Frequently Asked Questions on investing in Indonesia
How do you set up a new Foreign Direct Investment (FDI) company in Indonesia?
A Foreign Direct Investment (FDI) company should be incorporated as an Indonesian limited liability company (PT) and domiciled in Indonesia.
- To invest in Indonesia, an investor should first look at the Negative List of Investment, which contains the business sectors that are absolutely closed to all investment, closed to only foreign investment, and which are open only under certain conditions.
- Foreign investment approval will be issued by the Investment Coordinating Board (BKPM) in Jakarta. However, for projects located in a Bonded Zones, investors should submit an application to the BKPM through the respective Bonded Zone Authority.
- To apply for a new investment approval, applicants have to complete and submit two copies of the Model I/PMA form. The proposed company should have at least two shareholders.
- Following the evaluation process, the chairman of the BKPM will issue the investment approval. Upon the issuance of the investment approval, a new company can be established under Indonesian corporate law.
What is the difference between Investment Approval and a Permanent Business License?
Investment approval is needed by a company to acquire land and set up a factory, while a Permanent Business License is issued after a company has begun commercial production activities.
How do you set up a representative office in Indonesia?
A representative office (for business activities outside the financial sector) must be established with the approval of the chairman of the BKPM.
- To get approval, applicants have to submit two copies of the Model KPPA form to the BKPM office.
How can investors find out if a business field is open for investment?
Basically, all business fields are open to investment in the framework of FDI as well as Domestic Investment, except those fields that are closed or regulated, as stipulated in the Negative List of Investment.
What kind of tax incentives are provided for companies?
Investments in certain industries and in certain regions will be granted tax facilities as follows:
1. Reducing net (taxable) income up to 30 percent (5 percent per annum) of the value of the realized investment 2. Accelerated depreciation and amortization 3. Loss carried forward facility for period of no more than 10 years 4. A 10 percent income tax on dividends, and possibly lower if stipulated in the provisions of an existing tax treaty
Is it possible for foreigners to have 100 percent ownership of a company?
Basically a new company can be established with 100 percent foreign ownership. However, the company should have at least two shareholders who are either foreign individuals or companies.
Q: How long will it take to finish an investment approval?
The entire process will take a maximum of 10 working days from the time the completed application letter and its attachments are submitted.