bkpm_indonesia investment services

invest in

EU-Indonesia Business Network | Jakarta, 16 September 2014

INDONESIAN INVESTMENT COORDINATING BOARD

© 2014 by Indonesian Investment Coordinating Board. All rights reserved

INVESTING IN INDONESIA :Te c h n i c a l g u i d a n c e a n d s e r v i c e i m p r o v e m e n t

InvestIn Indonesia

WHY

WHAT

reasons why choosing Indonesia as an

investment location and what the potential

investment in Indonesia

The Investment Coordinating Board of the Republic of Indonesia

2

HOW• Investment licensing

• service mechanism

invest in




INVESTING IN INDONESIA :

Technical guidance

Investment in IndonesiaBrief info on basic regulation

Investment• Legal entity – Law No. 40/2007 • Business field – Law on each sector• Investment/capital – Law No. 25/2007

Investment


4

Authority• Law No. 32/2004 – Law No. 25/2007 –

Government Regulation No.38/2007 �Central, province and regency/

municipality government

Investment ServicesInvestment license

Investment step by step

PRINCIPLE LICENSE

• New • Expansion• Merger • Acquisition

Summary on how to do business in Indonesia


5

BUSINESS LICENSE

� Operational Licenses� Regional Licenses� Fiscal Incentives

COMMERCIAL PRODUCTION/OPERATION STAGE

PREPARATION STAGE

Presidential Regulation No. 39 of 2014 Clear/transparent conditions and restrictions on

investment in Indonesia

The regulation consists of :• 12 articles, and • 2 attachments :

1. List of business fields closed to investment

2. List of business fields open, with condition, to investment :

a. Reserved for micro, small, medium enterprises and cooperatives


6

a. Reserved for micro, small, medium enterprises and cooperatives

b. Partnership

c. Foreign capital ownership

d. Certain location

e. Special licenses

f. 100% domestic capital

g. Foreign capital ownership and certain location

h. Special license and foreign capital ownership

i. 100% domestic capital and special licenses

j. Foreign capital ownership and/or certain location requirements, for ASEAN investors

Implementation of negative list on Investment Licensing

asguidance on doing business fromestablishment to commercial phase

Most widely implemented articles• Article 3 - negative list principle


7

• Article 3 - negative list principle

• Article 5 - implementation of negative list for public listed company

• Article 8 - obligation to comply with other regulations

• Article 9 - grandfather clause principle

article 3 : ……. business fields not listed in the attachment I

and II, are open for investment without conditions…

Implementation of article 3:

• two parameters in the attachment of negative list are business field andKBLI (business field classification number)

• the presidential regulation stipulates which business fields are closed for


8

• the presidential regulation stipulates which business fields are closed for investment and which are open with the requirements

• the referenced parameter is business field

if the proposed business field is not listed in the negative list despite the KBLI listed, BKPM can approve the proposal

Example


9

article 8 : ……the provision does not reduce the obligation to

article 3 : ……. business fields not listed in the attachment I and II, are open for investment without conditions…


10

article 8 : ……the provision does not reduce the obligation to

comply with the terms and conditions of the ministry and local government regulation….

Example :• business field - five star hotel - is open without condition• taking into account the saturation of the location in one regency for hotel

operations, the local government closed the area for the hotel business activity, • therefore although is open for investment but not possible to operate five star

hotel in that regency

article 5 : …. the provision is not applicable for indirect

investment or portfolio, in which the transactions were being made through domestic capital market…..

Implementation of article 5:• referred as indirect investment and portfolio in article 5 is public shares which

the transactions carried out in the domestic capital market


11

the transactions carried out in the domestic capital market

• Law No.25/2007 on investment, stipulates that PMA is a company wholly owned by foreign parties or a combination between foreign and domestic parties

• Public Company classified as a foreign direct investment (PMA) company, if the shareholders which listed in the company deed consist of public shares and individual foreign shareholder and/or foreign business entities or PMA company

• Public Company which classified as PMA company obliged to comply with the provisions of the negative list

Example

• PT. ABC Tbk (PMA), approval license in 2000, business field : restaurant,

shareholder structure in the company deed : public shares 40%, Mr. Smith 20% (European) and Mr. Tono 40% (Indonesia)

• presidential regulation no. 39/2014, --- business field restaurant – open with condition max foreign shareholder 51%

• If Mr. Tono sell his 40% share, and the share structure of the company become :

Alt I :


12

Alt I :

Mr. Smith share 20%, public shares increase become 80% (public buy Mr.Tono share) –

BKPM can approve this composition, based on article 5 – the provision is not applicable for public shares, as long as the foreign share is not more than 51%

Alt II :

Mr. Smith 60% (he buy Mr.Tono shares), public shares remain 40% -------

BKPM will not approve this composition, because the foreign share is more than the maximum share in the negative list regulation (51%)

article 9 : …. the provision does not apply to investments that

have been approved before the presidential regulation was stipulated, as stated in the company license, unless such provision is more beneficial for the investment ………………….

Implementation of article 9:• Expansion – grandfather clause applied if expansion will be done in the

same business field


13

same business field

• Merger – grandfather clause applied for surviving company

it means that the surviving company is possible to maintain the percentage of foreign share

• Acquisition – grandfather clause applied for company that being acquired

it means that the acquired company is possible to maintain the percentage of foreign share

Impact to divesting program

Example:

• PT ABC (PMA) , business field trading (distributor) – approval license in 1998 - 100% foreign shareholder with obligation for divesting,

• In 2013 – PT. ABC has conducted the divestment obligation, the current share holders are Mr. Smith (European) 90% and Mr. Tono (Indonesia) 10%

• Presidential regulation no. 39/2014, business field trading (distributor) max foreign share holder 33%


14

holder 33%

• Alt I :

On September 2014 , Mr. Tono want to sell his 10% share,

Mr. Smith or other foreign (individual/entities) or other PMA company, is not possible to buy the share, since the maximum foreign share for distributor only 33%,

• Alt II :

On September 2014 , Mr. Smith want to sell his 90% share,

other foreign (individual/entities) or other PMA company, is possible to buy all Mr. Smith shares, since the maximum foreign share for PT ABC (grandfather clause) is 90%

Trading business activities

• Trading – scope activities are export, import and main distributor

(maximum foreign share for distributor activity 33% - KBLI 00000)

� the activity of distributor company is to distribute commodities / products in the country through the indirect distribution channel

� activities may also include after-sales services and/or products packaging, however it still have to obtain license to conduct activities other than distributor

� KBLI 00000 means the provision of negative list regulation is applied to distribute all


15

� KBLI 00000 means the provision of negative list regulation is applied to distribute all types of commodities or products

� grandfather clause is possible to implement when a distributor company need to add types of commodities

• Modern stores – supermarket, department store, hypermarket,

wholesale (requirement based on minimum trading/sales area)

• Multi Level Marketing (MLM) (maximum foreign share 95%)

Overseas

INDONESIA Importer

( API-P )Manufacturing as importerMfg conducting imports to meet

their own needs

MLM ManufacturerDistributor

(Direct) (Non-Direct)

(Final Products)

(Non-Final Products)

Importer

( API-U )

MLM ManufacturerDistributor

Modern

StoresManufacturerAgentWholesaler

Retailer – End Customer



invest in




INVESTING IN INDONESIA :

Service improvement

Source of investment related information and tools forall

stakeholders (public and private sector)

• One stop services (PTSP)Presidential Regulation No. 27 of 2009 � All provinces and regencies/cities in Indonesia are mandated to conduct integrated investment services through PTSP to provide legal certainty, transparency, accountability, equal treatment and efficiency

• Online/electronic investment services (SPIPISE)System used by government officials at PTSP to process investment licenses

nswi.bkpm.go.id


18

System used by government officials at PTSP to process investment licenses

• Investment step by stepFlow of investment procedure in Indonesia, from establishment, construction, commercial phase including investment incentives and facilities

• Investment progress report (LKPM)Report on investment realization progress made by company and submitted through direct to BKPM, airmail, email or LKPM online system

Quarterly for construction phase and every semester for commercial phase

• Investment dataStatistic on investment realization based on location, sector and country of origin

2013 2014 2015 2016

2012 - Tracking system

Implementation of online system

More transparent and simplificationof investment licensing procedure


19

2012 : launch online tracking system implementation2013 : granted ISO 2001 – 1998 and mandatory online master list2014 – 2015 :• mandatory online for Principle License application (prior to company establishment)• existing companies are required to create a folder in the BKPM data base

which must be filled with all administration documents of the company such as company deed, BKPM and Ministry licences, Regional Government licenses etc and should always be updated by the company

• gradually will be mandatory online application for other licenses2016 : BKPM will only receive application for all types of license issued by BKPM through

online, no more face to face services in the front office area

Online SPIPISE service � online-spipise.bkpm.go.id


20

Investor Relation Unit (IRU)

for any investment related inquiries via email and phone

P : +62 21 5292 1329-30

+62 21 5292 1334-35

E : [email protected]


21

Thank You

Indonesia Investment Promotion Centre (IIPC)

Lestari Indah

+62 811 180 632

[email protected]

Badan Koordinasi Penanaman Modal (BKPM)

Indonesia Investment Coordinating Board

Jl. Jend. Gatot Subroto No. 44

Jakarta 12190 - Indonesia

t . +62 21 5292 1329-30, 34-35

f . +62 21 520 2050

e . [email protected]

www.bkpm.go.id

bkpm_indonesia investment services

Documents