Indonesia Looking to Raise Foreign Ownership Caps by End-2019

Sep 2019

By the end of 2019, the Indonesian government will announce plans to increase foreign ownership of businesses in some sectors, according to the head of Indonesia’s investment board. The move comes as a potential way to support the country’s digital economy by easing investment restrictions.

According to an official from Indonesia Investment Coordinating Board (BKPM), revisions will open up the university sector to 100% foreign ownership within Special Economic Zones (SEZs) or 67% for other locations, as well as measures to boost supporting industries in the digital economy sector which were previously excluded from foreign investment. Given the country’s fast-growing internet economy, worth USD 27 billion in 2018, government plans could attract more FDI in the tech sector.

President Joko Widodo has renewed his promise for structural economic reform after winning the April elections, including changes to the “negative investment list” which sees foreigners barred from certain sectors and ownership caps in others. Other moves include loosening restrictive labor legislation and cutting corporate tax rates. 

The president previously eased restrictions in 2016, particularly in retail and communications, but despite a modest increase in investment in some businesses, FDI has remained relatively stagnant. BKPM data shows FDI in oil & gas as well as banking was USD 29.3 billion in 2018, a reduction of USD 33.2 billion compared to 2017. 

(Source: Reuters)