Investment Reflections in Indonesia
The Government of the Republic of Indonesia enacted
the Investment Coordinating Board (Badan Koordinasi Penanaman
Modal-BKPM) in 1973 to assist the President of the Republic
of Indonesia in formulating national policies on Investment.
This board is responsible for the planning, promotion licensing,
control and evaluation of investments. Incooperation with
Regional Investment Coordination Board (Badan Koordinasi Penanaman
Modal Daerah - BKPMD) and other related agencies, it also
undertakes the supervision of investment projects, and provides
advises to solve difficulties faced during the period of implementation.
Since 1985, it has progressively liberalized
both its trade and foreign investment policies. Foreign direct
investment has in most cases proven to be a stroger way to
the develop outward-looking industries than infant industry
protection policies under the inward-looking approach.
Approval for foreign investment can be obtained
in Indonesia either through the BKPM office in Jakara or the
BKPMD office in every Province, and also through Representative
Office of the Republic of Indonesia all over the world such
as Indonesian Embassies, Consulate Generals and Consulates.
Following the evaluation process, the Chairman of BKPM or
Head of Corresponding representative of the Government of
the Republic of Indonesia or the Chairman of BKPMD will issue
the investment approval. To implement an approved investment
project, the BKPM or the BKPMD will issue the following permits
/ licenses as proposed by the investors: customs approval
letter, limited importer license (APIT), foreign manpower
plan approval (RPTKA); and permanent business license (IUT).
Under the current regulation, a foreign capital
investment (PMA) company is granted a 30 year period to operate
after establishment. During this time, if an additional investment
to the original were undertaken, then a further 30 year period
would be granted for the project. It is also possible to extend
the termination by another 30 year.
A foreign capital investment (PMA) company is
generally considered to be a joint venture between foreign
and Indonesian partners either as corporation partnership
or individual partnership. There are no specific requirements
on the minimum amount of investment as the parties concerned
are left to determine their sums. In practice, the investment
approval board requires minimum capital of US $ 25.000. The
PMA company may also be established as fully owned by the
foreign investor. However, no later than 15 years of its commercial
operation, some of it shares must be divested to Indonesians
through the local stock exchange.