Restrictions have been eased on investing in host of industries from tourism and agriculture to transportation and entertainment.
Foreign firms are allowed to own different shares in businesses depending on the sector, according to the new regulation.
Overseas companies seeking to operate in Indonesia had long complained of rising protectionism pushed by nationalist politicians and domestic firms worried about losing out to foreign competitors.
Peter Fanning, chairman of the International Business Chamber in Jakarta, said the changes were positive but cautioned more still needed to be done.
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The move was first announced by President Joko Widodo in February but the new regulation came into force on May 18, presidential spokesman Ari Dwipayana confirmed. The new list was posted on a government website today.
The move comes as Indonesia is seeking new ways to boost its economy which grew at its slowest pace for six years in 2015.
It has been hard hit by a slowdown in demand for its key commodities exports, particularly from powerhouse China, as well as falling prices.