Indonesia has been become one of the most emerging country in Asia moreover in the world since 2008 global economic crisis. The Government of The Republic Indonesia sees this opportunity to increase economic growth in many sectors through capital investment either from domestic investor or foreign investor.
Abundant natural resources and huge number of consumers is a reason of foreign investors to invest their capital here in Indonesia. There are 2 (two) kinds of investment, indirect investment (through capital market) and direct investment (establish a company and running own business directly in Indonesia).
In this matter blogger will generally explain "Foreign Capital Procedures In Indonesia".
Direct capital investment in Indonesia stipulated in The Republic of Indonesia Act No.25 Year 2007 regarding Investment (Investment Act). In accordance with Investment Act, Investment means all forms of capital investment activities, either by domestic or foreign capital investors to conduct a business within the territory of the Republic of Indonesia.
Capital is an asset in the form of money or other forms which are not money owned by the capital owner and having an economical value.
Every foreign capital investment in Indonesia shall be in limited liability company (PT) in accordance with The Republic of Indonesia Act No.40 Year 2007 regarding Limited Liability Company. PT is a one of form of business entity in Indonesia which is stated by the government as a legal entity and own capacity to act on behalf itself against other party and government agency either in the court or out of court.
Foreign Investor shall submit the Registration Application to the Indonesia Investment Coordinating Board (BKPM) with certain requirements before they establish a limited liability company.However, the Investor shall comply
to the President Decree No.36 Year 2010 regarding list of business sectors for capital investment. This regulation is stipulate which is opened (or opened with certain requirements) or closed for investment.
PT shall be established by the Investor within 6 (six) months since the date of issuance the Registration from BKPM. The Registration shall be null and void by the name of law if the Investor hasn't establish a PT after 6 (six) months.
PT shall be established by 2 (two) or more persons with signing deed of establishment in front of notary public
and submit the deed of establishment to the Minister of Law and Human Rights of The Republic Of Indonesia. PT shall be incorporated by the Minister and registered into Company Register.
After incorporated by the Minister of Law and Human Rights, PT (foreign investor business entity) may obtain fiscal facilities such as taxation or customs facilities by submit to the BKPM application of Principal Investment Permit. Unless trading or services business sector, shall obtain Principal Investment Permit.
The Principal Investment Permit is given in order to facilitate and simplify the investors to complete their preparation before operation activities / commercial production.
In order to implement commercial production after all preparation completed, PT shall obtain the Business Permit from BKPM.This business permit shall be owned by a capital investment company which has owned a registration /Principal Permit/Capital Investment Approval Letter before conducting a commercial operation/production activity, except stipulated otherwise by sectoral rules and regulations.
The foreign investor may develop their business, but prior to the development, they shall obtain the Expansion Business Permit or the Alteration Business Permit.
The foreign capital investment above shall be terminated because of as follows:
- Running out of reserve
- End of term
- Permit termination
- Temporary suspension
- Administrative sanction
- Insolvency
- Suggested by the Company
- Submitted by the third party
- Acquisition, merger and consolidation
- The accomplishment if capital investment purpose.
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