Investment Guide
A.
Overview
This section overviews steps to be taken
by investors if they are interested in
investing in Indonesia. Starting out
with explaining applicable laws and
regulations, it continues with
procedures to follow and approval steps
to take for an investment activity, tax
information, application form filling,
costs to do business in Indonesia and
information about Indonesian business
sector classification.
Laws & Regulations pertaining to
investment are classified as
systematically as possible to cater
investors’ needs and help them find
information with ease. This is the first
information presented in order to give
the investors an idea about legal
certainty and supporting instruments for
investment in Indonesia.
The next step after confirming the legal
certainty is to familiarize with the
procedures to follow for an investment
in Indonesia. Included is information
about taxes imposed on investors,
standard costs to expend and Indonesian
business sector classifications.
Supplied with this information, it is
hoped that investors get an accurate
idea about what to do.
After these two steps, if you become
interested in investing in Indonesia,
you can fill an application form with
your company data and investment sectors
interesting for you.
For further details, click links below
from Indonesian Investment Coordinating
Board (BKPM):
1.
Procedure, Approval & Licenses
2.
BKPM Law & Regulation
3.
Taxation
4.
Aplication Form
B.
Investment Facilities
1.
Land rights:
i.
95 years of cultivation rights:
35 years + 30 years extension + 35 year
renewable
ii.
80 years of building rights:
30 years + 20 years extension + 30 year
renewable
iii.
70 years of land usage rights:
25 years + 20 years extension + 25 year
renewable
2.
Fiscal incentives:
i.
Exemption or deduction of income tax
C.
Negative List of Investment
According to the Presidential Regulation
No.111/2007, the negative list
classifies economic activities across
multiple categories: (1) closed; (2)
reserved for small and medium-sized
enterprises (SMEs); (3) allowed through
partnerships with SMEs; (4) limited
foreign ownership allowed within
specific regions; (5) allowed with
special permits from relevant government
authorities or state enterprises; (6)
100% domestic ownership; and (7) 100%
domestic ownership, with special
permits. The following breakdown shows
the sectors where these categories
apply.
1.
Closed:
Casinos, archaeological sites, museums,
cultural heritage sites, monuments,
cemeteries, coral mining, hunting
endangered species, transport terminals,
navigational aides, air-traffic control,
hazardous chemicals, chemical weapons,
alcoholic beverages (hard alcohol, wine
and malt liquor), alkalines containing
mercury, black tin and marijuana.
2.
Reserved for SMEs:
Power plants (less than 10 mw), travel
agencies, primary rattan, semi-finished
products from mangrove wood, capturing
wild animals from natural habitats,
near-shore fishing in small vessels,
courier services, telephone kiosks (wartel),
Internet cafes (warnet), telecom cable
installation, small-scale construction,
construction consultation, taxis, buses
serving fixed routes, hand-made batik,
palm sugar, tobacco processing,
cultivation of food crops (including
rice) in plots smaller than 25 ha,
plantation crops in plots smaller than
25 ha.
3.
Through partnerships with SMEs:
Silk, processed rattan, bamboo, gaharu
wood, sago palm, fish fattening, fish
hatcheries, fish processing (drying,
smoking or freezing), fish distribution,
value-added telephony (call centres,
content services such as ring tones and
premium text messaging etc), Internet
service providers, cigarettes (clove,
white and other), fruit and vegetable
sweetening and salting, batik prints,
rattan processing, finished goods from
mangrove wood, goods from cement,
jewellery, wooden vessels, hand
tractors, bike and motorcycle
components, and milk-powder processing.
4.
Limited foreign ownership:
Banks and money brokers (99% limit);
offshore hydrocarbon drilling outside
Eastern Indonesia, onshore hydrocarbon
drilling, oil-and-gas operators,
engineering and procurement contracting
services, power (generation,
transmission, consulting, installation,
maintenance, operation, research,
distribution and nuclear), data
communications system services, toll
roads, drinking water, cultivation of
food crops in plots greater than 25 ha,
or plantation crops in plots greater
than 25 ha (95% limit); insurance and
insurance services (80% limit);
pharmaceutical drugs and ingredients
(75% limit); cellular and satellite
telecommunications, Internet
interconnection, health services and
insurance agents (65%); construction
services and consulting (55% limit);
amusement parks (50%); fixed-line
telecoms networks (cable or
radio-based), Internet telephony,
multimedia services, education, business
consultation services, transport of
goods, passenger services, domestic
airline routes, airport services, cargo
handling, provision of port facilities
(ports, warehouses, container terminals,
ferry terminals), explosives and job
training (49%); and eco-tourism in
conservation forests (25%).
5.
Within specific regions:
Malls, supermarkets, department stores
and hypermarkets must comply with
spatial planning laws; entertainment
businesses must not conflict with
regional regulation.
6.
With special permits:
Mining radioactive materials with permit
from and co-operation with the National
Nuclear Energy Agency (Batan); wood
products (sawnwood, veneer, laminated,
plywood, chips) with plant capacity
>2,000m3 per annum must be harvested
sustainably; pulp must use imported
chips or wood from industrial timber
estates (HTI); cigarettes must partner
with SMEs or expand upon existing
businesses.
7.
100% domestic ownership:
Film and film services, recording
studios, wood products from natural
forests, open-sea fishing with vessels
larger than 100 gross tonnes, sand
mining, pharmaceuticals trading,
hospitals, pharmacies, pension funds,
press agencies, engineering design
services for industrial processes,
retailing other than supermarkets and
department stores, alcohol distribution,
property brokerages, and foreign worker
placement.
8.
100% domestic ownership with special
permit:
Weapon production requires a permit from
the Ministry of Defence.
