INDONESIA: Government to consider Indonesia foreign investment cap in state-owned enterprises

Wednesday February 15 2012

In relation to Indonesia foreign investment cap in state-owned enterprises, it is being reported that the State-Owned Enterprises Minister, Dahlan Iskan, has called on the government to increase control over share allotments during state enterprise IPOs so as to ensure foreign investors do not gain majority private ownership of these firms.

“People continue to think that privatization means selling our companies to foreign entities, as happened with Indosat and Telkomsel. Today`s privatization policy is far different, as we privatize state-owned companies through the capital market. We will never again directly sell our companies to foreign entities”, Dahlan said.

“In the future, we must ensure that most of the shares offered during the IPOs of state-owned enterprises are absorbed by domestic investors”, he added.

Foreign investment in Indonesia is regulated by the List of Negative Investments (DNI), which restricts foreign companies from having full ownership of strategic companies, for example those in the pharmaceutical, defense, and tourism sectors, as well as of alcohol and beverage industry firms. The State-Owned Enterprises Ministry is expecting to float several state-owned companies on the IDX in the coming months.

This information will be updated as further details become available.