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26 November, 2018
In an effort to stimulate investment in Indonesia, the government announced on Friday, November 16, 2018, that it had launched the 16th Economic Policy Package, with the primary objective of relaxing investment-related regulations.
There are three key points to this latest economic package: (i) the revision of the Negative Investment List (Daftar Negatif Investasi or “DNI”), (ii) the expansion of tax holidays, and (iii) the development of tax incentives for the mandatory saving of export earnings in Indonesian bank accounts.
Much of the focus is on the government’s revision of the DNI, which is regulated under Presidential Regulation No. 44 of 2016 regarding Lists of Business Fields that Are Closed and Business Fields that Are Open with Conditions to Investment (“2016 DNI”).
This new economic package will revise the 2016 DNI by excluding 95 business sectors, meaning that they will be open to partial or full foreign investment. Of these 95 sectors, 54 will now be fully open to foreign capital investment.
These 54 newly opened sectors include:
- Oil and gas offshore drilling
- Geothermal drilling and survey
- Power generation >10MW
- Medical devices type B, C and D
- Over-the-counter drug pharmaceutical industry
- Cigarette industry (clove cigarettes, white cigarettes, other cigarette industries)
- Telecommunication network providers (fixed and mobile)
- Internet access services
- Content service providers
- Internet and postal-based retail trading
- Art galleries and art performance buildings
A key objective of the economic package is mitigating the decline in investment growth in Indonesia.
According to data from the Capital Investment Coordinating Board (BKPM), investment growth fell 1.4% in the third quarter of 2018, which followed a 4.9% decline in the second quarter.
