Many investors view this transformation as a strong signal of the government’s commitment to enhancing global competitiveness and accelerating the inflow of high quality foreign capital.
The most significant shift comes from a fundamental change in regulatory approach.
Previously, investors had to navigate lengthy restriction lists. Today, the system is more transparent, predictable, and investor friendly.
This is where the Positive Investment List Indonesia 2024 (Daftar Positif Investasi or DPI) becomes a central reference in business expansion discussions.
The framework reverses the old restrictive mindset by opening nearly all sectors unless explicitly prohibited by law.
Legal Framework of the Positive Investment List
The primary legal foundation of Indonesia’s new investment regime is Presidential Regulation Number 10 of 2021 on Investment Business Sectors.
This regulation was later refined through Presidential Regulation Number 49 of 2021 to accommodate market developments and national strategic interests. These reforms align closely with Law Number 11 of 2020 on Job Creation.
Through broad deregulation mandates, the government officially revoked Presidential Regulation Number 44 of 2016, which previously governed the Negative Investment List (Daftar Negatif Investasi or DNI).
In practice, the Positive Investment List introduces a philosophy of openness and legal certainty.
Investors can immediately determine whether a business sector is fully open, subject to partnership requirements, bound by specific conditions, or classified as a priority sector.
This framework simplifies business classifications into four main categories:
- Priority business sectors
- Sectors allocated to or requiring partnerships with Cooperatives and MSMEs
- Sectors subject to specific requirements
- Sectors fully open to all investors
The Paradigm Shift from the Negative Investment List to the Positive Investment List
Under the former Negative Investment List regime, investment policy focused heavily on domestic market protection. Many sectors imposed strict foreign ownership limits, often delaying expansion decisions due to complex percentage restrictions.
Under the new Positive Investment List regime, the principle is significantly more open and transparent.
Almost all sectors are now considered open, with restrictions applying only to those explicitly prohibited by law or reserved for specific national interests.
As a result, the number of completely closed business sectors has decreased dramatically.
Currently, only six core sectors remain prohibited for private investment due to national security, morality, and environmental protection considerations.
These prohibited sectors include:
- Cultivation and production of Category I narcotics
- All forms of gambling or casinos
- Fishing of species listed under Appendix I of CITES
- Utilization of natural coral for construction materials or jewelry
- Chemical weapons industries
- Industries producing ozone depleting substances
Outside of these sectors, most business activities are open under applicable conditions.
This regulatory clarity has created a strong positive psychological impact on the market. Investors now gain faster certainty, enabling more structured long term investment decisions.
Strategic Sectors Fully Open to Foreign Investment
One of the most attractive aspects of the Positive Investment List is the broad liberalization of foreign ownership across strategic industries.
Many sectors previously restricted now allow up to 100 percent foreign ownership, particularly in digital, pharmaceutical, infrastructure, and selected service industries.
Below is an overview of the most sought after sectors requiring significant capital, technology transfer, and global operational standards.
Digital Economy and Information Technology
The digital sector is the most liberalized under the current investment framework. This aligns with Indonesia’s ambition to become Southeast Asia’s largest digital economy.
Computer programming activities under KBLI Code 62010 are now fully open to foreign investors.
This allows global software companies to establish development centers entirely in Indonesia.
Web portals and digital platforms under KBLI Code 63122 are also 100 percent open to foreign ownership.
These include hosting services, data processing, and ecommerce platforms with specific investment thresholds.
Telecommunications infrastructure, including the management of telecom towers, is likewise fully open to foreign capital.
The strategic objective is clear. The government aims to attract global data centers and cloud computing infrastructure to reduce operational costs and accelerate nationwide digital transformation.
Healthcare and Pharmaceuticals
The healthcare sector now offers significant opportunities under the Positive Investment List. Pharmaceutical manufacturing for human use is fully open to foreign ownership, an increase from previous limitations.
This includes industries producing traditional and modern pharmaceutical raw materials. Medical device manufacturing and distribution are also fully open to foreign capital.
These reforms are expected to strengthen Indonesia’s healthcare supply chain and service quality.
Manufacturing and Industrial Processing
The government actively encourages foreign investment in manufacturing to strengthen domestic industrial structures.
A major focus is placed on mineral downstream processing and high value industrial ecosystems.
A prominent example is the electric vehicle battery ecosystem. Cathode battery plants in Central Java and nickel cobalt smelters in Southeast Sulawesi have been designated as strategic projects with massive investment values.
Beyond minerals, the food and beverage sector has also experienced significant liberalization. Fruit and vegetable canning industries are now fully open to foreign investors.
The packaged water industry, including refillable drinking water businesses, has also been fully liberalized.
Infrastructure and Energy
Large scale infrastructure needs have driven the opening of critical sectors to foreign investment. Power generation facilities above 1 MW capacity are now fully open to foreign ownership.
This supports Indonesia’s clean energy transition agenda, particularly for large scale solar power projects.
Airport related business activities, including operational services within airport environments, are also fully liberalized.
Water storage and distribution services are now fully open to foreign capital, often supported by fiscal incentives for advanced water treatment technologies.
Services and Trade
Service sector liberalization aims to improve operational efficiency across industries. Logistics services, including freight forwarding and transportation management, are now fully open to foreign investors.
This is expected to reduce domestic shipping costs.
In retail, supermarkets and department stores with sales floor areas above 400 square meters are fully open to foreign ownership.
Meanwhile, minimarkets and small retail shops remain reserved for MSMEs. Travel agencies and real estate brokerage services are also fully liberalized.
Priority Business Sectors and Tax Incentives
The government has designated 246 business sectors as priority sectors under the Positive Investment List. These sectors are selected based on strategic national development objectives.
Key criteria include:
- Alignment with National Strategic Projects
- Capital intensive operations
- Labor intensive industries
- Advanced technology utilization
- Pioneer industries
- Export oriented activities
- Research and development commitments
Investors meeting these criteria may access competitive fiscal and nonfiscal incentives.
Fiscal incentives include Tax Holiday, Tax Allowance, and import duty exemptions for production machinery and capital goods.
Tax Holiday schemes allow corporate income tax reductions of up to 100 percent for qualifying pioneer industries.
Tax Allowance provides net income deductions based on investment value in specific sectors or regions.
Additional incentives target labor intensive industries through investment allowance mechanisms.
Nonfiscal incentives include simplified licensing processes, infrastructure support, energy supply guarantees, and streamlined foreign workforce utilization.
Reform of Minimum Capital Requirements for Foreign Investment Companies in 2025
A major reform introduced in 2025 concerns the minimum paid up capital for foreign owned companies (Perseroan Terbatas Penanaman Modal Asing or PT PMA).
Under Investment Coordinating Board Regulation Number 5 of 2025, effective from October 2, 2025, the minimum paid up capital has been reduced to IDR 2.5 billion per company.
This significant reduction lowers market entry barriers, particularly benefiting digital and service sector startups.
However, the total planned investment value must still exceed IDR 10 billion per five digit KBLI business classification per project location, excluding land and buildings.
A capital lock up mechanism also applies.
The paid up capital must remain in the company’s bank account for at least 12 months and may only be used for legitimate operational expenses or capital expenditures.
MSME Protection and Mandatory Partnership Requirements
Investment liberalization is balanced with strong protection for Micro, Small, and Medium Enterprises. The government allocates 112 business sectors exclusively for Cooperatives and MSMEs.
Additionally, dozens of sectors require mandatory partnerships between large enterprises and local businesses.
Reserved MSME sectors typically involve simple technology, labor intensive processes, and cultural heritage industries.
Examples include batik production, traditional headwear manufacturing, traditional musical instruments, and snack food industries.
There is also a capital threshold rule.
All businesses with investment value below IDR 10 billion, excluding land and buildings, are classified as MSME territory and closed to foreign ownership.
Mandatory partnerships are supervised through the Online Single Submission system.
Failure to fulfill partnership commitments may result in administrative sanctions, including business license revocation.
XPND’s Role in Maximizing Opportunities under the Positive Investment List Indonesia 2024
The Positive Investment List Indonesia 2024 provides extensive access for foreign investors across strategic sectors with clearer regulations and full ownership rights.
However, successfully capturing these opportunities requires accurate business structuring, proper KBLI classification, and compliance with risk based licensing mechanisms.
XPND serves as a strategic partner for foreign investors navigating Indonesia’s evolving investment landscape.
From establishing PT PMA entities and managing licensing through the OSS RBA system to aligning business classifications under the latest KBLI framework, XPND provides integrated regulatory support.
Beyond licensing, XPND also assists investors in leveraging priority sector incentives.
This includes optimizing tax benefits and ensuring ongoing compliance with investment realization reporting requirements.
Through a compliance driven and strategic approach, investors can expand operations efficiently while minimizing administrative risk.
