Foreign investors allowed for 49% in eCommerce

Ilustrasi (dok)

JAKARTA (IndoTelko) - President Joko Widodo (Jokowi) finally signed the Presidential Decree number 44 in 2016 on May 12, 2016 on the closed and open business fields list with conditions for investment, known as the Negative Investment List (DNI).

According to the documents obtained by IndoTelko, this regulation stated the areas of business in investment activities include three categories, namely the open business fields, closed business field and opened business field with requirement.

 Open business field with requirement includes two categories: businesses partnerships with micro, small, and medium enterprises (SMEs), as well as cooperatives. Then, the open business field with certain conditions, namely: foreign equity ownership restrictions, specific location, special licensing, 100% local capital and / or capital ownership restrictions within the framework of ASEAN cooperation.

While the business sectors that are not included in the closed business field and opened business field with requirement, then claimed as open business field. The provision of additional capital which could potentially exceed the limits on foreign ownership is also regulated in the open business field.

If the capital increase makes foreign share ownership rise beyond the maximum limits, then it musts be adjusted within 2 years time limit by 3 ways.

First, the foreign investors must sell the excess shares to domestic investors. Second, foreign investors must sell their excess shares in the domestic capital market, through a company whose shares they owned. Third, companies in which foreign investors own the shares, must purchase the excess portion of ownership and make them as treasury stock, according to the article 37 of Law Number 40 2007 regarding Limited Liability Company. This regulation applied since May 18, 2016.  

Negative Investment List in eCommerce

The interesting thing in the regulation's annex on eCommerce is that if previously proposed to open 100% for foreign investment in the marketplace.  

In the attachment list of open business fields with specific requirements in the communications and informatics sector stated to organize the trading transaction through an electronic system or marketplace-based platform, daily deals, price grabber and online classified ads with investment value less than US $ 100 billion is only allowed for 49% participation of foreign investors.

Not only that, the sector that also supports eCommerce similar of postal service implementation is also only opened 49% to foreigners. As well as the transportation sector, which disrupted by on demand services such as the transport of people not in the route (taxi) is only opened 49% to foreigners. However, for the venture capital that will be relied to inject funds into the startup is opened up to 85% to foreigners.

As for the other of communication and informatics sector is stated that the management & monitoring station Operation of radio frequency spectrum and satellite orbit is declared as closed to foreign investors. Telecom tower business is also still declared closed to foreigners.

For fixed telecommunications network, mobile telecommunications, telecommunications services content (ring tones, SMS Premium, and others), call center and value-added services of telecommunications, internet service providers, data communication systems, VoIP, interconnection service internet (NAP) is only open to 67% for foreign investors.

The government is also only open for about 20% of foreign investment for broadcasters’ subscription. This means that the challenge would be hard for streaming players like Hooq, iflix, and others to be local players, except if they seek for partners in the country to form an entity within the Negative Investment List (DNI).

Head of the Investment Coordinating Board (BKPM) Franky Sibarani in its official website expect with the issuance of the regulation, some investors who plans to invest in Indonesia will soon realize their interest. "With this new Negative Investment List (DNI), they can immediately realize their interests," he said. (id)