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Understanding the Investment Priority List (DPI): A Guide for Foreign and Domestic Investors

The Investment Priority List (DPI) is an official guideline issued by the Indonesian government to regulate business sectors that are open, closed, or subject to certain restrictions for both domestic and foreign investment. This document serves as the primary reference for investors in determining business fields that align with national policies, while also ensuring that planned business activities do not violate prevailing legal provisions.

The DPI is designed to reflect the direction and priorities of national economic development, including strategic sectors that the government aims to boost through investment. Through the DPI, the government provides legal certainty, regulatory transparency, and incentives for certain sectors. This system replaces the previous approach known as the Negative Investment List (DNI), which emphasized restrictions and prohibitions rather than encouragement and opportunities.

Why is the DPI Important for Foreign Investors?

For foreign investors, the Investment Priority List (DPI) is crucial because it provides clarity on the maximum foreign ownership limits across various business sectors in Indonesia. The DPI serves as the legal reference for structuring share ownership in the establishment of a Foreign Investment Limited Liability Company (PT PMA). Without referring to the DPI, investors face significant risks of proposing businesses that do not comply with national regulations, which could ultimately result in license rejection or even revocation of company legality.

For example, the DPI allows 100% foreign ownership in sectors such as real estate and property, as well as management consulting services. Meanwhile, in sectors like advertising, foreign investors are permitted to own a maximum of 49% of shares, and in the wood construction industry, foreign ownership is not allowed at all. Certain sectors, such as retail trade of specific products, are open to foreign investors but require partnerships with local small and medium-sized enterprises (SMEs).

With this information, foreign investors can develop more accurate investment strategies and avoid potential legal violations. The DPI provides certainty from the outset of the licensing process and serves as a fundamental basis for consultations with notaries, legal consultants, and submissions through the OSS system. By understanding the details of the DPI, investors can determine appropriate business structures and sectors while minimizing administrative and legal risks in the future.

Background of the Negative Investment List (DNI)

Before the implementation of the Investment Priority List (DPI), Indonesia relied on the Negative Investment List (DNI) as its investment guideline. Under the DNI, the government explicitly listed sectors that were either fully closed or restricted to foreign investment. The primary purpose of this approach was to protect strategic national industries, safeguard economic sovereignty, and ensure active involvement of local entrepreneurs in key sectors.

However, as investment needs grew to support economic expansion, the DNI system was considered overly protective and rigid. Many foreign investors viewed this approach as restrictive and less adaptive to global market dynamics. As a result, Indonesia was perceived as less competitive than neighboring countries in attracting foreign direct investment (FDI), prompting the government to implement major reforms through the transformation from DNI to DPI.

The DPI is governed by Presidential Regulation (Perpres) No. 10 of 2021 on Business Fields for Investment, which is a derivative of Law No. 11 of 2020 on Job Creation (Omnibus Law). In addition, technical regulations and implementation guidelines are set by the Indonesian Investment Coordinating Board (BKPM) and relevant sectoral ministries. This presidential regulation marks a shift from a prohibition-based approach (DNI) to a priority-based approach (DPI).

Forms of Protection for Local Entrepreneurs

The Investment Priority List (DPI) is not only designed to attract foreign investors but also provides tangible benefits for local businesses. By designating national priority sectors, the government offers various fiscal and non-fiscal incentives, such as tax reductions, expedited licensing processes, and access to training and human resource development. This aims to create a healthy investment ecosystem where local and foreign businesses can collaborate and grow together.

In addition to promoting investment, the DPI also functions as a protective measure for local entrepreneurs. Certain sectors remain closed or restricted to foreign investors in order to safeguard SMEs or domestic industries that are still developing. These provisions prevent foreign capital from dominating specific sectors and give local entrepreneurs space to remain competitive in the domestic market. Thus, the DPI plays a dual role: opening global opportunities while protecting national interests.

The Spirit of Positivism

The shift from the Negative Investment List (DNI) to the Investment Priority List (DPI) reflects a significant philosophical change in national investment policy. Whereas the DNI emphasized restrictions and prohibitions on foreign participation, the DPI adopts a more progressive approach—highlighting sectors that are prioritized for development. Many sectors previously restricted are now open to 100% foreign ownership, while still considering national interests and growth potential.

This change also introduced a new risk-based classification approach, which differentiates licensing processes and requirements according to the level of business risk. This approach not only simplifies bureaucracy but also accelerates government response times for investment applications, especially in low- to medium-risk sectors. Investors now have a clearer roadmap to access the Indonesian market legally and systematically.

The main motivation behind this transformation is to enhance Indonesia’s competitiveness as a global investment destination. The government aims to accelerate national economic growth through industrialization, expansion of productive sectors, and job creation. Through the DPI system, investors are offered legal certainty, faster services, and concrete incentives—demonstrating Indonesia’s commitment to creating a more open, efficient, and competitive business climate on the international stage.

Practical Step-by-Step Guide

Procedurally, Indonesia’s business licensing system still uses the OSS (Online Single Submission) platform as the main submission channel. However, with the introduction of the Investment Priority List (DPI), business classifications are no longer based on the DNI but instead aligned with the sectors designated in the DPI. This provides a more positive framework, directing investors to fields deemed strategic and high-value for national economic growth.

In practice, investors must match their business sector with the Indonesian Standard Classification of Business Fields (KBLI) listed in the DPI. Each KBLI will indicate the status of that sector—whether it is fully open, classified as a national priority, or open with conditions, such as mandatory partnerships with local micro, small, and medium enterprises (MSMEs). This information forms the basis for structuring company ownership and assists notaries and legal consultants in drafting PT PMA establishment deeds accordingly.

Other technical steps, such as applying for a Business Identification Number (NIB), business and operational licenses, and investment reporting, are still carried out through OSS. However, with the DPI, investment decisions are now more directed and measurable, as investors no longer need to guess ownership limits or sector accessibility. This accelerates licensing processes, reduces administrative risks, and upholds the principles of transparency and legal certainty.