Foreigners may own 100% of geothermal businesses in Indonesia
The government will issue a new regulation soon that will allow foreign investors to hold 100 percent ownership of large geothermal power plants, a senior official has said.
Investment Coordinating Board (BKPM) head Franky Sibarani said in Jakarta on Wednesday that allowing wholly foreign ownership of large geothermal power plants would be part of the government’s program to boost investment in clean energy in Southeast Asia’s largest economy.
He said the new investment regulation on foreign ownership would apply to geothermal plants with a capacity of 10 megawatts or higher. For plants with a capacity of less than 10 MW, foreign ownership will be capped at 67 percent.
“It has been agreed by the Energy and Mineral Resources Ministry,” he said, adding that the proposal had been recently discussed as part of a review of the “negative investment list” (DNI), which covers sectors in which restrictions on foreign investment apply.
According to the current DNI regulation, Presidential Decree No. 39/2014, the development of geothermal power plants with a capacity of less than 10 MW is closed to foreign ownership. Currently foreign investors may own up to 95 percent of plants with greater than 10 MW capacity.
The government is aiming to increase the use of renewable energy from 6 percent in 2014 to at least 23 percent by 2025 and at least 31 percent in 2050.
In the power sector generally Franky said the government also planned to allow up to 49 percent foreign investment in high- and extra high-voltage power installation services, while medium- and low-voltage power installation would remain closed to foreign investors.
Currently all power installation services must be fully owned by local investors.
Other business sectors that may be fully opened to foreign investment are e-commerce and medicine ingredient manufacturing.
Franky previously announced that the government was likely to raise or eliminate the caps on foreign ownership of film distribution, film production houses and cinema operators.
He stated on Wednesday that while the revised figures were not official yet, they had been agreed by the relevant ministries.
The government is now reviewing the DNI and it expects to complete the revision by next month.
The revision of the DNI is aimed at boosting foreign investment to propel the country’s economic growth and achieve a 7 percent growth rate as promised by President Joko “Jokowi” Widodo during his election campaign.
Azhar Lubis, BKPM deputy director for investment monitoring and implementation, said the BKPM was actively making investment procedures more efficient.
He said the investment climate in the country had been well-maintained and that it saw a surge in investment commitment of Rp 206 trillion (US$14.9 billion) in January alone. “Principal permits or commitment investments surged by 119 percent to Rp 206 trillion this year from Rp 94 trillion in January last year,” he told reporters.
Franky said that regulatory reforms, such as three-hour investment licensing, had also attracted more investment to the country.
The newly launched three-hour licensing was used by seven foreign companies with total planned investments worth Rp 31.8 trillion or 15 percent of total investment commitments in January, according to BKPM data.
The seven companies are from Singapore, China, the UK and Malaysia, with investments ranging from power plants to waste management.