The Indonesian Negative Investment List (Daftar Negatif Investasi, DNI) is a core policy document that regulates foreign investment access, clearly specifying industries that are prohibited, restricted, or conditionally open.
The current version was revised by Presidential Regulation No. 49 of 2021 (originally based on Presidential Regulation No. 10 of 2021), categorizing investment fields into four tiers and strictly defining prohibited industries. The DNI is divided into four levels:
In Indonesia, industries that are prohibited or restricted for investment are mainly based on factors such as national security, public health, environmental protection, religious beliefs, and cultural values.
Below is a list of the nine major industries that are completely prohibited for investment and the reasons behind them:
1. Drug-related Industries
– Scope of Prohibition:Cultivation and processing of cannabis, production of opium, drug distribution.
– Reason:Violation of Indonesian criminal law and Islamic law (with 87% of the population being Muslim), with drug-related crimes punishable by death in severe cases.
2. Gambling Industry
– Scope of Prohibition: Operation of casinos, online gambling platforms, illegal lottery businesses.
– Exception: Government-licensed sports lotteries (such as TOTO).
– Reason: Contradicts religious ethics and is prone to inducing crime and social issues.
3. Industries Harmful to Health and the Environment
– Scope of Prohibition: Production of cyanide/mercury, processing of radioactive materials, manufacturing of asbestos products.
– Reason:The Indonesian government has committed to fulfilling the Stockholm Convention to control pollution from toxic substances.
4. Industries Destructive to Natural Resources
– Scope of Prohibition:Illegal logging, trade in endangered species (ivory/rhinoceros horn), coral mining, destructive development of mangroves.
– Reason:Protection of biodiversity (Indonesia is the world’s second-largest tropical rainforest country).
5. Military and National Security-related Industries
– Scope of Prohibition:Unauthorized production of weapons/explosives, manufacturing of espionage equipment.
– Reason:To prevent misuse of technology and safeguard national sovereignty.
6.Industries Violating Religious and Cultural Values
– Scope of Prohibition:Production and sale of alcoholic beverages (completely prohibited in Islamic regions such as Aceh), production and dissemination of pornographic content, entertainment activities that violate Islamic teachings.
– Reason:Respect for religious traditions (the Constitution guarantees the legal status of six major religions).
7. Destructive Mining and Energy Industries
– Scope of Prohibition: Mining of uranium/thorium, mining in protected areas, destructive fishing practices such as blast fishing and cyanide fishing.
-Reason:Compliance with the Mining Act and commitments to marine ecological protection.
8. High-Risk Biotechnology
– Scope of Prohibition:Unauthorized cultivation of genetically modified crops, application of cloning technology.
– Reason: To prevent genetic contamination and uncontrollable health risks.
9. Other Restricted Industries
– Scope of Prohibition: Unlicensed aviation services, illegal telecommunications operations, unauthorized pharmaceutical production.
– Reason:Involves public safety and requires strict government regulation.
Notes for Investors:
– Dynamic Adjustments:The DNI may be revised in response to policy changes (e.g., plans to liberalize restrictions on the digital economy in 2024).
– Compliance Review:Before entering the market, foreign investors should collaborate with legal counsel and the Indonesian Investment Coordinating Board (BKPM) to confirm industry restrictions and conditions.
– Future Trends:The government plans to gradually open up some currently prohibited areas (e.g., medical equipment manufacturing), but there is no clear timetable yet.
