Investment Procedure

To establish a foreign direct investment company in Indonesia you must first decide what business sector you are going to invest based on Indonesian Classification for Business Sector.

Then, you must check whether the business sector is open with requirements or closed for foreign direct investment based on the Presidential Regulation about Negative Investment List. If the business sector which you are interested in is not regulated, and no other restrictions from related technical ministries, then it means the business sector is open for foreign direct investment with a maximum foreign ownership of 100%.

The legal entity of the Foreign Direct Investment or FDI company should be a Limited Liability Company or Ltd (Perseroan Terbatas or PT). The ‘PT’ company should be owned by a minimum of 2 shareholders. Those can be individual or corporate shareholders or a combination of both.

The minimum investment for an FDI company is above IDR 10 billion (excluding land and building cost), while the minimum paid up and issued capital is IDR 2.5 billion. For each shareholder, at least IDR 10 million or its equivalent in USD is required.

You can set up a company in any part of Indonesia. However, there are restrictions for some business sectors in certain regions, Industrial Law No. 3 Year 2014 and Government Regulation No. 142 Year 2015 has mandated that any industrial activities shall be located in industrial estates.

Today, the Indonesian Industrial Estates Association has 87 company members, in 18 provinces, covering a total gross area of about 86,059 hectares. There are more than 9,950 manufacturing companies operating and these figures do not include industrial estates non-HKI members.

Main attractions of industrial estates are that the development is comprehensively planned to assure a strategic location, accessibility, building ratio, infrastructure and supporting services, secured land titles, and continuous maintenance and operation management, as well as integrated environmental management.

Several industrial estates will be developed until 2019, 14 of those located outside Java Island will be allocated for the natural resources-based processing industry. While the other 2 in Java Island will be allocated for labor-intensive, high-technology, and consumer goods industry.

The process of company establishment in Indonesia requires Investor to issue Article of Association and legalization of the company, including taxpayer number through Public Notary.

The regulation of the Central Bank of Indonesia requires that all banking transactions (such as capital injection, administration of loans, payment of capital equipment, raw material, etc.) of a newly established PT. FDI should be administered through a special foreign investment bank account in Indonesia. In general, the required documents to open such account are as follows:

1. Single Business Number, the Deed of Establishment, Company Domicile Certificate, and Tax ID.
2. The power of attorney, specifically required for another person who needs authority to open a bank account.
3. Resident Identity Card or passport of the authorized person to open a bank account.
4. Photo of the authorized person to open a bank account.
5. Minimum deposit of IDR 10 million or USD 1,000.

Source : BKPM