culture and tourism sectors in filming service (studio of filming, laboratory of film processing, dubbing facilities, printing and film reduplication) is now opened for foreign capital of 49%.
d.  Health sector in hospital services, clinics of specialist doctors clinic laboratories and medical check-up clinic has also an upgrade in foreign capital ownership from 65% to 67% and the location of the activities can now be done all over Indonesia.
e.  Electricity sectors in electricity generators (1-10MW) can be carried out in partnerships, whereas the generators higher than 10 MW, the ownership of foreign capital is maximum 95%.

9)  There will be several adjustments on foreign capital ownership for several sectors and it may be due to the existing of some new decrees or to give wider opportunities for local investors:
a.  Agricultural sectors in the cultivation of principal food crops (corns, soybeans, peanuts, green beans, rice, cassava, sweet potato) with the width of no more than 25 hectares, the ownership of foreign capital is maximum 49% based on the Decree No. 41 Year 2009 regarding the Protection of Sustainable Agricultural Land.
b.  Sectors of Communication and Information in the fields of:

i.  Mailing administration, is conditioned to have special permission and the foreign capital is maximum 49% based on the Decree No. 38 Year 2009 regarding mailing.
ii.  Providing, managing, (operating and renting) and providing construction service for telecommunication towers are 100% local investor ownership.

10) In order to implement Indonesian commitment in investment related to ASEAN Economic Community, this current DNI adds one new attachment (Attachment II.j) which rules out the conditions of foreign capital ownership and/or location for investors from ASEAN countries. These investors are given dispensation in owning capital more than the other foreign investors, for example in the transportation sectors in maritime cargo handling services of which the ASEAN investors are allowed to own foreign capital with the maximum of 60% while the other foreign investors are only allowed for 49%.

You can download the Presidential Regulation 36 Year 2010 on Negative List of Investment here (in Bahasa Indonesia). Alternatively, you can have a look at Google’s translation of the DNI regulation in this page (Google’s translate has been improving quite a lot although it can get lousy for technical terms sometimes). You may find some tips on filling out BKPM Forms on my previous posts below.

If you have any specific question, you can email me at movanet(at)gmail.com

Related Posts:

The new investment negative list (2010)
The New Negative List of Investment (2007) 
How to set up a company in Indonesia
Geothermal projects in Indonesia
Water investment in Indonesia
Some note on Indonesian Investment Law
Living with the Other Fishes
Guide to doing business in Indonesia

As of today, still no news in BKPM’s website about the new Presidential Regulation 36/2010 on investment’s negative list. But below is the new list according to some news source. Note: as I don’t have the Perpres 36 with me yet, please treat this as an unconfirmed.

1. Industrial sector: In the industry of cyclamate and saccharin previously closed to investments, now opened with special permission.
2. Public works: In the field of construction services foreign capital ownership increased from 55 percent to 67 percent.
   Culture and tourism: in the business of filming techniques 49 percent is opened to foreign capital.
3. The health sector: in specialist medical clinics and medical support services, foreign equity ownership is increased from 65 percent to 67 percent and its activities can be conducted at locations throughout Indonesia.
4. Electricity sector in the business of power plant (10-10 MW) can be done in the form of partnerships, while for above 10 MW, the maximum foreign equity ownership of 95 percent.

Meanwhile, in some other business sectors foreign capital ownership is adjusted:

1. The agricultural sector: in the cultivation of staple food crops (corn, soybeans, peanuts, green beans, rice, cassava, sweet potato) with an area of more than 25 hectares, the maximum foreign equity ownership of 49 percent (in compliance with Law No. 41 Year 2009 on the Protection of Agricultural Land Sustainable Food).
2. Communication and Information Sector: in the business of the postal administration, special permit is required and the maximum foreign capital is 49 percent (in accordance with Law Number 38 Year 2009 on Postal Service).  Meanwhile the provision, management (including operation and rental) and provider of construction services for telecommunication towers (BTS towers ) must have 100 percent domestic capital.