Indonesia is a country which has benefited from a steady rate of economic growth over recent decades. For this reason, many investors from other countries have decided that Indonesia is a suitable location in which they may begin to invest. However, before they may do so, they must be aware of all the information specified in the Negative Investment List, which has had a tremendous impact on investment and business activities all over Indonesia.
The Negative Investment List plays an extremely important role in the business environment of Indonesia. It is managed by the Indonesian Investment Coordinating Board (BKPM). It specifies the business fields in which foreigners are permitted to participate as well as the extent to which they are allowed to do so. This list was created in order to protect the interests and well-being of Indonesian-owned businesses as well as their owners. The latest update to the Negative Investment List took place in 2018. This update refined some of the previous details of the Negative Investment List with a view towards encouraging foreigners to invest in Indonesia in such a way that will be of benefit to the economic growth of the country.
How the Negative Investment List’s Changes Have Impacted Business in Indonesia
A total of 54 industries experienced a change of status due to the most recent set of updates made to the Negative Investment List. Of these 54 industries, 25 of them were previously partially open to business activity and investment by foreigners. Some of the industries which are now completely open to foreign business activity and investment include fumigation and pest control, data communications, power plants which have capacities of at least 10 megawatts, telecommunication networks, and call centers.
There were also 17 other industries which had their compliance requirements relaxed. This relaxation of compliance requirements is intended to encourage foreigners to increase their investment and business activities in these industries. Industries such as lace knitting and fabric printing had all restrictions based on the size of the company in question removed. Certain industries which previously required special recommendations would now no longer require them. Among the more notable of these fields are banks, wood processing, tobacco, artificial sweeteners, and medical equipment.
The remaining 12 industries had been fully closed to foreign entry and contribution but are now completely open. Among these are surveyor services, construction machinery leasing, and leasing of other types of machinery.
These changes are expected to have a significant impact on the current condition of the economy of Indonesia. As is to be expected, the foreign influence and presence within each of the specified industries is expected to significantly increase. The revenue generated through this foreign business activity will in turn be expected to reduce Indonesia’s growing national deficit.
The Indonesian government has also been attempting to place increased priority on some of the sectors which had once been closed to foreign investment. Such sectors include oil and natural gas, power plants, and market research services. The government understands the value that these fields can bring to the country’s economy. Therefore, the entry of foreigners into these fields will be well-received by the Indonesian government.
The restructuring of the Indonesian market is also another important reason which underpins the changes made to the Negative Investment List. The government embarked on this restructuring process in order to maximize the economic gain from which the citizens of Indonesia would benefit. The changes to the Negative Investment List are just a few of the ways in which this restructuring process has made itself evident.
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