The Negative Investment List imposes restrictions on certain business activities conducted by foreigners in Indonesia. However, there are certain ways through which foreigners may bypass these restrictions and thus conduct business activities in a desired but still legal manner.

Requirements Specified by the Negative Investment List

The Negative Investment List is an initiative created by the government of Indonesia. It is intended to benefit local business owners by specifying which business fields are not allowed to have any foreign investment. The Negative Investment List also limits the amount of foreign investment allowed in other business fields in Indonesia. Although it was initially believed that the Negative Investment List might have served to provide business opportunities for foreign investors and company owners, the opposite has often proved to be the case. Therefore, foreigners who plan to start a company in Indonesia might be interested in finding out if any of the requirements of the Negative Investment List may be bypassed.

How a Foreign Company Owner May Bypass the Negative Investment List’s Requirements

There is just one method by which a foreign company owner in Indonesia will not be bound by the requirements specified by the Negative Investment List. For this to be the case, the foreigner must choose to set up a locally-owned company (PT) instead of selecting the usual option of setting up a foreign-owned company (PMA). PTs do not have to abide by the requirements of the Negative Investment List. However, in most cases, only a local may set up a PT in Indonesia. Furthermore, all the shareholders of a PT are usually to be locals, while no portion of the PT may be owned by a foreigner. However, there is a way for a foreign company owner to bypass these requirements and set up a PT. This can be done by utilizing the services of a local who will serve as the nominee director of the PT. Locals may also be selected for the positions of the PT’s shareholders and commissioners; they are to be nominee shareholders and nominee commissioners respectively. If necessary, more than one nominee director may be hired.