Larger Share of Foreign Ownership in Indonesia's Infrastructure Projects
The Indonesian government wants to enlarge the role of foreign participation in the country's infrastructure development. Through a proposed revision of Presidential Regulation No 36/2010 regarding the Negative Investment List (Daftar Negatif Investasi), foreign investors will have more room for investing in Indonesia's infrastructure sector within public-private partnership schemes (PPP projects). The Indonesian government needs more foreign participation as the current state of the country's infrastructure is inadequate.
Head of the Indonesia Investment Coordinating Board (BKPM), Mahendra Siregar, stated that foreign investors will have the opportunity to obtain a license to engage in government projects in three more sub-sectors of infrastructure: transportation, drinking water, as well as electricity generation (including both the transmission and distribution of electricity).
If the new revision is approved, then foreigners can have a 95 percent stake in PPP projects connected to the construction of port facilities (docks, container terminals, and more). When foreign investors engage in these projects without a PPP structure, the foreign stake is limited to 49 percent. For airport facilities, foreigners can only have a 49 percent stake (both in private projects and PPP projects). Lastly, in toll road development and public works foreigners can have a 95 percen stake (both in private and PPP projects).
For electricity generation (1 to 10 MW), foreign investors can own a 49 percent stake (both in private and PPP projects). When it involves the construction of power generators of over 10 MW, foreign ownership can go up to 100 percent through PPP projects and 95 percent through private projects.
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