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Print articleIndonesia - New Guidelines and Procedures for Investment Applications
March, 2010 -
Presidential Regulation on Investment Applications within the Framework of Integrated one Door Services (“PR 27/2009”) was issued on 23 June 2009 to simplify investment procedures by creating a one-door-integrated-services system.
To further implement PR 27/2009, in late December 2009, the Indonesian Investment Coordinating Board (“BKPM”) enacted 4 BKPM regulations:
a. Regulation No. 11 regarding the Implementation, Development and Reporting Procedures of the One-Door-Integrated System in the Capital Investment Sector;
b. Regulation No. 12 regarding Guidelines and Procedures for Investment Applications (“Regulation 12”);
c. Regulation No. 13 regarding Guidelines and Procedures for Controlling the Making of Investment Applications; and
d. Regulation No. 14 regarding the Electronic Information Services System and Investment Licensing.
These regulations address among other things the roles of each governmental level related to investment applications, the types of licenses and non-licenses, expatriate manpower utilization plans and other information in connection with the investment applications. In brief, there are 3 major changes.
First, the utilization of an electronic system for applications for and registrations of capital investments whether foreign (Penanaman Modal Asing - PMA) or domestic (Penanaman Modal Dalam Negeri) in Indonesia. The system is designed to be integrated with other government institutions and can be accessed by everyone or their proxies. However, note that several links can only be accessed by those who are registered and have an identification code.
Secondly, a change in application procedures. Previously the BKPM Chairman issued a BKPM Approval for the basic document and a temporary business license to the PMA Company and this was used as the document of reference by all Indonesian government entities dealing with the company. Subsequently, once the PMA Company was ready to commence commercial operation/production, it asked BKPM for its Permanent Business License (Izin Usaha Tetap). 3 basic licensing services are addressed in the current regulation including: investment registration (Pendaftaran) serving as the preliminary approval; in-principle license for the type of business needing fiscal facilities (ie an exemption from import duties); and business license (Izin Usaha).
Transitional provisions in Regulation 12 expressly honor existing licenses and non-licenses which remain valid until expiry.
Thirdly, Regulation 12 now allows applications for the registration of capital investments to be submitted both by companies still processing their legal entity status and companies whose legal entity status has already been approved. It is important to acquire BKPM approval before acquiring status as a legal entity to make sure that there are no objections to the proposed line of business and to ascertain whether there are any official or unofficial policies or practices that may be relevant to the investment.
This whole new system has been created to promote effectiveness, efficiency and transparency in Indonesia’s investment system and is intended to attract investors to invest in Indonesia. Whether the government’s efforts have achieved this aim it is still premature to say. We will need to observe this system for at least a year to see if a consistent system has been established to support the needs of investors.
To further implement PR 27/2009, in late December 2009, the Indonesian Investment Coordinating Board (“BKPM”) enacted 4 BKPM regulations:
a. Regulation No. 11 regarding the Implementation, Development and Reporting Procedures of the One-Door-Integrated System in the Capital Investment Sector;
b. Regulation No. 12 regarding Guidelines and Procedures for Investment Applications (“Regulation 12”);
c. Regulation No. 13 regarding Guidelines and Procedures for Controlling the Making of Investment Applications; and
d. Regulation No. 14 regarding the Electronic Information Services System and Investment Licensing.
These regulations address among other things the roles of each governmental level related to investment applications, the types of licenses and non-licenses, expatriate manpower utilization plans and other information in connection with the investment applications. In brief, there are 3 major changes.
First, the utilization of an electronic system for applications for and registrations of capital investments whether foreign (Penanaman Modal Asing - PMA) or domestic (Penanaman Modal Dalam Negeri) in Indonesia. The system is designed to be integrated with other government institutions and can be accessed by everyone or their proxies. However, note that several links can only be accessed by those who are registered and have an identification code.
Secondly, a change in application procedures. Previously the BKPM Chairman issued a BKPM Approval for the basic document and a temporary business license to the PMA Company and this was used as the document of reference by all Indonesian government entities dealing with the company. Subsequently, once the PMA Company was ready to commence commercial operation/production, it asked BKPM for its Permanent Business License (Izin Usaha Tetap). 3 basic licensing services are addressed in the current regulation including: investment registration (Pendaftaran) serving as the preliminary approval; in-principle license for the type of business needing fiscal facilities (ie an exemption from import duties); and business license (Izin Usaha).
Transitional provisions in Regulation 12 expressly honor existing licenses and non-licenses which remain valid until expiry.
Thirdly, Regulation 12 now allows applications for the registration of capital investments to be submitted both by companies still processing their legal entity status and companies whose legal entity status has already been approved. It is important to acquire BKPM approval before acquiring status as a legal entity to make sure that there are no objections to the proposed line of business and to ascertain whether there are any official or unofficial policies or practices that may be relevant to the investment.
This whole new system has been created to promote effectiveness, efficiency and transparency in Indonesia’s investment system and is intended to attract investors to invest in Indonesia. Whether the government’s efforts have achieved this aim it is still premature to say. We will need to observe this system for at least a year to see if a consistent system has been established to support the needs of investors.
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