In the previous essays, we discussed features and events related to Indonesia's foreign direct investment (FDI) environment. This essay highlights Indonesia's FDI restrictiveness rank compared to other countries. It explains the OECD's FDI Restrictiveness Index and Indonesia's ranking and points out that the recent investment reform is not reflected in the ranking. Thus, it remains to be seen how the new investment policy will affect upcoming Indonesia's ranking.
The Foreign Direct Investment (FDI) Regulatory Restrictiveness Index
The Foreign Direct Investment (FDI) Regulatory Restrictiveness Index evaluates the degree of statutory limitations on foreign direct investment across 22 economic sectors in 69 nations, encompassing all OECD and G20 countries. This Index measures a country's openness to foreign investment by assessing four principal areas of restrictions: Foreign equity limitations, screening or approval mechanisms, restrictions on the employment of foreigners as key personnel, and operational restrictions.
OECD's FDI Restrictiveness Report (2020) Ranks Indonesia as the Most Restrictive out of 69 Nations
Overall score: 0.35 (whereas 0 = open and 1 = closed)
Foreign equity limitations: 0.21
Screening or approval mechanisms: 0.00
Restrictions on the employment of foreigners as key personnel: 0.05
Other operational restrictions: 0.09
