The Ease of Doing Business in Indonesia remains ranked 73 out of 190 countries in the Doing Business 2020 report released by the World Bank. Although the rank remained unchanged, based on the report, Indonesia recorded an increase in the index score from 67.96 last year to 69.61. Further, the government continues to help boost the country’s economic growth, one of which will change the Negative Investment List (DNI) into a Positive Investment List (DPI) in January 2020.
Unlike the DNI providing business sectors, which are closed or partially open to foreign investment, the DPI, however, will include the Standard Classification of Indonesian Business Fields (KBLI) allowing 100% foreign shareholding. DPI will be a reference for what investments are allowed in Indonesia and are contained in a special regulation. Business sectors which are included in the DPI shall be entitled to numerous incentives offered by the government, such as tax holiday, as well as a super deduction tax for investors covering not only money, technology, and knowledge, but also creating productive activities in Indonesia.
Meanwhile, a list of closed business sectors shall remain and will be regulated under the omnibus law, which would regulatemulti-sector of business fields. The new Law will also revise and revoke several existing provisions in other complicated and overlapping laws2. Six business sectors which are closed for investment include the following3 :
1. Marijuana cultivation;
2. Catching fish species listed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
3. Utilization (Retrieval) of Coral/ Coral from Nature for Building Materials/Limestone/Calcium, Aquariums, and Souvenirs/Jewelry, as well as Live Coral or Recent Death Coral from Nature;
4. Chlor-Alkali Making Industry with Mercury Process;
5. Chemical Industry of the List-1 Chemical Weapons Convention as set out in Appendix I of Law No. 9/2008 on Use of Chemicals as Chemical Weapons; and
Despite hopes that DPI can boost investment, the policy might, at the same time, put the Micro, Small and Medium Enterprises (UMKM) in Indonesia which are not yet competitive in danger. To protect the UMKM, a small number of foreign investors shall be required to partner with local small businesses or cooperatives. HWO/HES
1. Doing Business 2020 Economy Profile Indonesia: Comparing Business Regulation in 190 Economies, World Bank Group;
2. Mengenal “Omnibus Law“ yang akan dibahas Pemerintah dan DPR, https://nasional.kompas.com/read/2019/11/29/13511951/mengenalomnibus-law-yang-akan-dibahas-pemerintah-dan-dpr?page=all diakses pada tanggal 2 Desember 2019;
3. Muhamad Wildan, Daftar Positif Investasi: Status dari 14 Bidang Usaha Belum ditentukan, https://ekonomi.bisnis.com/read/20191121/9/1173007/daftar-positif-investasi-status-dari-14-bidang-usaha-belum-ditentukan diakses pada tanggal 2 Desember 2019.