Indonesia to allow larger foreign ownership share in infrastructure projects

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Indonesia to allow larger foreign ownership share in infrastructure projects

Foreign investors will be able to take larger stakes in Indonesia's infrastructure projects. The changes require formal presidential endorsement before they can come into effect.

Hatta Rajasa, Indonesia's chief economic minister, stated:

The commitment is to maintain Indonesia's economic growth and anticipating a slowdown in the global economy by encouraging investment, particularly in domestic and foreign investment.

Through a proposed revision of Presidential Regulation No 36/2010 regarding the Negative Investment List, foreign investors will have more room for investing in Indonesia's infrastructure sector within public-private partnership schemes (PPP projects), including sub-sectors of transportation, drinking water, as well as electricity generation.

If the new revision is approved, foreigners  investors will be able to have:

  • a 95 % stake in PPP projects connected to the construction of port facilities,
  • in projects without a PPP structure, the foreign stake is limited to 49 %,
  • for airport facilities, foreigners can only have a 49 percent stake (both in private projects and PPP projects),
  • in toll road development and public works foreigners can have a 95 percent stake (both in private and PPP projects),
  • for electricity generation (1 to 10 MW), foreign investors can own a 49 % stake (both in private and PPP projects),
  • for projects that involves the construction of power generators of over 10 MW, foreign ownership can go up to 100 % through PPP projects and 95 % through private projects.

The World Bank said in its most recent quarterly review of the Indonesian economy that growth is likely to slow in 2014 at 5.3% is the expected base case, down from 5.6% in 2013.

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