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W&P- Indonesian Healthcare Sector: Notable Highlights for Foreign Investors

Being the world’s largest archipelagic country with more than 18,000 islands, Indonesia faces various challenges in providing equal access to healthcare services for all societies across Indonesian territory. Attracting more foreign investors to bring wealth of capital, expertise and know-how, and leveraging digital technology development and application to the health sectors in Indonesia would be two of most efficient options to overcome the challenges; and therefore, it is inevitably for the Indonesian Government to reform the Indonesia healthcare sectoral regulations to become more advanced, integrated, and accessible.

With the above goal in mind, in August 2023, the Indonesian Government enacted the new omnibus Health Act No. 17 of 2023 (“New Health Act”), which serves as a ‘super-integrated’ act, revoking, combining, and harmonizing 11 existing health sectoral acts and regulations. The New Health Act provides more easement, relaxation, and simplification, as well as liberalization of hospital and clinic business activities for foreign investments.

  1. Liberalization of Foreign Direct Investment Limitation in Healthcare Sector

    • Businesses in Indonesia are categorized into various business fields classifications and identified based on 5-digit numerical code (locally known as Klasifikasi Baku Lapangan Usaha Indonesia – KBLI”) as set out in the Indonesian KBLI Book. The relevant ‘selected’ KBLI will determine (i) the applicability of any foreign shareholding limitation or any other specific conditions (if any); and (ii) the required business authorization (licenses/permits).
    • From time to time, the Indonesian government issues the positive list which sets out foreign investment rules for various sectors (“Positive List”). The prevailing Positive List under Presidential Regulation No. 10 of 2021 groups business activities into 3 main categories:
      1. business activities that are totally closed for investments;
      2. business activities that are reserved for micro, small and medium-scale enterprises (“MSMEs”), and
      3. business activities that are open for investments but with certain conditions: (a) foreign ownership limitations, (b) partnering with locals, and (c) subject to special approvals/licenses.

Healthcare Sector
Prior to 2021, all types of hospitals and advanced clinics (klinik utama) business activities were limited to 67% (for all foreign investors) and 70% (for ASEAN foreign investors). Since 2021, the Indonesian Government has taken initiative to expand the liberalization of these sectors, by generally allowing 100% foreign ownership (for clinics, this remains subject to type of clinic).

The table below lays ‘major’ healthcare sector related KBLIs following the liberalization effort by the Indonesian Government:

No. Business Field KBLI Foreign Ownership Limitation
1. Private Hospital 86103 None
2. Advanced Clinic (Klinik Utama, specialistic healthcare services) 86105 None
3. Primary Clinic (Klinik Pratama, basic healthcare services) 86103 Closed for Foreign Ownership – allocated for MSMEs
4. Health Clinic Laboratories (Laboratorium Kesehatan Klinik) 86903 None – but subject to the requirement of partnership with MSMEs
5. Medical Digital Platform*

*) limited to the operation of digital platform business; while the medical related consultation should be provided by the licensed healthcare service providers through the platform

63122 None
6. Medical Data Processing Activities 63111 None


  1. Digital Transformation of Medical Records
    In 2022, Indonesian Government introduced the digital transformation of electronic medical records through the enactment of Ministry of Health Regulation No. 24 of 2022 on Medical Records (“MOH Reg. 24”).

MOH Reg. 24 and the New Health Act mandate all healthcare service providers (including hospitals, clinics, health clinic laboratories, and healthcare service providers providing telemedicine services) to implement medical records on electronic digital basis at the latest by 31 December 2023.

Some notable highlights of the regulatory requirements related to medical records under MOH Reg. 24 are as follows:

No. Matters Remarks
1. Electronic System Software In implementing the medical records on electronic digital basis, healthcare service providers may opt to use (i) its own electronic system (ii) electronic system provided by third-party service providers, or (iii) electronic system developed by the Indonesia’s Ministry of Health (“MOH”).

In any case, the electronic system used by the healthcare service providers must be registered with and connected to the MOH.

2. Medical Records Disclosure Either (i) based on patient’s consent or (ii) without patient’s consent, but with approval of the MOH and only for certain limited purposes (e.g., law enforcement, medical audit).
3. Medical Records Transfer MOH Reg. 24 governs the transfer of medical records between healthcare service providers only.

Transfer of medical records from healthcare service providers to non-healthcare service provider must be assessed and analysed on case per case basis.

4. Medical Records Storage and Retention Medical records can be stored either in a server, certified cloud computing system, or other certified digital-based storage media; in each case must be located in Indonesia.

Medical records must be stored for minimum 25 years after the patient’s latest visit.


  1. Greater Ease for Indonesian and Foreign Overseas Graduate Doctors (“Overseas Graduate Doctors”) to Practice in Indonesia
    The New Health Act exempts the existing requirements of competency evaluation by the MOH (comprising administrative and practice capability assessments) for Overseas Graduate Doctors to practice in Indonesia.

Overseas Graduate Doctors would be allowed to practice in Indonesia as long as they (i) (a) graduated from a recognized medical school and (b) have a minimum of 2 years of practice experience abroad (for Indonesian doctors) or 5 years of specialized or sub-specialized practice experience abroad (for foreign doctors); or (ii) have expertise in a certain specific advanced medical field (for both Indonesian and foreign doctors) and 5 years of practice experience abroad (for foreign doctors)

This is one of the most significant liberalizations by the New Health Act for Overseas Graduate Doctors, who have been restricted for years to easily practice in Indonesia. The relaxation of exemption is aimed to accelerate the procurement of sufficient number of specialist and sub-specialist doctors practicing in Indonesia to cater the needs of various specialist and sub-specialist healthcare services across Indonesia.

  1. Simplification of Doctor’s Practice License

The New Health Act simplifies the requirements for obtaining the doctor’s practice license (Surat Izin Praktik – “SIP”) and registration certificate (Surat Tanda Registrasi – “STR”). It abolishes the existing prerequisites for doctors to obtain (i) a recommendation from the relevant professional organization (e.g. IDI (Ikatan Dokter Indonesia or Indonesian Doctors Association)), and (ii) approval letter from the superintendent doctor before applying for the SIP and STR. Consequently, doctor will only need to obtain the STR and SIP.

Other significant changes by the New Health Act in relation to STR and SIP are: it no longer limits a doctor’s place of practice to a maximum of 3 places and the STR is now valid for life instead of the previous limitation of 5 years.

  1. Expanded Recognition of Telemedicine

The New Health Act expands the recognition of telemedicine services, to also cover those provided directly by healthcare service providers to patients from previously being limited to between healthcare service providers only.

This explicit recognition will serve as the legal basis for telemedicine practices widely developed in Indonesia, particularly during the Covid-19 outbreak compelling social distancing and physical interaction limitation. At the same time, this is expected to attract more investment on digital health business for further development of telemedicine service industry in Indonesia.

However, the New Health Act is yet to set specific licensing regime and detailed requirements for “direct” telemedicine (by foreign investment or foreigners). We anticipate these to be specified in the implementing Government Regulation. Until the issuance of the implementing regulation, the MOH will assess any “digital innovative solution” proposed by business actors on a case-by-case basis through health regulatory sandbox and registration framework in accordance with the MOH Decree No. HK.01.07/Menkes/1280/2023. This framework is intended to assist the MOH to analyse and acknowledge the new health sector innovation and business schemes during the absence of the relevant regulatory regulation. It is reported that the MOH has granted the registration to a foreign owned company engaged in telemedicine application business.

  1. Personal Data Protection Harmonization

The New Health Act harmonizes the regulatory requirements for personal data protection aspects of health industry with the Indonesian Personal Data Protection Act introduced in October 2022, including by way of explicitly acknowledging the rights of patients to require healthcare service providers to delete incorrect data and other rights stipulated under the Indonesian Personal Data Protection Act.

The technical details of the requirements, including for the transfer and processing of anonymized health related data would subject to and be further clarified in the implementing regulations.

There are more than 30 pending implementing regulations that are expected to be issued following the official enactment of the New Health Act, including those related to hospital, telemedicine, medical equipment and pharmacy. If you have