Foreign Investment: Indonesian Government Will Revise Regulations, Allowing Foreign Capital on More Sectors

By Staff Writer

Feb 11, 2016 02:10 AM EST

Indonesia decided to provide more scope and permission for foreign investors to participate in some economic sector previously restricted. Indonesian President Joko Widodo announced that the country will loosen some restrictions on foreign investment in nearly 50 sectors.

The new protocol will allow more foreign investments in important sectors, including e-commerce, retail, healthcare, and entertainment. One particular sector that would soon be open to foreign investments had received a lot of buzz, which is the movies sector.

The new change is introduced along with other economic stimulus packages that had been carried out by the government during the past six months. According to Tempo, the revisions to Indonesia's investment regulations would be launched soon as the government's 10th economic stimulus package. The packages also act as a strategy to thrive in the ASEAN Economic Community.

Traditionally, the biggest industries in Indonesia for centuries had ben agriculture and mineral. Indonesian authorities are pushing forward to drive industry and employment in various other sectors with the help of stimulus packages and regulations reforms they introduced.

With the loosening of restrictions on foreign investments, the government expected that Indonesia could receive more investments from overseas. The increasing foreign investment will, in turn, compensate for export performance that had suffered in result to the slowing down of China's economy. The Economic Times noted that cooling economic growth in China had negative impacts toward Indonesia as its trading partner. As Southeast Asia's biggest economy, Indonesia's economic growth has been growing at its slowest pace in six years.

In an interview with Bloomberg, Indonesian trade minister Tom Lembong implied that the revisions to foreign investment regulations were also meant to fix the investment climate in Indonesia. "We are opening up dan rationalizing our investment regime. It's a big push. We had fallen behind from where we should be." During the past few months, some big foreign companies such as Ford and Chevron had pulled themselves out of Indonesia. The government believe that the investment climate could improve if they are willing to thoughtfully reform counterproductive regulations and make some politic changes to support that.

President Joko Widodo, along with other Indonesian authorities, were to further discuss and update the investment list. The list would determine which sectors would be open to foreign investments. The final changes are to be announced after a decision is formed.

The trade minister expects that Indonesia's economic growth would go at a faster pace at 5.2 percent this year. The reforms and revisions regarding foreign investments sectors are also expected to give a boost to the economic growth and compensate for weaker export performance. 

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