Indonesia’s New Investment Regime: Overview and Impacts on Key Industries

Indonesia’s New Investment Regime: Overview and Impacts on Key Industries

Following the implementation of Indonesia’s Law No. 11 of 2020 on Job Creation (or Omnibus Law), the government has issued a series of regulations providing further clarification and guidance for many of the nation’s key economic sectors.

These regulations include general requirements on business investment as well as specific guidance on industries such as telecommunications, media and technology; medical hospitals and clinics; and public works, public housing and construction.

Indonesian flag with Ally Law

The President of the Republic of Indonesia issued Presidential Regulation (PR) No. 10 of 2021 on business investments, which has been amended by PR No. 49 of 2021 (PR 10/2021). The amended regulation replaces the former list of negative investments — or business fields that were either closed or open, with conditions, to investment — with a positive list that liberalizes investment significantly. PR 10/2021 stipulates that all business sectors in the country are now open for investment unless it is otherwise stated as completely closed to investments or is specifically reserved for the central government with no cooperation with third parties allowed. Currently closed business activities include:

  • Narcotics
  • Gambling and/or casinos
  • Fishing for prohibited species as listed in CITES
  • Coral/reef extraction
  • Chemical weapons manufacturing
  • manufacturing of chemicals and materials harmful to ozone
  • Alcoholic beverages (including wine and malt-based beverages
  • Public service
  • Strategic defense and security

On the other hand, the positive list gives priority to business activities that satisfy certain criteria, including those that are capital intensive and labor intensive, involve sophisticated technology or are pioneering industries, are export-oriented, are R&D- and innovation-oriented, or fit within the national strategic program.

Additional regulations and legal frameworks have been promulgated for specific sectors. To read the full series of articles by Marshall S. Situmorang, Audria Putri and Aniendita Rahmawati of Ally Law member firm Nusantara Legal Partnership — including the overview of the positive investment list and the industry-specific pieces on TMT, medical hospitals and clinics, and the construction sector, please click the relevant links.




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