FOREIGN INVESTMENT REGULATIONS IN INDONESIA'S HEALTHCARE SECTOR

For foreign investors aiming to enter Indonesia's healthcare industry, several ownership requirements, types of businesses allowed, and specific rules must be adhered to.

A. Business Forms and Ownership for Foreign Investors

According to Law No. 25 of 2007 on Investment, foreign investors can invest in the healthcare sector but must comply with the following regulations:

Permitted Business Forms

• Must be in the form of a Limited Liability Company (PT) registered under Indonesian law.
• Cannot be 100% foreign-owned—must form a partnership with a local entity, especially in healthcare facilities.

Foreign Ownership Percentage

• Before 2021: Foreign ownership in the healthcare sector was restricted.
• After 2021 (Presidential Regulation No. 10/2021):
  • Foreign ownership in hospitals, clinics, and medical laboratories can reach 67% for non-ASEAN investors.
  • ASEAN investors can own up to 100% in these sectors.

Healthcare Sectors Open for Foreign Investment

Based on the latest Negative Investment List (DNI), several healthcare sectors are open to foreign investment, including:

• Specialist hospitals and clinics.
• Clinical and radiology laboratories.
• Cosmetic and aesthetic surgery services.
• Technology-based healthcare services (telemedicine, AI in diagnostics).
• Medical research and development.

B. Licensing Regulations for Foreign Investors

Principle License from BKPM (Investment Coordinating Board)

Before starting operations, foreign investors must obtain a Principle License from BKPM, which includes:

• Type of investment (clinic, hospital, laboratory, or telemedicine).
• Business development plan.
• The number of local and foreign workers to be recruited.

Operational License from the Ministry of Health

After obtaining the principle license, clinics or hospitals must secure an operational license from the Ministry of Health, which covers:

• Standards for facilities and medical equipment.
• Qualifications of medical staff and specialists.
• Medical waste management system and patient safety protocols.

Integrated Licensing Service (PTSP)

The Indonesian government has implemented the Online Single Submission (OSS) system to streamline the licensing process for foreign investment in the healthcare sector.

C. Rights, Obligations, and Protection for Foreign Investors

Rights of Foreign Investors in the Healthcare Sector

• Equal legal treatment as domestic investors (Article 6, Law No. 25 of 2007).
• Freedom to repatriate profits in foreign currency (Article 8, Law No. 25 of 2007).
• Eligible to apply for an extension of Land Use Rights (Hak Guna Usaha/HGU) for up to 95 years for clinic or hospital land in Special Economic Zones (KEK).

Obligations of Foreign Investors

• Must meet health quality standards and ensure patient safety.
• Prioritize local labor and transfer technology to Indonesian medical staff.
• Submit an annual investment activity report to BKPM.