The Indonesian government has very strict laws and regulations on the gaming industry, explicitly prohibiting foreign investment in the gaming industry, including casinos. The following is detailed information on recent updates and changes to Indonesia's gaming laws and regulations:
Legal and regulatory measures
1. The new Gambling Law is introduced:
Number and duration of gambling licenses:A maximum of six new licenses will be issued, and the validity period of a gambling license shall not exceed ten years, but can be extended to three years.
Capital Amount:The minimum capital of concessionaires has been increased to MOP5 billion to ensure that concessionaires have sufficient funds to deal with possible risks and maintain market stability.
tax rate:The tax rate will be slightly increased to 35%+5%, and can be reduced by 5% in special circumstances to increase the government's fiscal revenue without placing too much burden on gaming companies.
2. Casino Operation Regulations:
The rule that casinos must operate within concessionaires has been abolished, allowing them to operate in other legal locations. This change increases the flexibility of casino operations and encourages the development of more forms of gaming and entertainment projects.
3. Market size and revenue control:
The total number of gaming tables and slot machines is capped and gross revenue is capped to control the size and revenue of the gaming market. These measures are aimed at preventing the market from overexpanding and maintaining healthy market development.
The premium system is introduced to ensure that the government obtains stable fiscal revenue from the gaming industry. The premium is introduced so that the government can still obtain stable fiscal support when the gaming industry revenue fluctuates.
4. Gambling intermediary business:
The scope of gambling intermediary business is restricted, and any profit-sharing arrangement between gambling intermediaries and concessionaires is prohibited. This regulation is intended to prevent the excessive expansion of gambling intermediary business and protect the fairness and transparency of the gambling market.
5. Local capital ratio:
The percentage of the concessionaire's company capital that must be held by a local managing director has been raised to 15% to ensure local interests. This regulation is intended to increase the participation of local residents in the gaming industry and promote local economic development.
6. Casino establishment:
The requirement that casinos be located on real estate owned by the concessionaire further strengthens the regulation of gaming facilities and ensures that gaming activities are conducted in a legal and controlled environment.
The Indonesian government’s specific restrictions on foreign investment in the gaming industry
The Indonesian government has adopted very strict restrictive measures on foreign investment in the gaming industry, mainly including:
1. Completely prohibited industries:
According to the 2018 "Guidelines for Overseas Investment and Cooperation by Country (Region)", the gaming industry is listed as a completely prohibited industry. This means that foreign investment is not allowed to enter this field in any form, whether it is a joint venture or wholly owned.
2. Specific area restrictions:
Although no specific areas are mentioned, according to materials provided by the Indonesian Investment Coordinating Board, foreign investment can only conduct gaming business in tourist areas or integrated hotels. This indicates that foreign investment is strictly restricted or even prohibited in non-designated areas.
Historical background and reasons for foreign investment in Indonesia's gaming industry
From a historical background, Indonesia's foreign direct investment (FDI) policy has undergone multiple evolutions. Here are the main reasons:
1. Evolution of foreign direct investment policy:
The Foreign Investment Law No. 1 of 1967 initially regulated foreign investment behavior, and the law was amended in 1970 to suit Indonesia's social needs. In recent years, the Indonesian government has introduced a series of measures to improve the investment environment and attract foreign investment, such as launching online trading services in 2013, relaxing restrictions on foreign investment access, and shortening the time required to obtain a business license.
2. Reasons for attracting foreign investment:
By optimizing foreign investment policies, the Indonesian government aims to attract more foreign investment into the country's economy. Between 2020 and 2022, Indonesia introduced the Comprehensive Job Creation Law, revised existing laws, and launched an investment "priority list" to relax restrictions on foreign investment in key areas such as infrastructure and renewable energy.
In addition, Indonesia has established a sovereign wealth fund and its investment management agency to attract global capital to invest in national strategic projects.
Latest policies or announcements
1. Adjustment of foreign investment access conditions:
In the 2015 edition of the "Guidelines for Overseas Investment Cooperation by Country (Region)", the restrictions on foreign investment access in certain areas have been adjusted. Foreign investment no longer needs to set up a new enterprise or apply for a new license in advance if the foreign investment only expands the same business operations in Indonesia to other regions in Indonesia.
Indirect investment or portfolio investment in the Indonesian capital market is not subject to the relevant provisions of the Catalogue of Prohibited and Restricted Investment Industries.
Comparison with other Southeast Asian countries
Compared to other Southeast Asian countries, Indonesia is less open to foreign investment in the gaming industry. Here are the other countries:
1. Philippines:
Foreign investment is allowed to participate in the gaming business through joint ventures, and restrictions on online gambling have been gradually relaxed. The Philippine gaming industry is relatively open, attracting a large amount of foreign investment.
2. Malaysia:
Foreign investors are allowed to set up casinos in certain resorts. Malaysia's policy is relatively flexible, and foreign investors can participate in the gaming industry in certain areas.
3. Thailand:
Although gambling activities are strictly regulated, legal casinos are allowed in certain areas. The Thai government controls gambling activities by setting up specific gambling areas while allowing foreign investment.
In summary, the Indonesian government has strict laws and regulations on the gaming industry, and explicitly prohibits foreign investment in the gaming industry. This policy not only reflects the Indonesian government's strict control over the gaming industry, but also reflects its emphasis on maintaining social stability and security.
