Recently, the Indonesian Investment Authority (BKPM) has issued Regulation number 13 of 2017 regarding Guidelines and Procedures for Investment Licensing and Facilities (13/2017 Regulation). The 13/2017 Regulation is of great importance for foreign investors that currently have or wish to establish a foreign investment company in Indonesia. The regulation regulates the investment requirements for Foreign Limited Liability Companies (PT PMA) and several types of Foreign Representative Offices. In this column we will discuss the licensing system foreign capital investment.
The 13/2017 Regulation replaces the following BKPM regulations (Old BKPM Regulations):
Above regulations are as of January 2, 2018, revoked and not longer valid for foreign investors in Indonesia.
Under the Old BKPM Regulations, a foreign investor was first required to obtain a principle license before being able to apply for a business license. Under the 13/2017 Regulation, the principle license is no longer regulated.
Registration of Capital Investment
The 13/2017 Regulation now introduces a new type of license, namely the Registration of Capital Investment. The Registration of Capital Investment only applies to foreign investment companies that fulfill one of the below criteria:
Above business can however only start their business activities after they have obtained their business license.
The 13/2017 Regulation now regulates two types of business licenses for foreign investment companies (PT PMA), namely:
Minimum BKPM Investment Requirements
No changes are made to the minimum investment requirements under the 13/2017 Regulation. The minimum investment requirements to obtain a permanent business license remain thus the same, namely:
Please note that there are certain exceptions to this rule, for certain types of industries and businesses.
The 13/2017 Regulation regulates the licenses for the following types of representative offices:
Foreign Oil and Gas Company Representative Offices were previously not regulated under the Old Regulation and have now been added.
We would like to make one remark on the validity period of a Foreign Company Representative Offices (KPPA): previously under the Old Regulations, the KPPA license was valid for a maximum period of 3 years and could be extended for two times one year. Under the 13/2017 Regulation the restriction of maximum two years extension has been removed. Now the KPPA can be extended in accordance with the validity period mentioned in the appointment letter of the Chief Representative. This may indicate that there is no limit anymore to extensions of a KPPA, which would be good news for foreign investors.
The 13/2017 Regulation has been entered into force on January 2, 2018 for foreign companies.