Government Announces Revised Negative Investment List

54 new sectors expected to be opened up, but details remain unclear

By Gilang Ardana
Monday, November 26, 2018

The long-awaited revision of the Negative Investment List (DNI) has been announced as part of the government’s latest policy reform package.  The package, number 16 in the series, was officially announced by Coordinating Minister of Economic Affairs Darmin Nasution on November 16 at the Presidential Palace. 

In the revised list, the government decided to open up more than 50 sectors to 100 percent foreign participation. While the full details have not been released yet, the government cited sluggish global economic growth and turbulence in currency markets as motivation for the action.

The revision to Presidential Regulation No. 44 of 2016 has to be signed by President Joko Widodo before the new DNI list comes into effect. Other implementing regulations to operationalize other items within the policy package have also not yet been released.

The formal policy package covers three main areas:

  1. Expanding Tax Holiday Facility:  The government will expand the scope of business sectors eligible for a tax holiday. The Ministry of Finance will revise Ministerial Regulation No. 35/PMK.010/2018 concerning the Granting of the Corporate Income Tax Reduction Facility (PMK). 
    1. Two business sectors were added to the list: agriculture, plantation and forestry-based processing; and digital economy (70 new business classifications, or KBLI, were added). With this revision, 169 KBLI are eligible for a tax holiday from 17 business sectors.
    2. Auto-notification of the tax holiday facility will be within the Online Single Submission (OSS) system.
    3. Relaxing the Negative Investment List (DNI): Thegovernment will revise Presidential Regulation No. 44 of 2016 concerning the Negative Investment List. It will remove several sectors from the list by prioritizing sectors that bring technology, innovation and export expansion into the country. The revised list is also expected to further strengthen partnerships with micro and small businesses and cooperatives.

In the new revision, the government opened 54 new industries to 100 percent foreign investment, including:

  1. Retail through post and Internet
  2. Wood industries (laminates, wood chip and wood pellets)
  3. Tourism management
  4. Power generation above 10 MW
  5. Oil and gas construction services: platforms
  6. Geothermal survey and drilling services
  7. Maintenance and operation of geothermal services
  8. Onshore oil and gas drilling services
  9. Electricity installation audits
  10. Cigarette industry
  11. Surveys, market research and polling
  12. Art exhibitions and galleries
  13. Land transportation
  14. Telecommunication network providers
  15. Content services network providers
  16. Internet access services
  17. Vocational training
  18. Finished pharmaceutical products
  19. Pest control and fumigation
  20. Medical devices type B, C and D.

Through the policy package, the government said it is also reaffirming its commitment that future revisions of the DNI will not be more protective, and that more sectors will be opened in future revisions. The grandfather clause will also be further strengthened.

  1. Natural Resources Export Proceeds (DHE) There will be an obligation to bring export proceeds from natural resources (DHE SDA) back to the country – this will apply to mining, plantations, forestry and fisheries. There will be tax incentives given in return in the form of a final tariff for income tax over deposits, savings and Bank of Indonesia certificate discounts.
  • The export proceeds should be kept within Indonesia’s financial markets through an account in a foreign exchange bank.
  • There will be no obligation to convert the proceeds into rupiah.
  • There will be administrative sanctions for noncompliance.

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