The upcoming Negative Investment List has infuriated some foreign investors, who fear they may lose some of their shares and have fewer options for further investment.
The list, which should be approved by President Susilo Bambang Yudhoyono in the next two to three weeks, is expected to impose more extensive limitations on foreign investment in some sectors, including telecommunications, where foreign ownership is expected to be restricted to a maximum of 49 percent.
Trade Minister Mari Elka Pangestu said critics should wait until the list was released before they voiced their concerns.
"I think these investors haven't got a hold of the final draft yet. There are a lot of versions circulating. So it's better if they wait. The final one is generally not going to be more restrictive," Mari told The Jakarta Post on Friday.
But Mari admitted that while some sectors would become more open to foreign investment, others would become more restrictive.
"If they do become more restrictive, there are reasons for it and it will vary from one to another. One example is that, because the list is a presidential regulation, it can't contradict existing laws. As a result, there are several investment sectors that can't opened up as much as we hoped for," she said.
"Take the case of foreign ownership in cabotage. The existing transportation law limits foreign ownership of cabotage. But this law will soon be revised," she said.
Cabotage denotes the transport of goods and people within the country.
As the head of the ministry responsible for determining the criteria by which sectors were opened and closed, Mari said the list would be regularly reviewed in the interest of investors.
"Foreign investors should know that the new list is not created with the aim of restricting their investment, but to create transparency, certainty and consistency between regulations."
Mari said the new list would be more detailed than the old one, dealing with 15 sectors and more than 200 types of businesses.
According to the draft list circulating and making headlines in some newspapers, other than the limit on foreign ownership in the telecom sector, foreign investment in mineral water springs would also be banned.
Last week, the European Union's ambassador to Indonesia, Jean Breteche, said the Negative Investment List would cause considerable disadvantage for the country.
"If overprotected, Indonesia will become a closed state. You will never get the benefit of foreign investment and technologies," he said on the sidelines of a seminar on Public-Private Partnerships held by the EU.
Singapore Technologies Telemedia (STT)'s senior vice president for strategic relations and corporate communications Kuan Kwee Jee also shared Breteche's concerns about the list.
"It really is fine to limit foreign investment. It's the stability that I'm more concerned about. You cannot have a regulation and change it whenever it suits you. There must be certainty for businesses," she said.
Despite the restrictions, many sectors are expected to become more open to foreign investment. Under the new arrangements, the government is expected to allow 95 percent foreign ownership in the farming sector and 100 percent ownership in plywood businesses.