Database

To date, there are no reports of foreign investments in the telecom or ICT sectors that were blocked by the Indonesian governement based on national interest considerations. However, the Indonesian government is allowed to block investments on these grounds.
Morevover, the concept of national interest is defined in a broad sense including economic considerations: the protection of natural resources, protection of micro, small and medium-sized enterprises, as well as cooperatives, supervision of production and distribution, increase of technological capacity, participation of domestic capital and joint venture with companies appointed by the government.

There are nationality requirements for the manager of limited liability companies, while the position of chief executive officer is reserved only to Indonesian nationals. However, in this case there are no residency requirements.

Regulation 6/2017 introduces the requirement that any consortium providing Internet Protocol Television (IPTV) must consist of at least two Indonesian entities (Art. 4). Furthermore, Article 6 of the regulation explicitly points to the fact that any foreign investor must comply with Article 4. Every consortium providing IPTV must seek approval from the Communications Ministry. The letter seeking approval shall also provide information on all company shares belonging to foreign investors (Art. 25(7)h).

There is a limit of 49% on the shares that can be aquired by foreign investors in government controlled firms.

There are limitations on foreign ownership in the express delivery services, which could affect e-retailers. Foreigners are now allowed to own more than 49% of these services. Moreover, foreign suppliers are required to limit their activities to provincial capitals with international airports and seaports.

Online retailing and post retailing was formerly closed to foreign ownership. Foreign investors could not participate in e-commerce activities, although there were no foreign investment restrictions for intermediary e-commerce.

Following Presidential Decree No. 44/2016, effective in May 2016, full foreign ownership is allowed for foreign investors who invest at least IDR 100 billion (approx. USD $7.4 million) for the establishment of an e-commerce company in Indonesia.

In Indonesia, caps on foreign equity shares for investment are applied as follows:
- 49% for certain telecommunication network providers, including fixed network providers, for multimedia service, internet service providers and mail providers and lastly for value added services, including content service, information service centers, communication data service and internet interconnection services;
- 65% for closed fixed network providers and mobile network providers (cellular and satellite).

Indonesia's Regulation No. 82 requires that providers of bespoke software provide or escrow the source codes associated with their service.

Indonesia is currently only an observer to the WTO Agreement on Government Procurement.

The Ministry of Industry Regulation 02/M-IND/PER/1/2014 establishes price preferences for bidders using domestic content. According to the law, the procurement of public goods and services is categorized depending on the Domestic Component Level (Tingkat Komponen Dalam Negeri - TKDN). Price preferences are issued for bidders with more than 25% of TKDN or striving to achieve at least 30%. The price preferences can be up to 15% for the procurement of goods and maximally 7.5% for services.

Based on Article 6 of the Regulation 15/M-IND/PER/3/2016, transmission towers and steel-reinforced conductors used in public procurement require a minimum local content of 40%.

Decree 41/PER/M.KOMINFO/10/2009 requires Indonesian telecommunication operators to expend a minimum of 50% of their total capital expenditures for network development on locally sourced components or services. Decree 41 also requires companies to annually report the percentage of local content procured and have that information “authenticated” by the government or a survey institute appointed by the government.

The Ministry of Industry adopted on 29 May 2009 a regulation (Regulation 49/2009) requiring the use of domestic products and services in 558 sub-sectors for public procurement. The regulation relates to both domestic and foreign companies established in Indonesia which could be considered as local producers in several sectors, including the telecommunication sector. The regulation is a response to a Presidential instruction No. 2/2009 stipulating that all state administration should 'optimize' the use of domestic goods and services and give price preferences to domestic goods and providers. Domestic products are defined as 'goods/services (including construction-design and engineering) produced or prepared by a company investing and producing in Indonesia, with the possibility to use imported raw material or component in the production or working process'.

On 13 January 2014, the Indonesian Ministry of Industry issued Regulation 02/M-IND/PER/1/2014 restricting public procurement (replacing regulation 15/M-IND/PER/2/2011). According to the new law, the procurement of public goods and services is categorized depending on the Domestic Component Level (TKDN) and the Company Utilization Point Rating (BMP) which is based on investments of the suppliers in Indonesia.

The regulation constitutes a local content requirement because domestic service suppliers need to be prioritized, as given by Art. 10. In order to be considered as a domestic service supplier, the majority of shares have to belong to an Indonesian citizen and two thirds of the board members have to be locals. If no domestic service suppliers are participating in the procurement, national service suppliers (with at least 10% of shares belonging to Indonesians) will be taken into consideration. Other regulations were introduced concerning consortiums as these must be led by a domestic service supplier for onshore construction. In the case of offshore constructions the work has to be fulfilled only up to 30% by a domestic supplier. This minimum increases to 50%, when the consortiums includes national or foreign service suppliers.

According to Presidential Regulation No. 54/2010, foreign companies can only bid in cooperation with a national company (unless no national company has the ability to provide the goods and services requested) and only on bids that exceed the following thresholds:
- Rp 100 billion (approx. 9 million USD for construction services;
- Rp 20 billion (approx. 1,8 million USD) for goods and other services; and
- Rp 10 billion (approx. 0,9 million USD) for consulting services (Art. 104).
In addition, Art. 97 mandates the use of domestic products in government procurement if there are providers offering goods and services with a local content exceeding 40%.