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Tag Archives: perpres no.36 tahun 2010

INDONESIA NEGATIVE LIST OF INVESTMENT (Daftar Negatif List Investasi)

To increase foreign capital investment in Indonesia, on 25 May 2010, President Republic of Indonesia has issued President Regulation No. 36 of 2010 on List of Business Fields Closed to Investment and Business Fields Open, With Conditions, to Investment and revoke and repeal the previous regulation under Presidential Regulation Number 77 of 2007 as amended by Presidential Regulation Number 111 of 2007 (the “Negative List“). This regulation was issued as the implementation regulation of Article 12 paragraph (4) and Article 13 paragraph (1) of Law Number 25 of 2007 on Investment.

SUMMARY

Closed Business Sectors

Under article 1 Negative List stated that, closed business sectors are certain business fields that are prohibited for foreign investors to conducting any investment activities (Appendix 1 Negative List).

Open Business Sectors with Conditions

Business fields open, with conditions, are certain business fields that allowed for foreign investors to conduct investment activities under certain requirements. This business sectors is reserved for national Micro, Small and Medium Enterprises and Cooperatives. Several requirements among other thing are the foreign investors that intend to running in these sectors shall conducting partnership with Micro, Small and Medium Enterprises and Cooperatives. (Appendix II Negative List)

Indirect Investment

Under this Negative list, clearly stated that this Negative List not regulates indirect investment or portfolio transaction is made through capital market. In other word that negative list investment for closed or closed with certain requirement is not binding for indirect investment or portfolio transaction is made through capital market.

Merger, Acquisition and Amalgamation

In the event there is any change of shareholder composition (foreign investor jointly as shareholders of the company) is conducted through a merger, acquisition or amalgamation following requirements shall be apply:

  1. A limitation of capital ownership from foreign investors in the merging company shall be as set out in the approval letter of the company.
  2. A limitation of capital ownership from a foreign investment in the acquiring company shall be as set out in the approval letter of the company.
  3. A limitation of capital ownership from a foreign investment in a new company resulting from an amalgamation shall be in compliance with the provisions applied when the new company was formed from that amalgamation.

Expansion

Foreign Investment Company may expand its business activities in the same business sector through additional capital by issuing new shares with pre-emptive rights. In the event the additional capital is conducting through issuing new shares with pre-emptive rights has result the foreign ownership is above the maximum limitation under approval capital, in the period of 2 (two) years the composition shall be adjusted with the maximum composition stated on approval capital. This adjusting can be conducted by following steps:

  1. the foreign investor sells the excess of shares in good will to domestic investor;
  2. the foreign investor sells the excess of shares through a general tender conducted by a company whose shares are owned by the foreign investor in a domestic capital market; or
  3. the company, as referred to in paragraph (2) sub-paragraph b, purchases the excess shares owned by the foreign investor and treats the shares as treasury stocks, subject to Article 37 of Law Number 40 of 2007 on Limited Liability Company.

BUSINESS SECTORS AMENDMENT

Several sectors give opportunities for foreign capital to more help strengthening the financing capacity for domestics:

  1. Industrial sectors in siklamat and saccharine were previously closed for investment and now they are opened with certain license;
  2. Public works industries in construction have an upgrade of foreign capital ownership from 55% to 67%;
  3. 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%;
  4. 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;
  5. 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 comprise with maximum 95% shares.

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:

  1. 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;
  2. Sectors of Communication and Information in the fields of.
    1. 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.
    2. Providing, managing, (operating and renting) and providing construction service for telecommunication towers are 100% local investor ownership.

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%.

AK

 

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