Indonesia announced that they are reviewing plans to increase foreign ownership by foreign investors in businesses near the year's end, Reuters reported the country's investment board head revealed. Thomas Lembong, agency head for BKPM, said that the government is also exploring easing restrictions in areas which could support the emerging digital economy of the country.
Indonesian President Joko Widodo offered a fresh five-year term in October, promised to renew the push for structural reform in the largest economy in Southeast Asia. Investments have contributed largely to make the growth rate steady at 5% in recent years.
Reforms in the "negative investment list," which hinders foreigners from investing in some sectors and restricts the level of ownership they can have, will be announced before the end of this year, Lembong added.
Widodo shortened the "negative list" in 2016 when he introduced a shake-up of rules which he dubbed the "Big Bang." Sectors from retail to telecommunication were opened up and re-introduced to foreign investment.
This move, while it drew a few investments in businesses like film-making, didn't have the desired effect in foreign direct investment (FDI), where investments have remained low.
The Indonesian president plans to introduce sweeping economic reforms to create more foreign direct investments and plans to make it into one of the key priorities in his second term, according to SMH AU. Lembong cleared up this idea by saying that, for instance, the university sector will be open to overseas investors and players intent on entering the market.
Australian universities have started to enter Indonesia in a "head-start" of sorts, through the recently signed Indonesia-Australia free trade deal. The deal allowed Australian universities to have "extensions" in Indonesia while keeping majority ownership.
Lembong also added that this keeps state-owned enterprises on their toes, with foreign investors coming in and leveling them up. State-owned industries such as the national flag carrier Garuda Indonesia have become priorities that president Widodo aimed to tackle in his second term.
The president enjoyed the chance to take on "advocates" for protectionism and economic nationalism. It's a risk he's open to taking, as these people still enjoy moderate influence and prominence in Indonesia's politics as well as the economy.
The BKPM agency head said that these revisions will create more open ownership in the university sector, boosting it all the way to around 100% foreign ownership. The president aimed to open "special economic zones" or 67% of open locations.