Telecommunication

Indonesia’s New Investment Regime: Telecommunication, Media, And Technologies Sector – Media, Telecoms, IT, Entertainment


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Following up the new investment regime as introduced by Law No.
11 of 2020 on the Job Creation or known as Omnibus Law, the
President of Republic of Indonesia has issued a new legal framework
on the business investment which is now promoted as positive list,
(Presidential Regulation No. 10 of 2021 on the Investment Business
Field that has been amended by PR No. 49 of 2021 (“PR
10/2021
” or “Positive
List
“)).

PR 10/2021 specifies substantial changes to Indonesia’s
Foreign Direct Investment (FDI) regime. It generally stipulates
that all business sectors are now open for foreign
investment unless it is stated that it is completely closed off to
foreign investments; or specifically reserved for central
government (Art. 2 (1) of PR 10/2021).

Due to the broad changes in the FDI regime, we will now focus
our analysis of this article specifically on the technology, media,
and telecommunications (“TMT”)
sector.

Legal Frameworks: The executive summary below
is referred to the following prevailing regulations:

  1. PR 10/2021, which has revoked and repealed the PR 44 of 2016 on
    Lists of Business Fields That Are Closed and Open with Conditions
    to Investment or known as Negative Investment List
    (“PR 44/2016” or
    “NIL”); and

  2. Chief of the Statistical Bureau Regulation No. 2 Year 2020 on
    the Indonesian Industrial Standard Classifications 2020
    (“KBLI 2020” or
    “KBLI”).

Telecommunications Business Activities: PR
10/2021 eliminates the foreign ownership limitations on various
telecommunication business activities, such as fixed and mobile
telecommunication networks, these sectors previously were
restricted to a maximum of 67% foreign ownership.

Given such changes, foreign investors may now raise their stakes
on telecommunication companies or enter into various
telecommunications activities on their own, without having to
establish a joint venture with local partners. However, please note
that any changes of shareholding structures must be first approved
by and/or reported to the Ministry of Communication and
Informatics, which shall depend on the fulfillment of the
applicable commitments for each telecommunication license
holder.

See below the comparison on foreign ownership limitations based
on NIL and the new Positive List provisions for your ease of
reference.

























Business
Activities
Relevant KBLI Foreign Ownership
Limitation
NIL Positive List
Fixed telecommunication network 61100 Maximum 67% Open without condition
Mobile telecommunication network 61200

61300
Maximum 67% Open without condition
Telecommunication network integrated to
telecommunication services
61921

61922

61923

61929
Maximum 67% Open without condition
Telecommunication content services 61911 Maximum 67% Open without condition
Call center and telephony added value
services
61919 Maximum 67% Open without condition
Internet service provider 61921 Maximum 67% Open without condition
Data communication system services 61922 Maximum 67% Open without condition
Telephony internet services for public 61923 Maximum 67% Open without condition
Internet interconnection services (NAP) and other
multimedia services
61929 Maximum 67% Open without condition
Telecommunication tower provider, operation and
maintenance services and construction services
42217 100% closed for foreign investment Open without condition, except for telco’s
tower construction using simple or intermediate technology (KBLI
43212), which is allocated for MSME or cooperatives


Media and Broadcasting Business Activities: PR
10/2021 now allows newspaper, magazines, and bulletin publishing
activities (KBLI 58130) to have a maximum of 49% foreign ownership
for a publicly listed company (previously such KBLI was completely
reserved for domestic investment).

However, the strict limitation on foreign ownership in private
and subscription-based broadcasting activities (KBLI 60102, KBLI
60202) remains the same, in which maximum foreign ownership of 20%
for raising working capital or business expansion still
applies.

Digital Platform Business Activities: The
Positive List now allows web portals and digital platforms for
commercial purposes (i.e., marketplaces, on-demand
online services, other commercial digital platforms, etc.) (KBLI
63122) to be 100% open for foreign investment, without any
investment value requirement. Previously, it was restricted to a
maximum of 49% of foreign investment for a platform with an
investment value of less than IDR 100,000,000,000 (one hundred
billion Rupiahs).

NLP Commentary to the Positive List on TMT
Sectors:
Indonesian government is taking huge steps to
promote investment, create job opportunities, and strengthen the
domestic economy through the Omnibus Law. One of the steps is
eliminating maximum foreign ownership restriction in many business
sectors, including TMT, energy, tourism, etc.

We trust that the significant relaxation of FDI requirements on
TMT sectors will likely entice foreign investors and simultaneously
gives a positive impact on Indonesia’s economy, particularly on
the development of digital infrastructure sector.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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