Legal Guide to Invest in Indonesia for PMA Owners – BKPM Regulation Number 13/2017 has made it more possible for foreign investors to start investing in Indonesia. To make that happens, there is a legal guide to invest in Indonesia. It is of a hassle than the old one done by old regulations. You can read through this legal guide to invest in Indonesia here. This will help you to know your way around.
FDI (Foreign Direct Investment)
Based on the Indonesian foreign investment law, there are two legal entities that foreign investors can have. They are:
- PMA (Penanaman Modal Asing) or Foreign Investment Company.
- KPPA (Kantor Perwakilan Perusahaan Asing) or Foreign Representative Office.
Relating to FDI Indonesia and the company’s possible involvement in commercial activities, it is suggested that foreign investors prefer PMA to KPPA. With PMA, your company can operate fully without too much interference from your local business partner or local representative.
Not only for newly-built companies, the old ones in the form of KKPA can also be transformed into PMA. This can be done through merger and acquisition. This company can also obtain assistance from the investment banking Indonesia regarding foreign investment purpose.
Negative Investment List
There are three categories of business in Indonesia regarding FDI acceptance, which are:
- Open for FDI.
Foreigners can own this company 100% because the sector or the field is not part of the Negative Investment List.
- Conditionally-open for FDI.
There is a divided capital or percentage share between foreign owners with their local counterparts. Depending on the mutual agreement, the share can be 50-50 or not.
- Closed for FDI.
The sector or field is part of the negative investment list or related to the country security, hazardous, or prohibited by the existing law.
Film and hospitality are two of the sectors fully open to FDI. This means foreigners can own them fully or 100%. Other 17 industries that are conditionally-open to FDI include capital investment, agriculture, banking, forestry, education, transportation, trading, mineral, and energy.
Of course, foreign investors can still do that as long as they do not exceed the required limit of their capital.
Requirements to Establish Your PMA:
Based on the legal guide to Invest in Indonesia, your PMA’s organization should have at least two shareholders. One is the director, and another is the commissioner. They can either be an individual each or a corporate entity. Especially for PMA that is conditionally-open to FDI, one shareholder should be a local resident.
The minimum capital needed is IDR 10 billion. The 25% of it should go to the investment plan while the 75% should be injected as the shareholders’ loans. Other procedures they have to take include:
- Submitting their principle license to BKPM (Badan Koordinasi Penanaman Modal) or Indonesia Investment Coordinating Board.
- Requesting for the name of their company to Ministry of Law and Human Rights.
- Writing article or association and also establishment deed.
- Proving the certification of the company’s domicile.
- Providing for the NPWP (Nomor Pokok Wajib Pajak) or Tax Identification Number.
- Having the Article of Association legalized by Ministry of Law and Human Rights.
This is the legal guide to invest in Indonesia for PMA owners.