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What Is the Negative Investment List (DNI) and Why It Matters
Foreign investors exploring opportunities in Indonesia must first understand the Negative Investment List (DNI)—officially known as the Daftar Negatif Investasi. This regulation outlines which business sectors are fully open, partially restricted, or completely closed to foreign ownership. The DNI is a cornerstone of foreign direct investment in Indonesia, as it directly determines the feasibility of establishing a PT PMA (foreign-owned company) in a given industry.
Introduced under Presidential Regulation No. 44 of 2016 and later updated by Presidential Regulation No. 10 of 2021 (the Omnibus Law on Job Creation), the DNI was replaced by a new Positive Investment List system. However, the term "negative list" remains widely used and understood. The shift to a positive list means that all sectors are open unless explicitly closed, simplifying the framework for investors. This article explains the current structure, key restrictions, and practical steps to verify your business eligibility.
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Legal Basis and Evolution of the DNI
The DNI is rooted in Indonesia's investment law framework, primarily Act No. 25 of 2007 on Investment and its amendments. The Omnibus Law (Act No. 11 of 2020) introduced significant changes, leading to the issuance of Presidential Regulation No. 10 of 2021, which replaced the old DNI. This regulation classifies business fields into:
- Open to foreign investment with no restrictions (subject to general licensing)
- Open with conditions, such as maximum foreign ownership percentages, partnership requirements, or specific licenses
- Closed to foreign investment (reserved for cooperatives, micro, small, and medium enterprises, or the state)
The positive list approach aims to attract more foreign capital by reducing ambiguity and expanding open sectors. For instance, sectors like e-commerce, transportation, and telecommunications now have relaxed foreign ownership caps compared to pre-2021 rules.
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Key Restricted Sectors Under the Current Positive List
While most sectors are open, certain areas remain restricted or closed. Understanding these is critical for your company registration strategy. Below are major categories:
Closed to Foreign Investment
- Gambling and casinos
- Cultivation and processing of certain narcotics
- Fisheries (certain types of fishing)
- Forestry concessions (some sub-sectors)
- Drinking water supply (raw water)
- Industries that produce weapons, ammunition, explosives, and war equipment
Open with Conditions (Partial Foreign Ownership)
Examples include:
- Higher education: maximum 49% foreign ownership
- Construction services: maximum 67% foreign ownership (subject to qualifications)
- Hospitals and clinics: maximum 67% foreign ownership
- Distribution and warehousing: maximum 67% foreign ownership
- Tourism (e.g., hotels, restaurants): up to 100% for certain categories, but with location conditions
These caps are subject to change, so always verify the latest investment law updates.
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How to Check If Your Business Sector Is Open
Before investing, you must verify the status of your intended business field. The official reference is the KBLI (Indonesian Standard Business Classification) code system. Each business activity has a unique KBLI code, and the investment list specifies conditions per code. Steps:
- Identify your primary business activity and its KBLI code using the KBLI code directory.
- Cross-reference the code with the Positive Investment List (Lampiran I and II of Presidential Regulation No. 10 of 2021).
- Check for any specific conditions such as minimum capital, partnership with local SMEs, or location requirements.
- Consult with BKPM (Indonesia Investment Coordinating Board) or a professional advisor for confirmation.
For example, if you plan to open a construction company, you need a KBLI code related to building construction and must comply with foreign ownership limits and obtain a construction business license.
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Implications for PT PMA Establishment
Setting up a PT PMA requires alignment with the investment list. If your sector is closed, you cannot establish a foreign-owned company; you may consider a joint venture with an Indonesian partner (if allowed under conditions). If partially restricted, your PT PMA must adhere to the maximum foreign ownership percentage. Your business licensing application through the OSS RBA system will automatically validate your sector's eligibility based on the KBLI code you enter.
Key considerations:
- Minimum investment capital: PT PMA requires a minimum total investment of IDR 10 billion (excluding land and buildings), with paid-up capital at least IDR 2.5 billion.
- Shareholder structure: Foreign ownership structure must comply with the positive list conditions.
- Local partnership: Some sectors require a local partner (Indonesian individual or company) to hold the remaining shares.
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Frequently Asked Questions (FAQ)
What is the difference between DNI and Positive Investment List?
The DNI (negative list) listed sectors closed or restricted; the Positive Investment List (since 2021) lists only sectors that are closed or conditionally open—everything else is open by default. The term DNI is still used colloquially.
Can a foreign investor own 100% of a company in Indonesia?
Yes, for many sectors that are fully open under the Positive Investment List. However, some sectors have maximum foreign ownership caps (e.g., 67% or 49%). Always verify using the official list.
How often is the investment list updated?
The list is updated periodically through presidential regulations. The most recent major revision was in 2021. Minor adjustments may occur.
What happens if I invest in a closed sector?
Your investment application will be rejected by BKPM. If discovered later, your company may face administrative sanctions, including revocation of business licenses.
Do I need a local partner for a PT PMA?
Only if your business sector is listed with a condition requiring local ownership. Many sectors allow 100% foreign ownership, so no local partner is necessary.
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Conclusion
Understanding the Negative Investment List (now Positive Investment List) is essential for any foreign investor targeting Indonesia. By identifying your KBLI code and checking the applicable conditions, you can determine the feasibility of your PT PMA. Always consult the latest regulations and seek professional guidance from experts in foreign direct investment to ensure compliance. For further details on related topics, explore our dedicated DNI article and business categories guide.
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