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FIELDS OF BUSINESS THAT CANNOT BE UNDERTAKEN BY FOREIGN…
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FIELDS OF BUSINESS THAT CANNOT BE UNDERTAKEN BY FOREIGN DIRECT INVESTMENT ("FDI")

The Indonesian government is actively promoting investment activities to ensure continuous growth and advancement in the economy's sectors. Presently, Indonesia has outlined which business activities are permissible for investment and which are not. The Indonesian government currently utilizes the term "Positive Investment List" in Indonesia, where all sectors are open for investment except those specified in Presidential Regulation Number 10 of 2021 as amended by Presidential Regulation Number 49 of 2021 concerning Business Fields for Investment ("Presidential Regulation No. 49/2021"). Therefore, for entrepreneurs intending to establish FDI, attention should be paid to Article 2 of Presidential Regulation No. 49/2021, which states the closed sectors for foreign investment as follows:

  1. Business sectors declared closed for Foreign Direct Investment; or
  2. Activities that can only be conducted by the Central Government.

The business sectors closed for foreign investment as mentioned above include:

  1. Business Fields that cannot be operated as specified in Article 12 of Law Number 25 of 2007 concerning Investment as amended by Law Number 11 of 2020 concerning Job Creation; and
  2. Industries of Alcoholic Beverages (KBLI 11010), Wine Industry (KBLI 11020), and Malt Beverage Industry (KBLI 11031).

As mentioned, the business sectors that cannot be operated are specified in Article 12 of Law Number 25 of 2007 concerning Investment ("Investment Law") as amended by Law Number 6 of 2023 concerning the Ratification of Government Regulation Number 2 of 2022 concerning Job Creation into Law ("Job Creation Law"). In the Investment Law as amended by the Job Creation Law, it is stated that the following business sectors are closed for investment:

  1. Cultivation and manufacturing of narcotics of Group I;
  2. All forms of gambling activities and/or casinos;
  3. Capture of fish species listed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
  4. Utilization or harvesting of corals and natural corals used for building materials/lime/calcium, aquariums, souvenirs/jewelry, as well as live corals or recently dead corals from nature;
  5. Chemical weapons manufacturing industry; and
  6. Industrial chemicals and substances destructive to the ozone layer.

The brief overview above provides a general description of the regulations regarding business fields for foreign direct investment (FDI) companies. Should you seek further information on this matter, Suria Nataadmadja & Associates Law Office can assist you.