What's Happening?
Indonesia has introduced a 'Positive List' to regulate foreign direct investment (FDI), replacing the previous 'Negative List'. This change is part of Presidential Regulation No. 10 of 2021, amended by Presidential Regulation No. 49 of 2021, under the Job
Creation Law. The Positive List categorizes business fields into those closed for investment, limited to the Indonesian government, or open to investment. The list aims to simplify business permissions and attract more foreign investments by lifting restrictions on several sectors, including telecommunications, healthcare, and energy. Additionally, Indonesia has launched the Online Single Submission (OSS) system, a web-based platform to streamline business registration. The OSS Risk-Based Approach, introduced in 2021, categorizes businesses by risk level, determining the necessary permits and licenses. This system is designed to lower entry barriers and encourage foreign participation in the Indonesian market.
Why It's Important?
The implementation of the Positive List and the OSS system is significant for Indonesia's economic landscape. By reducing restrictions on foreign investments and simplifying the registration process, Indonesia aims to attract more international investors, boosting economic growth. The reduction in the minimum capital requirement for foreign investment companies from IDR 10 billion to IDR 2.5 billion further lowers entry barriers, making the market more accessible. This move could lead to increased competition, innovation, and job creation in various sectors, including telecommunications, healthcare, and energy. The changes are expected to enhance Indonesia's global competitiveness and economic resilience, particularly in the face of global economic challenges.
What's Next?
As Indonesia continues to implement the Positive List and the OSS system, it is likely to see increased foreign investment inflows. The government may monitor the impact of these changes on the economy and adjust regulations as needed to ensure they meet the intended goals. Businesses and investors will need to navigate the new regulatory environment, potentially seeking guidance from local experts to comply with the updated requirements. The success of these initiatives could serve as a model for other countries looking to attract foreign investment and streamline business operations.
