LAW OF INVESTMENT AND

CAPITAL MARKET:
Business Form of Domestic & Foreign
Investment, Investment Procedure, and
Negative Investment List

Group 4
Amanda Wulansary (1706065551)
Djuan Dennis Sihotang (1706065614)
Nicolette Alicia Johnson (1706028751)
Sasongko Soeparno (1706065816)
 Outline
1. Domestic and foreign
investment business form
2. Investment Procedure
3. Negative Investment List
(DNI)
Domestic and
Foreign Investment
Business Form
BUSINESS FORM
based on Art. 5 Law No.25/2007 concerning
Investment

DOMESTIC INVESTOR (1) FOREIGN INVESTOR (2)

Domestic investment can be in a Foreign investment is obliged to be
form of legal entity business form, in a form of PT (limited liability
an unincorporated legal entity company) according to the
business form, and sole prevailing laws in Indonesia and
proprietorship shall domiciled within the territory
of Indonesia
● PT (limited liability company)
● CV In the practice, foreign investment
● Firm
●
company will use PT PMA as the
Civil Partnership
● Sole proprietorship business form
Foreign Joint Venture Company
Anderson Business Law and Legal Environment define Joint venture as
relationship in which two or more persons combine their labor or property for
single business undertaking and share profits and losses equally or as
otherwise agreed

Article 1 (3) Law No.25/2007 concerning Investment define Foreign Investment

as any investing activity for running business within the territory of the
Republic of Indonesia, made by any foreign investor using either foreign capital
entirely or joint capital with domestic capital

Foreign joint venture company considered as a foreign investor although it has

a domestic capital in it

Foreign Joint Venture Company shall follow Art.5 (2)

Investment
Procedure
Foreign Investment and Domestic Investment
1. Register for company establishment that adheres to Art.7 Law
No.40/2007 (Company Law)
2. Check the Presidential Regulation No.44/2016 concerning Negative
Investment List
3. Register to the BKPM (Investment Coordinating Board) and fill out
the application form as stated in Attachment Model 1 (Head of
BKPM Regulation No.6/2018)
4. Apply for investment principle permit (investment regulation) BKPM,
in order to get fiscal facilities from the government (Head of BKPM
Regulation No.13/2017)
5. Apply for investment business permit to the BKPM (Art. 20 Head of
BKPM Regulation No.5/2019)
Presidential Regulation
No. 44/2016: Negative
Investment List (DNI)
 Negative Investment List (Daftar Negatif Investasi)
● Enacted on May 12th 2016
● Contains the lists of Business Fields that are Closed and Business Fields that are
Open with Conditions to Investment
● 6 (six) chapters:
○ General Provisions;
○ Business Sectors;
○ Implementation of Investment in Business Sectors;
○ Monitoring, Evaluation, and Settlement of Investment Problems;
○ Transitional Provisions;
○ Concluding Provisions.
● 3 (three) sections of appendix:
○ list of business fields that are closed to investment;
○ business fields that are open to investment with conditions (reserved or in
partnership with micro, small, and medium-scale enterprises and cooperatives)
○ business fields that are open to investment under certain conditions
Negative Investment List
● Business fields that are open under certain conditions are namely:
1. Limited foreign capital ownership;
2. Certain locations;
3. Special licenses/permits;
4. 100% (one hundred percent) domestic capital; and/or
5. Limited capital ownership in the context of the Association of Southeast
Asia Nations (ASEAN) cooperation.

● Business fields that are not included in the lists of business fields closed to
investment and open to investment with conditions shall be business fields
that are open to investment.
● The 3 (three) sections of appendix attached to the DNI is a part of and
inseparable to the Presidential Regulation No. 44/2016.
Negative Investment List

● Business fields that are open with conditions must meet the location conditions as
provided in the laws and regulations on spatial layout and regulations on
environment management
● Change in capital ownership from a merger, acquisition, consolidation in an
investment company that engages in the same business sector (Article 9)
● Business activities expansion ( Must adjust with Article 10)
● Coordinating Minister for Economics Affairs assisted by the Tim Nasional
Peningkatan Ekspor and the Tim Peningkatan Investasi shall monitor, evaluate, and
settle problems arising from the implementation of investment activities in the
business fields listed in the DNI
● Today, DNI still acts as a ‘guidance’ for investors
● Many finds DNI inconvenient and too restrictive → DNI too long and in contrary with
other countries’ more open investment trend
● Government plans to abolish DNI and change it into Daftar Positif Investasi (“White
List” or “DPI”) by January 2020
● The difference between DPI and DNI is that only 6 (six) industries will remain restricted
in the DPI such as marijuana, casino or gambling, and chemical weapon industries and
anything besides the 6 restricted industries will be open to foreign investment while the
DNI has 20 (twenty) restricted business sectors
Thanks!
Does anyone have any questions?
QUESTIONS
1. Adira: what if the foreign investor would like to invest in an existing domestic
company. Would it change the procedures? And what would be the status of
the company? -
2. Rheza: art 1 par 6 law 25 year 2007 : forms of investors. How does the
procedures for investment conducting by foreign government.
3. Arya: our view regarding the DPI
4. Andrew: how does all of these required permits, how are they expected to be
dealt with, when you consider to the online single submission?
5. Yoichi: explain the meaning of PT PMA in english. Do we have any further
news of the DPI list what did they change?
6. Bu Ira: do we need the “white list”? Criticism or suggestion to the
government?