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Indonesia: Plan to Revise Foreign Investment Rules

(Apr. 17, 2014) Indonesia’s Coordinating Minister for Economic Affairs, Hatta Rajasa, announced on April 11, 2014, that in the near future Indonesia plans to revise its current “negative investment list,” which has been used to protect domestic industries considered to be “sensitive.” No indication was given as to which industries would be removed from the list. (Rieka Rahadiana, Indonesia to Issue Revised Foreign Investment Rules Next Week, JAKARTA GLOBE (Apr. 11, 2014).)

The plan to reform the rules follows a slowing down of foreign investment in Indonesia. In addition, the country’s negative foreign currency accounts had led to a 20% reduction in the value of Indonesia’s currency against the U.S. dollar. (Id.)

The negative investment list, formed under Indonesian government decrees of 2007 and 2010, indicates sectors of the economy that are “either wholly or partially closed to private foreign and/or domestic investment … .” (Negative Investment List, Indonesia Investment Coordinating Board (IICB) website (last visited Apr. 14, 2014); The Presidential Regulation of the Republic of Indonesia on the Criteria and Establishment of Closed Business Line and Open Business with Conditions in Respect of Capital Investment, No. 76/2007 (July 3, 2007), IICB website; The Presidential Regulation of the Republic of Indonesia on List of Business Fields Closed to Investment and Business Fields Open, with Conditions, to Investment, No. 36/2010
(May 25, 2010), IICB website.)

The announcement of the planned revision comes after the December 2013 statement that an increase in foreign investment would be permitted in power plants, advertising, and pharmaceuticals. At that time, proposals to let foreign investors participate in air and sea ports were turned down. (Rahadiana, supra.)