Indonesia is looking to give local startups a boost by exempting foreign investors from minimum investment requirements. The draft of this presidential regulation stems from the country’s Omnibus Law on job creation that was enacted in November 2020. This is seen as an opportunity to continue fostering the environment of Indonesia’s digital economy.

The Omnibus Law gives opportunities to foreign investors to get a stake in almost all local businesses. However, foreign investors are required to reach a minimum investment of roughly $710,000 (10 billion IDR). The new presidential regulation looks to “encourage the strengthening of the technology-based startup ecosystem.” Acting as a supplement to the law enacted in November 2020, it exempts any foreign investor who is looking to invest in startups located in the country’s special economic zones.

Aside from having no minimum investment, the regulation will also relax the rules on foreign employees for SEZ startups. The Omnibus Law states that foreign employees would have to secure a government-approved plan. The regulation states that this process will be more relaxed when it comes to companies in the SEZs. This opens up opportunities for startups to acquire skilled foreign employees with ease.

Throughout 2020, Indonesia did not fare too well in terms of foreign direct investments due to the coronavirus pandemic. However, the country’s startup sector did very well despite lockdowns. According to Cento Ventures, a Singaporean VC firm, Indonesian startups brought in around $2.8 billion during the first half of 2020, compared to 2019’s $1.5 billion.

Indonesia’s President Joko Widodo, who has been a staunch supporter of his country’s tech startups, has made many statements showing how important the development of local technology is as a role in his government. With this new presidential regulation, he aims to continue his support for Indonesia’s thriving digital economy.

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