Indonesia Set to revise Negative List of Investment

The government of Indonesia has revealed its plans to allow foreign investors full right ownership of cold storage businesses, rubber manufacturing industries, sugar factories and the business of e-commerce through the revision of the presidential regulation No. 39/2014 on the list of negative investment. The Negative investment list (Daftar Nagatif investasi) is a comprehensive list that has those sectors that are partially or completely restricted to foreign investment. Presently, the government is contemplating whether it will be a good idea to open other sectors in order for foreign investors to come in for business purposes.

The head of the Indonesia investment coordination Board (BKPM), Franky Sibarani disclosed that foreign investors will be given full privilege to own and operate the cold storage, sugar and rubber businesses. However, he also clarified that the government is going to put in place terms and conditions by which investors needs to adhere to for proper organization.

As part of plans in growing its economy, the Indonesia government is also considering giving more access to foreign investments in Indonesia’s department store and minimarket businesses. Meeting of concern stake holders will continue on Tuesday (19/01). The president of Indonesia Joko Widodo has let his opinion known on the matter, saying that, what he wants the Negative Investment List revised before January ending. “Due to the fact that the ASEAN Economic Community (AEC) Began 1 January 2016, to attract more foreign investors there is need for Indonesia to make its business environment more friendly.” Cabinet secretary Pramono Anung disclosed to everyone. The AEC creates a single market and production base among the list of ASEAN member nations

Indonesia Cold Storage Business

In reference to the cold storage business, Sibarani disclosed that investors will not suffer any geographical restriction, so therefore individual and organization coming into Indonesia to invest will enjoy 100 percent full privilege throughout the archipelago. As at present, cold storage foreign ownership is limited to 33 percent in Sumatra, Java and Bali. Apart from these three islands, foreigners have the privilege to acquire a 67 percent stake.

Presently, the scarcity of cold storage facilities has become a major problem for transporting some particular food products. Take for instance; Indonesia’s fish processing industry is really experiencing serious issues due to the scarcity of cold storage facilities. The total cold storage facility capacity of Indonesia (available to fisheries) was put at an estimate of 7.2 million tons back in year 2014. However, what the country produces annually is 14 million tons of fish (data credited to the Indonesia Cold Storage or ARPI).

Indonesia Sugar and Rubber Manufacturing Industries

Presently, foreign investors are allowed to acquire a stake of 95 percent in Indonesia sugar industries. But now the government is considering extending it to 100 present under concrete agreement that foreign investors will have to involve in partnership with indigenous formers that are the rightful owners of the sugarcane plantations, In order to make way for 100 percent foreign ownership, the sugar plant is required to make use of around 30 percent of domestically produced raw materials.

Currently, the Indonesian Sugar Association (AGI) disclose that there is going to be a widening deficit of sugar in Indonesia this year (2016) as local production is expected to drop further to about 2.3 million tons in 2016, meaning that in order to meet local demand an estimate of about 400,000 tons of sugar needs to be imported in Indonesia.

Also in the rubber manufacturing industry, foreign investors that are serious in doing business in Indonesia will need to engage in strong partnership with indigenous framers.

Indonesia E-commerce Business

Any country that wants to be successful and expand its business across globe will have to embrace ecommerce in order to achieve its aims and objective, having acknowledge this fact, the Indonesian government is moving towards this direction, According to Sibarani, Indonesia’s is going to open it E-commerce Business fully (100%) to foreign investors, as far as a minimum of IDR 10 billion (approx. USD $72 million) will be invested and as far as the foreign investors agrees to cooperate and work together with indigenous warehousing companies.

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