Extent of Foreign Ownership in Private Hospitals to be Increased

Foreign investors with an interest in the health-care industry may eagerly await the upcoming revision of Presidential Regulation No. 77 of 2007 on the Negative Investment List (as amended by Presidential Regulation No. 111 of 2007); it will include a provision for a larger percentage for foreign ownership of a hospital or health-care related business.

The Head of Capital Investment Coordinating Board (‘BKPM’) states that, after revision, foreign investors can own up to 67% of any private hospital or health-care support service in Indonesia. The Head of BKPM did not explicitly refer to what ‘support service’ categorically includes, however this often refers to medical equipment leasing, ambulance services, food provision, and the like.

Certainly the ideal for this reform is to increase the quality of healthcare services in Indonesia generally, and also to mitigate the trend of wealthier citizens going abroad to obtain comparatively better services.

Apart from changes to the Negative Investment List, Law No. 44 of 2009 on Hospitals has been in force since 28 October 2009 - it too allows and regulates foreign investment in private hospitals. According to its provisions, in addition to obtaining a Hospital License from the Minister of Health, private hospitals with foreign participation must also attain recommendations from the BKPM and relevant Regional Health Authority.

According to the Head of the BKPM, the final, revised Negative Investment List should be completed and issued some time in March 2010.