Indonesian Law | Hukum Indonesia - Blog: Foreign Investment in Indonesia – Update 2015

Tuesday, December 15, 2015

Foreign Investment in Indonesia – Update 2015

Following our earlier article regarding Foreign Investment in Indonesia, in which you can find here, on the below is the latest update pertaining to foreign investment in Indonesia as follows:


The minimum investment for establishing a foreign investment company in Indonesia is more than Rp. 10,000,000,000.00 (ten billion Rupiah) or its equivalent in USD, excluding land and buildings.

The minimum paid-up capital of the foreign investment company is at least Rp. 2,500,000,000.00 (two billion and five hundred million Rupiah) or its equivalent in USD. The remaining investment can be from loan(s).


Not all business fields are ‘open’ to foreign investment. The latest regulation concerning limitation on foreign investment (which usually called as ‘Negative Investment List’) is Presidential Regulation No.39 of 2014 (and may, at the time of writing, be revised again). This regulation provides what business sectors are completely ‘closed to’ investment or ‘conditionally open’ (meaning that they are subject to foreign ownership limits or require special arrangements).

Business sectors that are not mentioned in the Negative Investment List are, in theory, considered completely open to investment from non-Indonesian investors (can be owned 100% by foreigners). However, we consider that it would be prudent to re-confirm this with BKPM.


The term of Investment Registration Approval no longer exist. Accordingly, the steps and documents needed for PT PMA establishment are as follows:
  1. Check for PT PMA name availability; 
  2. Obtain Principle License from BKPM; 
  3. Execute PT PMA Deed of Establishment (the “DOE”) in notarial deed; 
  4. Obtain Domicile Letter from sub-district (Kelurahan) where the PT PMA’s office will be located; 
  5. Obtain the Ministry of Laws and Human Rights approval (“MLHR Approval”). By virtue of Law 40/07, the legal entity status of PT PMA is deemed exist after MLHR Approval. 
The next step after obtaining legal entity status of the PT PMA is to obtain Tax Payer Registration Number (“NPWP”) from relevant tax office, obtain Company Registry Certificate (“TDP”) and open a PMA bank account in Indonesia under the name of PMA Company.


The Principle License serves as a temporary operating license until PT PMA reaches the stage of commercial production. At that time, PT PMA shall apply for a Business License (Ijin Usaha - “IU”) to BKPM.


To work legally in Indonesia, any foreign employee must obtain a work permit (IMTA). Based on the work permit (IMTA), the Indonesian Immigration will issue the foreign employee’s limited stay visa (VITAS) and the limited stay permit card (KITAS).


Foreign investment company wishes to import goods should obtain the following licenses:
  • Import Identification Number for Producer (Angka Pengenal Impor – Produsen “API-P”). This license is for foreign investment company wishes to import goods or machinery for its own business (not to be traded); or 
  • General Import Identification Number (Angka Pengenal Impor – Umum “API-U”). This license is for foreign investment company wishes to import goods to be traded; and 
  • Customs Identification Number (Nomor Identitas Kepabeanan “NIK”). NIK is a personal identity number provided by the Directorate General of Customs and Excise of Indonesia to users of customs services, such as importers and/or exporters. This NIK is needed in order to make the customs users can access or connect with the customs system. 


BKPM has issued Regulation No. 16 of 2015 on Guidelines and Procedures for Capital Investment Facilities which focuses on granting fiscal facilities to qualified investors and sectors in the form of:
  • Import duty exemptions for capital goods importation; 
  • Import duty exemptions for the import of raw materials to be used for production; 
  • Import duty exemptions for the import of capital goods to be used by companies engaged in the construction and development of power plants for public use; or 
  • Import duty exemptions or reductions and value added tax (VAT) exemptions or deferral for the import of capital goods to be used by companies with mining contract of works.
By: tnrlawfirm

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