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14 July 2010
The government has finally published the long-awaited new Investment Negative List. The new list, issued under Presidential Regulation 36/2010 on May 25 2010, sets out the lines of business that are closed to investment, as well as those that are open to investment on certain conditions. The two business line categories are listed in Attachment 1 and Attachment 2 of the regulation, respectively. This update summarizes the key points of the regulation.
The lines of business that are open to investment on certain conditions are those:
The 2010 list does not apply to investments that were approved before its issue, unless the terms of the list are more favourable to the investor.
The list does not apply to indirect investments or to portfolios for which the transactions are made through the Indonesian capital market or stock exchanges.
In the event of a shareholding change as the result of a merger, acquisition or consolidation of investment companies in the same line of business, the maximum foreign shareholding is:
The pre-emptive right provisions under the Company Law apply where a foreign investment company wishes to expand its business by increasing its capital through a rights issue. If the Indonesian partner or investor is unable to participate and, as a result, the foreign shareholding exceeds the limit in the investment licence, a divestment must be made within two years to ensure compliance with the limit. This can be achieved by:
The provisions of this regulation do not prejudice the provisions of regulations on business activities that have been issued by governmental technical departments or by a regional government.
The list also sets out conditions of foreign ownership or location for investors from member states of the Association of Southeast Asian Nations (ASEAN). These conditions are included to implement Indonesia's ASEAN commitments on investment.
The new list replaces the previous list, which was issued in 2007.
For further information on this topic please contact Agus Ahadi Deradjat at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125), fax (+62 21 250 5121) or email (email@example.com).
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