Business Fields that are Closed for Investment in Indonesia

(After the Omnibus Law)

Closed business fields, or previously known as the “Negative Investment List/Daftar Negatif Investasi (DNI)”, are certain business field which is prohibited from being commercialized as an Investment activity. Generally, this line of business will only be run by the government for the public interest.

Prior to the enactment of Law No. 11 of 2020 concerning Job Creation (Law 11/2020 or Omnibus Law), the list of closed business fields is regulated in Presidential Regulation No. 44 of 2016 concerning Lists Of Business Fields that are Closed To and Business Fields that are Open With Conditions To Investment (PR 44/2016), which consists of 20 business fields, ie.:

1. Marijuana cultivation;
2. Catching of fish species listed in Appendix I to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
3. Lifting of valuable artifacts from shipwrecks;
4. Utilization (collection) of coral from nature for construction materials/lime/calcium, aquarium, and souvenirs/jewelry as well as living coral or dead coral (recently dead coral) from nature;
5. Chloral alkali making industry under mercury process;
6. Industry of pesticide active substances: DichloroDiphenylTrichloroethane (DDT), Aldrin, Endrin, Dieldrin, Chlordane, Heptachlor, Mirex, and Toxaphene;
7. Industrial chemical industry and Ozone Depleting Substances (BPO): Polychlorinated Biphenyl (PCB), Hexachlorobenzene and Carbon Tetrachloride (CTC), Methyl Chloroform, Methyl Bromide, Trichloro Fluoro Methane (CFC-11), Dichloro Trifluoro Ethane (CFC-12), Trichloro Trifluoro Ethane (CFC-113), Dichloro Tetra Fluoro Ethane (CFC-114), Chloro Pentafluoro Ethane (CFC-115), Chloro Trifluoro Methane (CFC-13), Tetrachloro Difluoro Ethane (CFC-112), Pentachloro Fluoro Ethane (CFC-111), Chloro Heptafluoro Propane (CFC-217), Dichloro Hexafluoro Propane (CFC-216), Trichloro Pentafluoro Propane (CFC-215), Tetrachloro Tetrafluoro Propane (CFC-214), Pentachloro Trifluoro Propane (CFC-213), Hexachloro Difluoro Propane (CFC-211), Bromo Chloro Difluoro Methane (Halon-1211), Bromo Trifluoro Methane (Halon-1301), Dibromo Tetrafluoro Ethane (Halon-2402), R-500, R-502;
8. Industry of chemicals listed in Schedule 1 of the Chemical Weapons Convention as incorporated in AppendixI to Law Number 9 Year 2008 concerningUse of Chemicals as Chemical Weapons;
9. Alcoholic hard liquor Industry;
10. Alcoholic beverages Industry: Wine;
11. Malt beverages Industry;
12. Organization and operation of terminals for passenger land transport;
13. Organization and operation of weigh stations;
14. Telecommunication/aids to shipping navigation and Vessel Traffic Information System (VTIS);
15. Provision of air navigation services;
16. Administration of testing of types of motor vehicles;
17. Management and operation of radio frequency spectrum and satellite orbit monitoring stations;
18. Public museums;
19. Historical and archaeological remains (temples, Sultan’s palaces, inscriptions, ruins, ancient buildings, etc.);
20. Gambling/casinos.

After the Omnibus Law was ratified, closed business fields were no longer stated in the PR, but were regulated in Law No. 25/2007 concerning Investment which has been amended by the Omnibus Law (Law 25/2007). In Law 25/2007, it is determined that the closed business fields are:

1. Class 1 narcotics cultivation and industry;
2. All forms of gambling and/or casino activities;
3. Catching of fish species listed in Appendix I to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
4. The use or extraction of coral and the utilization or extraction of corals from nature which are used for building materials/lime/calcium, aquariums, and souvenirs/jewelry, as well as live or dead corals (recent death corals) from nature;
5. Chemical weapons manufacturing industry; and
6. Industrial chemical industry and industrial ozone depleting substances.

However, as described in the previous article on the Basic Concept of Division of Business Fields for Investment in Indonesia, the business fields that are closed in PR 40/2016, are divided into two in PR 10/2021, ie.: (1) business fields that are declared closed for investment; and (2) Business fields or activities that can only be carried out by the Central Government, therefore in PR 10/2021 it is determined that the business fields that can only be carried out by the Central Government are activities that are service for public interest or in the context of defense and security that is strategic in nature and cannot be carried out or cooperated with other parties, which includes, among others:

1. the main tool of the weapon system,
2. government museums,
3. historical and ancient relics,
4. operation of flight navigation, telecommunications/aids for navigation of shipping and vessels.

Some of the business fields mentioned above were previously listed in the negative list of investment, which is contained in Attachment 1 of PR 44/2016.

From the description above, the difference points are:

1. Closed business fields are no longer stated in the PR, but are regulated in Law 25/2007.
2. Business fields that are closed and undergoing changes are: previously closed is “marijuana cultivation” then changed to “class 1 narcotics cultivation and industry”;
3. Several business fields are removed from the list of business fields declared closed, ie.:

• • Lifting of valuable artifacts from shipwrecks;
  • Chloral alkali making industry under mercury process;
  • Industry of pesticide active substances;
  • Alcoholic hard liquor Industry;
  • Alcoholic beverages Industry;
  • Malt beverages Industry;
  • Organization and operation of terminals for passenger land transport;
  • Organization and operation of weigh stations;
  • Administration of testing of types of motor vehicles;
  • Management and operation of radio frequency spectrum and satellite orbit monitoring stations;
  • Gambling/casinos.

4. The “main tool of the weapon system” business fields that were previously not included in closed business fields have now become closed business fields.

And if it is described in a comparison table, then the business sectors that are closed in Indonesia between before and after the Omnibus Law, the comparison can be seen as follows:

Regards