Indonesia considers opening up hospitality sector to 100% foreign investment

Tranquil shot of batam. Credit: Flickr/Soham Banerjee

The Indonesian government might allow complete privatisation and a 100 per cent foreign ownership for the hospitality sector  – mainly hotels and restaurant across categories- in a bid to boost tourism.

Under the current regulation, only hotels of three-star category or more, can be completely owned by a foreign investor. However, only 51 per cent foreign investment is allowed for the smaller one/ two star category of hotels.

The head of National Investment Coordinating Board (BKPM) Franky Sibarani said in a statement the agency has received inputs from relevant government agencies and private sectors to “free up the sectors”.

BKPM, in cooperation with government ministries and agencies, is currently reviewing the negative investment list (DN) that will decide the sectors that are allowed or barred from foreign investment. The new ruling on DNI is scheduled to be issued by May next year.

“The move to open investment in hotels and restaurants for foreign investments is expected to help improve the quality standard of service at hotels and restaurants in Indonesia, which ultimately support the development of tourism sector,” Sibarani said.

“There have been a lot of requests from foreign investors to inject capital in first and second star hotels however they have been hesitating to do so due to shared ownership limitation. In addition, the development of hotels and restaurants can support the government’s efforts to boost tourist visits to Indonesia,” he said.

The government hoping to increase the flow of foreign toursits to Indonesia to 12 million in 2016.

In the period of Oct. 22-Dec. 11, 2015, BKPM has identified eight major foreign investment projects in hotels and restaurants. These include two projects from China worth around $590 million located in Lombok Island and Batam, Riau Islands, two projects from Uni Arab Emirates in Jakarta and Bali, two major hotel projects from South Korea to be located in Bandung and Semarang as well as one from Australia and one from Russia.

Last week, BKPM said the government is considering a proposal to limit foreign ownership to 67 per cent in online marketplace business such as Tokopedia and motorcycle taxi app Go-Jek.

At present, Indonesia does not allow foreign ownership in local retail e-commerce companies, but this restriction does not apply to online marketplaces that mediate between buyers and sellers.

The government is also looking at limiting the ownership of foreign investors in mining exploration to 75 per cent.

Also Read: 

Indonesia mulls limiting foreign ownership in online marketplaces to 67%

Indonesia scraps e-commerce from negative list but caps foreign ownership at 33%

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.