Economic Policies

Trade and Industry

InvestmentGuide

Investment Procedure

Investment Approval Stage
1. Application and Approval Procedures at Representative Offices
2. Application and approval Procedures in Bonded Zones.
3. Application and Approval in Integrated Economic Development Zones

 

Investment Approval Stage

• Foreign direct investment (Penanaman Modal Asing/PMA) companies in Indonesia can be established in the form of 100% foreign ownership or a joint venture between foreign and Indonesian parties and should be Limited Liability company (Perseroan Terbatas/PT) and domiciled in Indonesia.
• To invest in Indonesia, an investor should first look at the "Negative List of Investment" (Daftar Negative Investasi/DNI). This contains the list of business sectors that are absolutely closed to all domestic as well as foreign investments and those fields or businesses closed for foreign investments only. The regulated business sectors in this case refer to those which are still open to investors if certain requirements are fulfilled such as partnership with state owned/local companies, cooperation with small business holders, and located in certain location. The special provisions/ terms for certain fields of business open to capital investment that must be observed by investors, both applying as well as in conducting capital investment activities in Indonesia as stated in the Capital Investment Implementation Technical Guidance (Petunjuk Teknis Pelaksanaan Penanaman Modal/PTPPM).
• Foreign investment approval can be issued either in Indonesia, the Investment Coordinating Board (BKPM) in Jakarta or Regional Investment Coordinating Board (BKPMD) in every province, or through representative in several countries. Therefore, investors can choose one of those offices for submitting their investment application at the most convenient one for them, (please refer to the Chart). However, for foreign investment projects located in Bonded Zones, investors should submit the application to BKPM through the respective Bonded Zone Authority.
• Foreign investment application documents are to be submitted to the BKPM or BKPMD concerned, representative of the Government of Indonesia overseas where then they will be evaluated in terms of their compliance with various aspects such as sectoral policies, and finance. If further clarifications are still required, a letter will be sent to the investor concerned to request the necessary additional data and information.
• Following the evaluation process, the Chairman of BKPM or Head of Corresponding Representative Offices of the Government of the Republic of Indonesia or the Chairman of BKPMD concerned will issue investment approval.
• The entire process would take a maximum of 10 (ten) working days.
• Upon the issuance of the investment approval, a foreign investment company can be legally established through the execution of the articles of incorporation in notary deed form.
  

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1. Application and Approval Procedures at Representative Offices of the Republic of Indonesia, the Office of the State Minister/BPM-PBUMN and BKPMD.

• There are 156 Representative Offices of the Republic of Indonesia throughout the world including Indonesian Embassies, Consulate General and Consulates.
• The Investment Coordinating Board (BPKM) is a Non- Department Government Agency serving under and responsible directly to the Presidennt of the Republic of Indonesia and led by a Chairman. It’s office is located in Jakarta, the capital city of the Republic of Indonesia, at Jalan Gatot Subroto No: 44, Jakarta Selatan, Indonesia 12910.
• The Regional Investment Coordinating Board (BKPMD) is located in each capital city of each province . The BKPMD is headed by a chairman, who is a subordinate of and responsible to the Provincial Governor.
• To apply for a new investment approval, foreign investment applicants have to complete and submit 2 (two)copies of Model I/PMA form The Indonesian Embassy/Consulate General/Consulate or to corresponding BKPMD where the project will be located and vice versa.
• The following documents should be attached to the application form as enclosures in order to ensure that the application form will furnish all information and attached required documents:

1. By Foreign Participant:
   1. Articles of Association of the Company in English or Indonesian language; or
   2. Copy of valid passport for foreign individuals,
2. By Foreign Investment Company (PMA):
1. Articles of Association of the Company and any amendment(s) thereof;
2. Tax-payer’s Registration Number
3. (Nomor Pokok Wajib Pajak/NPWP)

3. By Indonesian Participant:
   1. Articles of Association of the Company and any amendment(s)thereof or identity Card of Individuals
   2. Tax-payer Registration Number (NPWP

4. Flowchart of the production process and raw material requirements for processing industries; Description of business activities for the services sector.
5. Power of Attorney to sign the application form if the participant(s) is/are represented by another party/parties.
6. Other requirements from the sectors concerned, if any, as stated among others in the "Capital Investment Implementation Technical Guidance".
7. Requirements for partnership cooperation in the business sector are as follows:
   1. Agreement between Small Scale Enterprise and Medium/Large-Scale Enterprise outlining among other things name and address of each party, pattern of partnership, rights and obligations of each party as well as guidance provided for Small-Scale Enterprise.
   2. Letter of Statement by the Small Scale Enterprise stating that the enterprise concerned, meet the criteria of Small-Scale Enterprises based on Law of the Republic of Indonesia No: 9 of 1995

Chart of:

Foreign Direct Investment (PMA)
Application Procedure and its Implementation Permit

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2. Application and approval Procedures in Bonded Zones.

• To apply for a new investment approval for projects located in Bonded Zones, foreign investment applicants must complete and submit 2 (two) copies of Model I/PMA form to BKPM through the corresponding Bonded Zone Authority where the project will be located.
• The required documents attached to the applicant’s form as enclosure s are similar to those required in procedures above mentioned.
• To implement the approved investment projects that are located in Bonded Zones, investors are not required to apply for any further implementation licenses such as location permit, building construction permit, nuisance act permit, land title, etc.

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3. Application and Approval in Integrated Economic Development Zones (KAPET)

• The application for investment located in Integrated Economic Development Zones also referred to as Kawasan Pengembangan Ekonomi Terpadu (KAPET), shall be submitted to the Managing Board of KAPET concerned either for Domestic or Foreign Investment. The Managing Board of KAPET shall evaluate applications for new Foreign Investments located in the KAPET and the result of the application shall be submitted to the Chairman of BKPM
• The Managing Board of KAPET shall evaluate new investment applications, applications for expansion and modification in the context of Foreign Investment located in the Integrated Economic Zone.
• The Managing Board of KAPET then submits the result of the evaluation to the Chairman of BKPM who shall the issue an approval of the application and notify the applicant through the Managing Board of KAPET.
• The Managing Board of KAPET shall evaluate applications for investment implementation permits and issue the approval of the applications.

 

Based on the Presidential Decree No: 96/2000 dated July 20, 2000 and the Presidential Decree No: 118/2000 concerning the amendments to Presidential Decree No: 96/2000 on Business Fields Closed and Open to Investment can be among others mentioned as follows:

Business Fields Absolutely Closed to Iinvestment

1. cultivation and processing of marijuana and the like;
2. Collection/utilization of sponge;
3. Industries producing chemicals harmful to the environment;
4. Industries producing weapons and related components;
5. Casino and gambling facilities, etc.

Business Fields Closed to Investment in Which A Part of theShares Owned by Foreign INVESTORS:

1. germ plasma cultivation;
2. Concessions for Natural Forests;
3. Contractors in the field lumbering;
4. Taxi/bus transportation services;
5. Small-scale sailing;
6. Trading and trade supporting services;
7. Radio and television broadcasting services; radio and closed circuit television broadcasting services, and multimedia and printed media information services providers, etc.

1. building and operation of seaports;
2. Electricity production, transmission and distribution;
3. Shipping;
4. Processing and provision of potable water for public use;
5. Atomic power plants’
6. Medical services;
7. Telecommunications;
8. Regular/non-regular commercial airlines etc.

 

1. Cultivation of Fish in fresh water;
2. Fishing of demersal fish (big fish, grouper and other sea fish);
3. Industries producing wood pulp;
4. Industries producing pulp made of other cellulose fibers or other materials;
5. Industries producing chloro alkalai;
6. Processing of finished/semi-finished goods made from mangrove wood;
7. Money printing industry;
8. Special printing industries ( Postal stamps, duty stamps, duty stamps and the like)
9. Milk processing industry;
10. Plywood and rotary veneer industries;
11. Sawn timber industries;
12. Ethyl alcohol industries;
13. Industries producing raw materials for explosives (ammonium nitraten)
14. Industries producing explosives and components for industrial/commercial use.
15. Electricity planning and supervision consulting services;
16. Electricity equipment construction, maintenance, installation services, development of technology supporting the supply of electricity and testing of electricity installations.
17. Petroleum and natural gas drilling services;
18. Power plant businesses, Restaurant etc.

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