Marion Elisabeth                     Noveleta Dinar

Partner on Investment,           Associate

Banking & Finance and          dinar@aymp.law

General Corporate Matters

marion@aymp.law       

A: Permata Kuningan,

Penthouse Floor

Jalan Kuningan Mulia,

Kav.9C Jakarta, 12980

T: 6221 8370 7777

F: 6221 8370 7771

W: www.aymp.law

INTRODUCTION

The enactment of Presidential Regulation No. 44 Year 2016 concerning Lists of Business Fields that are Closed and Conditionally Open for Investment – publicly known as “Negative Investment List (DNI)” (“2016 DNI”) – has purposes, among others, to trigger interest of both domestic and foreign investors to invest in Indonesia, and to support the enlargement of Micro, Small, and Medium Enterprise (“SME”) and other national strategic sectors. In order to achieve these purposes, various components of 2014 DNI as regulated under Presidential Regulation No. 39 Year 2014 (“2014 DNI”) are revised under 2016 DNI.

KEY PROVISIONS OF 2016 DNI

Classification of Business Fields for Investment

1. Closed: Business fields prohibited for investment.
2. Conditionally Open: Business fields open for investment but with conditions, i.e. (i) reserved for SME and cooperative, (ii) partnership with SME and cooperative, (iii) foreign investment caps, (iv) open in specific locations, (v) special licenses, (vi) 100% domestic capital, (vii) investment caps in respect of ASEAN cooperation; and/or (viii) combinations of the aforementioned.
3. Open: Business fields open for investment without additional conditions.

Exemptions

All business fields that are Conditionally Open become Open if:

1. the investment is made as portfolio investment through the capital market; or
2. the investment activities are performed in a special economic zone, except when the investment condition is business fields that are reserved for SME and cooperative.

Several Differences between 2016 DNI and 2014 DNI 

1. Several business fields that were previously Closed/Conditionally Open are now Open (samples are in Table I) AND business fields that did not exist in the list are now included as Closed or Conditionally Open (samples are in Table II);
2. Some foreign investment caps are now considerably increase or now Open (samples are in Table III);
3. Unlike 2014 DNI, 2016 DNI has (i) special appendix for business fields reserved or for partnership with SME and cooperative, and (ii) clearly indicated form of partnership with SME and cooperative, i.a. under/through the nucleus-plasma system, subcontracts, agency, and franchising. 

Table I

Table II

Table III