Download - How to set up foreign Direct Investment
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HOW TO SET
UP
FOREIG
N DIRECT
INVESTM
ENT
COMPANIES
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FOREIGN INVESTMENT IN INDONESIA
DIRECT INVESTMENT INDIRECT INVESTMENT
Only 1 (one) way of Foreign Direct Investment is allowed:
• Establish a Foreign Direct Investment Company (PT PMA) with Foreign Shareholders in it
• Open up a Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA/KP3A)
• Finance a Local PT via Loan Arrangement or Other Arrangements
1. 2.
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WHY PT PMA ?• Only Direct Form of Foreign Investment
• Ideal Form to incorporate Subsidiaries / Affiliates in Indonesia
• Unlimited Time Period
• Clear Separation of Responsibility
• Protection by the Laws and Regulations
• High Visibility for Branding in PT PMA Name
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WHAT DO YOU NEED TO PREPARE ?
1. Business Activities
2. Investment Plan
3. Capital Structure and Shareholder Composition
4. People who will run Company and work in it
5. Apply for Principle License at BKPM
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PT PMA BUSINESS ACTIVITIES• Be Specific and List all Activities that You are Doing
• Be Honest about What You Actually Do
• Check Out Negative Investment List
• Think Long-Term and Plan Accordingly
• Plan Your Investment for each Business Activity
• Consult with Your Tax Consultant
• Keep it Clear and Simple
1.
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PT PMA INVESTMENT PLAN FOR BKPM• Only to Submit for Principle License at the Beginning
• Investors have 1-5 years to realize the Investment Plan
• Minimum above IDR 10,000,000,000 for each Business Activity
• Source of Investment can include Capital of the PT PMA and Loan from Foreign or Local parties
• Use of Investment include Fixed Capital and Working Capital
2.
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CAPITAL STRUCTURE AND COMPOSITION• Consult Negative Investment List for Maximum % of Foreign
Shareholders in PT PMA
• Determine the Value of Each Share
• Determine the composition of shares owned by Each Shareholder
• Authorized Capital must be min. IDR 10,000,000,000
• Paid-up Capital must be min. IDR 2,500,000,000
3.
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APPOINT DIRECTOR AND COMMISSIONER
• Appoint the People who will run PT PMA in Indonesia
DIRECTORS – Day-to-Day Activities
• PT PMA must have at least 1 Indonesian Director to sort out the Establishment process while the Foreign Director secure their Expatriate Working Permit in Indonesia
• All Directors must have a registered residence in Indonesia
COMMISSIONERS – Supervising Directors
• Are not required to have registered residence in Indonesia
4.
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APPLY FOR PRINCIPLE LICENSE AT BKPM• Identity of Shareholders
• Office Space and Project Location
• Investment Plan and Company Structure of Organization
• Company Profile / Business Flowchart for Subsidiaries
• Technical Recommendation if needed
• Presentation at BKPM if deemed required by BKPM
• 3-Hour Investment License Principle License for PT PMA with large-scale Investment, mostly for Infrastructure Projects
5.
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• Applies for PT PMA with Investments that fulfill these requirement:
1. Investment Plan Value = IDR 100 billion upwards
2. Absorbs at least 1.000 local workers• Submit Identity of Shareholders + Business Flowchart to
BKPM
• Investment License is composed of 8 + 1 License Products• Investment License, Deed of Establishment and
Ministerial Approval, NPWP, TDP, RPTKA, IMTA, API, NIK + Letter of Land Availabiity
3-HOUR INVESTMENT LICENSE (IZIN INVESTASI)
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CONCLUSION: HOW TO SET UP PT PMA
1. Pre-Establishment
2. BKPM Principle License
3. Deed of Establishment and Ministerial Approval
4. Basic Legality Permits (SKDP, NPWP, TDP, etc.)
5. Post-Establishment (Operational Licenses)1. Technical Recommendations2. Government Approvals3. Investment Realization4. Permanent Business License (IUT)
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TRENDING BUSINESS SECTORSBASED ON FOREIGN INVESTMENT
APPLICATIONSJanuary - December 2015 (Data from
BKPM)Services - USD 11.3 B (38,5%)
Manufacturing - USD 11,8 B (40,2%)
Mining - 4.0 B (13,7%)
Food Crops and Plantation - USD 2.0 B (7%)
Livestock, Fishery and Forestry - US 0.1 B (0,3%)
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POPULAR BUSINESS ACTIVITIES FOR PT PMA
SERVICES BUSINESS SECTOR
• Portal Web – Operating Website and Mobile Apps, Collaborate with Service Providers to Connect Customers and Services
• Import – Collaborate with Local Distributors, Warehouse and Cold Storage Providers
• Export – Collaborate with Manufacturers and Selling Agents
• Consultancy – Global Quality and Local Presence, Assist Established Entrepreneurs in Achieving Business Goals
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