How to Invest

1. STARTING A BUSINESS IN INDONESIA

General Rules

In starting a business in Indonesia, there are several general rules that you need to be aware of:

• Every sector has their own Indonesian Standard Industrial Classification (KBLI) as stated on the Regulation of the Head of the Bureau of Statistic No. 19 of year 2017
• Many business sectors are open for Foreign Direct Investment (PMA)
• Certain exceptions are stipulated under Presidential Regulation No. 44 of year 2016 regarding the list of business fields that are closed to investment and business fields that are conditionally open for investment (“Negative Investment List” / DNI)
• Every sector has certain restriction on foreign capital ownership.

Setting Up A Foreign Company

The Foreign Investment Law (Law No. 25 of 2007) includes a guarantee that foreign investors will be treated equally to domestic investors and that Indonesian Government will not nationalize a foreign investment or revoke the investors right to control a foreign investment, unless it is in the national interest to do so and compensation is paid. To set up a foreign company in Indonesia,

• Foreign investors MUST form a limited liability company (PT), with minimum of 2 shareholders: individual and/or company (Law No. 40 of 2007 on Limited Liability Company)
• Minimum investment for PT PMA is IDR 10 billion (≈ AUD 1 million) including working capital for one year, machinery and others, not including land and buildings (Law No. 20 Year 2008 regarding micro, small, medium enterprise and cooperative)
• Minimum issued and paid-up capital: 25% of total investment
• Choose a local public notary to get your Deed of Establishment and Article of Association (Akta). The notary will submit the Akta to the Ministry of Law and Human Rights for approval.
• Akta sets out the firm’s purpose, location, capital and management rules, details of company’s founders, first directors and commissioners, and shareholders.
• The notary usually also provide service to apply Tax ID Number (NPWP)

Applying for Licenses

Next step is applying Business Identification Number (Nomor Induk Berusaha/NIB) via Online Single Submission (OSS) System https://oss.go.id/oss/ by making an account in the system and then verify through your registered/company email. NIB is free of charge and you will get the NIB right after all required and correct documents and application is completed. NIB can also be used as company registration number (TDP), importer number (API), and custom access (NIK).

After the NIB, you may proceed to apply business license and commercial license (IU) with commitment in the OSS system. It means that the company can check-mark the required documents such as environment license, location permit, and building construction permit (IMB) if needed. After the company receiving such documents and upload to the system, then the IU will be automatically activated/valid. IU is also free of charge.

2. ESTABLISHING A FOREIGN REPRESENTATIVE OFFICE

Foreign Representative Office is an office incorporated by an overseas company to represent itself in Indonesia with a view to manage the interest of the company or the affiliated companies in Indonesia and/ or in other countries and/ or to prepare the establishment and development of foreign investment companies in Indonesia.

Foreign Representative Office usually has limited functionality and generally are prohibited from directly engaging in operational activities, signing contracts, issuing official invoices, receiving payments from its clients, and directly engaging in any other profit generating activities.

There are three types of representative Offices which can be incorporated in Indonesia: Foreign Company Representative Office (KPPA), Foreign Company Trade Representative Office (KP3A), and Foreign Company Construction Representative Office (BUJKA).

To set up (new/renew/amendment) KPPA, kindly follow these steps:

Step 1 – contact Indonesian Embassy / Indonesian Consulate General in your area to request legalization of documents at Consular Section.

Documents to be legalized are as follows:

a. Letter of Appointment of Chief of Representative

b. Letter of Intent

c. Letter of Statement from Chief of Representative that he/she will reside in Indonesia and will not engage in other business activities

Step 2 – Contact IIPC Office to get the Letter of Reference

By way of sending the scanned documents below to iipc-aussie@bkpm.go.id and the original documents to:

The Indonesian Investment Promotion Centre (IIPC) Sydney

Suite 6, Level 30, Governor Macquarie Tower

1 Farrer Place, Sydney, NSW 2000

A. A request letter addressed to “Director of Indonesia Investment Promotion Centre (IIPC) Sydney”

B. Registration of the company (current company extract) with the Australian Securities andbInvestment Commissions (ASIC) legalized by a public notary.

C. Bank Reference Letter issued by Australian bank to confirm that banking relationship has been acceptable with details of account of company (account balance is not required)

Attention to:

The Indonesian Investment Promotion Centre (IIPC) Sydney

Suite 6, Level 30, Governor Macquarie Tower

1 Farrer Place, Sydney, NSW 2000

D. for renewal or amendment of licence, please send along:

- current valid KPPA licence issued by BKPM

- KPPA activities report (latest LKPM submission)

- other supporting documents if needed

Upon issuance of Letter of Reference, softcopy will be sent to your email. You may collect the

original document at our office or we can mail it to you if you provide us with your details.

Step 3 – Logon https://oss.go.id/portal/# to upload the supporting documents and apply for KPPA new/renewal licence. For guidance in fulfilling the forms, please kindly refer to https://oss.go.id/portal/informasi/content/panduan_perwakilan

Other supporting documents such as:

a. All documents mentioned above to be uploaded in the online company folder (BKPM website)

b. Article of Association of Australian company (in English or in Bahasa Indonesia)

c. ID of Chief of Representative (foreigner: copy of passport; Indonesian: KTP & NPWP)

d. Soft copy of photo of Chief of Representative (4x6 cm, red background)

e. Power of Attorney if the application is not done by the head of company