In response to domestic concerns raised by certain groups and organizations over the investment list[1] issued in February 2021, the Indonesian government issued a revised investment list, the Presidential Regulation No. 49 of 2021 (“PR No. 49/2021”). PR No. 49/2021 amends the February’s investment list, Presidential Regulation No. 10 of 2021 (“PR No.10/2021”) and came into force on May 25, 2021.

A few examples of business sectors affected by PR No. 49/2021 are discussed below.

Alcoholic Beverages

PR No. 49/2021 reinstated foreign investment restrictions on the alcoholic beverage industry (Business Classification Code (also known as KBLI[2]): 11010), wine (KBLI Code 11020), and alcoholic beverages made from malts (KBLI Code 11031). These sectors were meant to be opened to foreign investment under PR No.10/2021 subject to certain requirements. However, President Joko Widodo himself revoked such relaxation in a statement shortly before PR No. 10/2021 was to come into effect.

E-commerce

E-commerce (that is, trading using the internet) for the following products is now allocated to cooperatives and Micro, Small and Medium enterprise (SMEs),[3]  which means they are now closed to foreign investment/foreign shares ownership:

  1. food and beverages, tobacco, chemicals, pharmacy, cosmetics, and laboratory equipment (KBLI Code 47911);
  2. textile, clothes, footwear and personal equipment (KBLI Code 47912); and
  3. household and kitchen equipment (KBLI Code 47913).

Previously, e-commerce in these products had not been not included in PR No. 10/2021, which in principle meant that such e-commerce was open to foreign investment.

Manufacture

Manufacture of Soy Sauce (Code 10771) and Spare Parts and Component of Machineries and Turbines Industries (KBLI 28113) are still 100% open to foreign shares ownership, although they are now subject to certain partnership requirements with SMEs.

Courier and Postal Activities

Courier activities[4] (KBLI Code 53201) are now limited to up to 49% foreign shares ownership. Postal activities[5] (KBLI Code 53100), however, are now open to 100% foreign shares ownership as they have been omitted from PR No. 49/2021.

Conclusion

Business sectors that are not included in the investment list in principle should be 100% open to foreign investment. However, in some cases sectoral restrictions or requirements may apply. Therefore, please consult about your foreign investment plan with a legal expert or the authorized government official in the relevant sector(s) before making any significant investment decisions.

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[1] A list of business activities that are opened or closed to domestic/foreign shares participation.

[2] KBLI or DAFTAR KLASIFIKASI BAKU LAPANGAN USAHA INDONESIA is a standard classification of lines of business recognized in Indonesia. It consists of lists of types of business activities in Indonesia and explanations on the scope of each business activity.

[3] Cooperatives (also known as Koperasi) are a legal entity which are owned and run jointly by their members, either individuals or other cooperatives, for the sole purpose of sharing profits with or providing other benefits to members. Micro, Small, Medium Enterprises (MSMEs) are types of business designated for local entrepreneurs with minimum investment requirements.

[4] Generally, courier activities cover goods delivery service businesses carried out by the private sector, in addition to delivery activities carried out by universal post, which includes collection, processing, transportation and delivery both domestically and internationally.

[5] Generally, postal activities cover services relating to sending letters, postal items, postcards, printed materials, newspapers, small packages, postal packages, postal money orders and postal cheques, domestically and abroad, and activities related to printing, processing and sending business letters, brochures and invoices managed by Indonesia’s National Post.

The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.