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.
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.