PRESS RELEASE
Wednesday, 9 June 2010
NEGATIVE INVESTMENT LIST:
SIMPLYFYING, ASSURING AND ATTRACTING INVESTORS
Government has issued Presidential Regulation No. 36 Year 2010 about the business closed for investment and business opened for investment under certain conditions in investment (Negative Investment List/Daftar Negatif Investasi (DNI)) which changes the Presidential Regulation No. 77 Year 2007 and its amendment at the Regulation No. 111 Year 2007. The release of this current DNI is based on the idea of give simplification, certainty and the investment attraction to the investors as well as to improve the investment climate and to reach the investment target as well as to carry out the Indonesian commitment regarding Asean Economic Community.
Government stated that investment will trigger the growth of economy for about 7% per annum (2010-2014) and it will require investment value of Rp 2.000 trillion per year. The increase in investment will create new jobs to decrease the unemployment to 5 – 6 % as well as to decrease the poverty to 10%.
The simplification, certainty and investment attraction of this current DNI are elaborated as follows:
1) It is not necessary to establish a new firm or to get a new license for expanding business in the same field of a different location for an existing investment, unless it is ruled by the Decree.
2) Indirect investment or portfolio of which its transaction is carried out through a local capital market will not be attached to DNI. Indirect investment or portfolio is an investment which is not involved as the controller a company. In other words, buying the stock would be another mean of increasing capital gain.
3) In the case of merger, acquisition and amalgamation within the same business line, these following limits will be applied:
a. Limiting foreign capital ownership of the surviving company based on the Agreement Letter of the company.
b. Limiting foreign capital ownership of the taking over company based on the Agreement Letter of the company.
c. Limiting the foreign capital ownership of the amalgamation of the company based on the agreement of the company as it was established.
4) In the case of expanding the business activity within the same field and requiring additional capital through rights issue, foreign investors have the right to order the effect in advance when the local investors are not able to participate in adding on the capital. However, if the addition makes the foreign capital ownership become over the limit as outlined in the Agreement letter of the company, then within 2 (two) years, it has to be adjusted as to the minimum limit in the Agreement letter through these following ways:
a. Selling the excess of the foreign capital to the local investors
b. Selling the excess of the foreign capital through local capital markets
c. The company buys the excess of the foreign capital and treats it as treasury stocks.
5) In the case of the investment of which its agreement letter is received by the company before the release of this Presidential Regulation, this current DNI only outlines the investment list closed for business (attachment I) and the list opened with conditions for business (attachment II), it does not apply grandfather clause unless the regulation of this current DNI is more profitable.
6) The regulation which is less significant that the Presidential Regulation of DNI will be applied as long as it is not against this Presidential Regulation of DNI. Hence when the regulation is hierarchically under the Presidential Regulation and its content is against the Presidential Regulation of DNI, the Regulation is not valid.
7) The format of the attachment has the list of closed investment list for business and those opened with conditions which is arranged based on the sectors under the business lines for it to be simpler and more comprehensive.
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%.
source: Indonesia Investment Coordinating Board
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