Mechanism of the Investment Licenses

Background

Mechanism of the investment licenses that is applied by BKPM to the investor covers provisions concerning business sector and business entity that could be managed by the investor in the territory of Indonesia. Principally, provisions on the mechanism of the investment licenses apply the same treatment to all of the investors, either foreign investor or domestic investor. However, for the business entity in the investment activity, there is a distinction for the provisions applied to foreign investor and domestic investor.

Business Sectors for the Investment Activity

As written in Article 10 paragraph 1 of Peraturan Kepala BKPM No.12 of 2009 (“Perka BKPM 12/2009”), all business sectors are opened for investment activity, unless stipulated otherwise in the legislation. In this case, there are also business sectors or types of business which are closed and opened with specific conditions for investment activity which shall be stipulated by the legislation. Investor who will conduct an investment activity is required to consider such legislation in order to be aware of the business sectors or types of business that are closed and opened with certain conditions. 

Business Entities for the Investor

BKPM distinguishes business entities in the investment activity for foreign investor and domestic investor. In Article 11 paragraph 1 of Perka BKPM 12/2009, it is regulated that business entity for foreign investment activity shall be established in the form of Limited Liability Company based on Indonesian Law and domiciled in the territory of the Republic of Indonesia, unless stipulated otherwise by the law. While regarding the business entities for domestic investment activity, there is no obligation for the investor to establish its business entity in the form of Limited Liability Company. The form of business entity for domestic investment activity could be in the form of legal entity, non-legal entity, or individual business, in accordance with the legislation.

Registration of the Investment Licenses

The registration process of investment activity by foreign investor in the territory of Indonesia either has obtained or has not obtained the legal status of Limited Liability Company could only be submitted to PTSP (Pelayanan Terpadu Satu Pintu) of BKPM. While for the domestic investor, the registration process of investment activity could be submitted to PTSP BKPM, PTSP PDPPM (Perangkat Daerah Provinsi bidang Penanaman Modal), or PTSP PDKPM (Perangkat Daerah Kabupaten/Kota bidang Penanaman Modal) according to its authority, if required for the investment licenses.

Article 16 paragraph 2 of Perka BKPM 12/2009 regulated that foreign investor who has not obtained the legal status of Limited Liability Company shall proceed with the Deed of Establishment of the Limited Liability Company within the period of 6 (six) months from the date of the issuance of the Registration of BKPM, otherwise the registration process will be null and void. If prior to the period of 6 (six) months there are changes in the provisions regarding the business sectors, then the issued Registration will be null and void if the Registration is contrary with the new provisions. The registration of investment activity will be valid until the company has Principle Licenses or the company is ready to operate / commercial production.

Domestic investment company and foreign investment company which has obtained the legal status of Limited Liability Company and which business sectors could obtain fiscal facilities shall obtain Investment Principle Licenses. The application for Investment Principle Licenses could directly be submitted by the foreign investment company, either has or has not conducted a Registration, to PTSP BKPM.

In accordance with Article 20 of Perka BKPM 12/2009, investment company which in the implementation of its investment has been ready to conduct an activity/commercially produced shall apply for Business Licenses to PTSP BKPM, PTSP PDPPM, or PTSP PDKPM according to its authority.

Renintha Karina

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