The OSS-C at BKPM was innaugurated on 26 January 2015 to provide a simpler, faster, more transparent and integrated service for investors in Indonesia.
Investors no longer need to go around Jakarta to consult and obtain permits. At the OSS-C, 22 ministries and government institutions are now integrated. Investment licenses for almost all sectors have been delegated and served at BKPM, such as manufacturing industry, power, oil and gas and tourism sectors.
Having investment licenses processed in one system and working together under one roof will facilitate better coordination among related parties at the national level. This allows authorities to reduce the process time, synchronize procedures, avoid authority overlap and eliminate red tape.
Yes. Indonesian government provides Investment Incentives as follows:
According to the Regulation of the Ministry of Finance Number 159/PMK.010/2015 and the Regulation of the Chairman of BKPM Number 19 Year 2015 the applicant or company should meet the following criteria:
It is, then, eligible for the following incentives:
Yes. Starting 2016, the government accelerates custom clearance process for imported capital goods, aiming at speeding up project under construction. Capital goods no longer need screening at the ports. So, it will cut the processing time from five days to only 30 minutes.
Since September 2015, Indonesian government has been issuing several economic policy packages, among others, to improve investment climate.
We set a minimum wage formula so investors can predict annual increase of wage, considering inflation and economic growth. We support business to reduce production costs, by cutting the price of fuel, gas, and electricity for industry. We revised the Indonesia Investment Guidance (DNI) to be more open and easier for (foreign) investors, including industrial sector, creative economy, and tourism.
Ease of Direct Investment Construction (Kemudahan Investasi Langsung Konstruksi or KLIK), officially launched on February 22nd 2016, is a license that will be given to the investor who have investment plan in certain industrial/ bonded zones. With this license, investor is allowed to do the Construction-Stage directly after obtaining Principle License (IP).
Once the KLIK license is obtained, the investor is allowed to obtain other licenses paralelly while do the Construction-Stage, such as Building Permit (IMB), Environmental Permit (AMDAL and UKL/UPL), etc.
(Note: these licences should be completed prior entering Commercial-Stage)
This facility can be enjoyed by any investor because there are no minimum limits required for investment value or the amount of labor as long as the investment plan located in certain industrial/ bonded zones assigned by Government of Indonesia.
So far, there are 14 industrial parks that have been set up by the government to implement this facility:
As one of a support in drawing more investment, Indonesia Government, through BKPM, officially launched “The Investment Licensing Service in 3 Hours” (Layanan Izin Investasi 3 Jam or I23J) on January 11st 2016. The service, which is part of the government’s 2nd economic policy package, aims to cut the time to wrap up licensing procedure for only 3 hours from workdays normally. The total permits issued by this service are ‘8+1’ products.
Those who are using the service will receive ‘8+1’ licensing products, such as:
The criterias to get this investment quick service are:
In accordance with Regulation of the Chairman of Investment Coordinating Board Number 17 Year 2015 on Guidelines and Procedures for Investment Monitoring, BKPM may impose administrative sanctions for company which is not deliver investment realization report (LKPM) during project completion periode and no extenstion of the project completion period.
Administrative sanctions can be done by:
Indonesia’s labor is filled with a total absorption including erector, seasonal and contract during the reporting period while Foreign workers filled in the employment of foreign workers who have obtained foreign working permit.
Fixed Capital consists of the purchase value and development of land, buildings, machinery/equipment and spare parts and others. The details of these columns are as follows:
Realizable value of the investment to domestic investment companies is in the form of Rupiah (IDR) while the foreign companies is in the form of United States Dollars (USD) or Rupiah (Rp). Additional columns of investment realization filled with additional value during the reporting period while the total column is filled with the value realization of investment projects in the reporting period (accumulated value) with the previous quarterly period.
If at the time of the reporting period there were no additional investments realizable value, then the additional column filled with 0 (zero) so that the column value of total current quarter equal to the total column of the previous quarter.
For a company that just sent the first LKPM, Additional Columns of investment realization value equals with the value of total investment realization column.
Based on Regulation of the Chairman of Investment Coordinating Board Number 17 Year 2015 on Guidelines and Procedures for Investment Monitoring, after getting investment permission from BKPM, the company has the obligation to submit a report on Investment Realization Report (LKPM). For companies in the construction stage, the company must submit LKPM Development Stage delivered every 3 (three) months. As for companies which already operate or in the commercial stage, have to submit LKPM and to be submitted every 6 (six) months. LKPM can be delivered directly to the BKPM by email: firstname.lastname@example.org.
As of 2015, Indonesian Government has laid the new focus on several business sectors as planned in The Investment Strategic Planning for the period of 2015-2019. These priorities sectors were selected based on the economic advantages, growth factors and productivity aspects. The sectors are Infrastructure, Agriculture, Industry (Labor-intensive industry, Import-substitution industry, Export-oriented industry, Downstream industry of natural resources), Maritime, Tourism, SEZ, and Industrial Park.
However, all industry or business fields in Indonesia is open to foreign investments unless mentioned otherwise in the Investment Guidance or previously called the “negative investment list”. This regulation attaches to the Investment Law under Presidential Regulation.
Investment together with manufacturing industry and export are expected to be the pillars of Indonesian economy. There are three aspects where investments shall contribute the most to the economy.
First, supporting sustainable economic growth. We seek quality investments, that do not only see Indonesia as a market, but also as a production base. Investments that add value to our natural resources, contribute to our export and substitute our import.
Second, creating jobs, improving productivity and competitiveness. Investment in manufacturing sectors is prioritized, especially laborintensive industry, export-oriented and import-substitution industry, and also downstream industry of natural resources.
Third, promoting equal development distribution. We encourage more investments realized outside Java Island, the most populated island in Indonesia. We offer more incentives especially to investments located in eastern part of Indonesia, such as Nusa Tenggara, Maluku, and Papua.
First you have to check whether your business is open for FDI in Indonesia in accordance to the Indonesia Investment Guidance (Daftar Negatif Investasi or DNI) under the Presidential Decree No. 39 of 2014 that stipulates the sectors which are closed and open with conditions to investment. If the business sector is not listed in the DNI, the business will be considered open and allowed for up to 100% foreign ownership.
The legal entity of the FDI Company should be a Limited Liability Company or Ltd. (Perseroan Terbatas or PT). The ‘PT’ company should be owned by minimum 2 parties, each party is either individual or corporate. According to Indonesian law, any company with any percentage of foreign shareholding is considered as a FDI Company or foreign-owned-PT-company, in short ‘PT. PMA’. Additionally, it is imperative that new investor has to learn more about the location of their investment such as the market activity, office location, manpower procurement, and the regulations pertaining to their business sector.
The FDI is required to have minimum investment ABOVE IDR 10.000.000.000,- (ten billion Indonesian Rupiah), or equivalent to current exchange rate. This applies to all business sectors and the amount of minimum investment is not including the value of the land and buildings owned by the company. In addition, the minimum paid up capital of a FDI Company (PT. PMA) is IDR 2.500.000.000 (two & a half billion Indonesian Rupiah). For each shareholder, at least IDR 10.000.000,- (ten millions Rupiah) or its equivalent in USD.
Yes, you can setup company in any part of Indonesia. However, there are restrictions for some business sectors in certain regions. The Government has mandated (in PP No.24/2009 and UU No.3/2014) that manufacturing companies are located in industrial estates and that tenants’basic needs must be met, for example water and electricity.
Today, the Indonesian Industrial Estates Association (Himpunan Kawasan Industri Indonesia or HKI) has 69 company members, in 13 provinces, covering total gross area of about 45,600 hectares. There are more than 9,000 manufacturing companies operating and employing some 4 million people in the industrial estates. These figures do not include industrial estates non HKI members.
Main attractions of industrial estates are that the development is comprehensively planned to assure a strategic location, accessibility, building ratio, infrastructure and supporting services, secured land titles, and continuous maintenance and operation management.
15 new industrial estates will be developed until 2019. 13 industrial estates outside Java Island will be allocated for natural resources processing industry. While the other 2 in Java Island will be allocated for labor-intensive, high-technology and consumer goods industry.
There are eight existing Special Economic Zone or SEZs (Kawasan Ekonomi Khusus or KEK) in Indonesia and until 2019, 11 new SEZs will be developed troughout the archipelago. Each of SEZs is developed for specific sectors. The existing SEZs are:
The government offers additional fiscal and nonfiscal facilities for industries in SEZ. About 20-100% tax discount for period up to 25 years is offered under certain criteria. The government also provide free value added tax for importation of raw materials. In addition, foreign investors in SEZs are eligible to own properties and receive residential permits.
It depends on the business sector. Generally, trading or service provider company could start the business operation as soon as it receives the Business License (Izin Usaha or IU). However, other business sectors, such as manufacturing, plantation, information and technology, education, medical and health, and hospitality, should obtain specific licenses pertaining to their business sector from relevant government agencies or ministries.
Yes, foreign investor could setup a Representative Office to study the market for a maximum period of 5 years. 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.
The requirements and procedure to form a representative office in Indonesia is governed by the Regulation of The Chairman of BKPM Number 15 Year 2015 Regarding Guidelines and Procedures for Licensing and Non-Licensing Investment. According to this regulation there are 3 types of Representative Offices which can be incorporated in Indonesia, namely:
For the time being, application for Principle License (IP) and Business License (IU) has to go through BKPM-Online Service Platform or Electronic Investment Information and License Service System (Sistem Pelayanan Informasi dan Perizinan Investasi secara Elektronik or SPIPISE). Other licenses such as Import Identification Number (Angka Pengenal Importir or API) and several sectors Business License (IU) still go through BKPM OSS-C in Jakarta.
There is NO COST to be spent at all to have the licenses, it is free of charges
The entire process would take a maximum of 3 (three) working days since completing the application letter and its attachments.
Request Business Permit submitted by the company when the company is ready for production/operations, either goods or services (where the main engines of production companies have installed 80% and/or the office is ready to receive customers) as the implementation of the above Registration/ Consent Principle/Approval investment owned company, unless it is specified by sectoral legislation.
The regulation of Central Bank of Indonesia requires that all banking transactions (such as capital injection, administration of loans, payment of capital equipment, raw material, etc.) of a newly established PT PMA be transacted through a special foreign investment bank account in Indonesia. In general, the required documents to open such account are as follows:
Fundamentally, all of business fields are opened for investment in the framework of Foreign Direct Investment as well as Domestic Direct Investment, except some of business fields on the provision list of business fields that are closed and openned with certain requirements in the field of investment (Investment Negative List/Daftar Negatif Investasi (DNI)).
These provisions are stipulated in Presidential Regulation Number 44 Year 2016 concerning Lists of Business Fields Closed to Investment and Business Fields Open with Conditions to Investment, that was signed by President Joko Widodo on May 12, 2016. This new regulation are meant to substitute the previous regulation, Presidential Regulation Number 39 Year 2014.
The requirements and procedure to form a representative office in Indonesia is governed by the Regulation of the Chairman of BKPM Number 15 Year 2015 concerning Guidelines and Procedures for Licensing and Non-Licensing Investment. According to this regulation, there are 3 types of representative offices which can be incorporated in Indonesia, namely:
Indonesia is the fourth most populous country in the world with the young workforce and a large and growing domestic market due to the demographic bonus, making Indonesia one of the world’s leading economies.
As the only G-20 member in Southeast Asia and an active voice to develop world concerns, Indonesia plays a more significant role in the global stage. Standard Chartered foresees Indonesia’s entry into the G-7 by 2030 and projects that the Indonesian economy could become the 10th largest by 2020 and the 5th largest by 2030.
Being the world’s 3rd largest flourishing democracy with the largest Muslim populations, Indonesia has a stable policy situation with high commitment to implement structural reforms. Worldwide Governance Indicators Survey conducted by the World Bank indicated that Indonesia has improvements in several indicators such as Government Effectiveness, Regulatory Quality, and Control of Corruption.
Indonesia’s economic growth which continues to rise along with the improvement in investment climate has upgraded Indonesia’s ease of doing business rank from 91 to 72 by 2018. In addition to that, Indonesia has leaped to the fourth place, from previously on the eighth place, as a prospective investment destination 2017-2019 based on the survey by the United Nations Conference on Trade and Development (UNCTAD).
Indonesia has abundant of natural resources. It also has the second highest biodiversity level in the world after Brazil. Aside from the flora and fauna, Indonesia is home to many ecosystems. From beaches, small islands, coral reefs, seaweed beds, sand dunes, tidal flats, coastal mud, mangroves, and others make Indonesia the most attractive place for investment, especially in the tourism sector.
The challenges with Indonesian infrastructure have a lot to do with the geographical realities in the country, as a vast archipelago. The fiscal budget allocated for infrastructure increased more than doubled in the last five years and the private sector’s contribution is strongly encouraged and facilitated.
The Government has issued several policies, including the provision of government guarantees, land acquisition for development projects, and viability gap fund for part of Public-Private Partnerships or PPP (Kemitraan Pemerintah dan Badan Usaha KPBU) project’s construction cost. In addition, the government established some financial institutions to help finance PPP projects and increase their bankability.
President Joko Widodo has set an infrastructure target in the five-year development plan, to be achieved by 2019. Indonesia, among others, will build 15 new airports, increase the capacity of 24 seaports, add 60% to current railway tracks, construct 1,000 km of toll roads, as well as 35,000 megawatts of power.
As of 2015, the Indonesian Government has laid the new focus on several business sectors as planned in The Investment Strategic Planning for the period of 2015 – 2019. These Priority sectors were selected based on economic advantages, growth factors, and productivity aspects. The sectors are as follows:
1. Infrastructure: 35 GW power generation, 24 seaports, multimoda transportation
2. Agriculture: Food estate, corn plantation, cattle, salt
4. Maritime: shipbuilding, fishery industry, cold storage, marine technology
5. Tourism, Special Economic Zone or SEZ (Kawasan Ekonomi Khusus or KEK) & Industrial Park: strategic tourism areas, MICE, 8+11 SEZs, 15 new industrial parks
6. Digital economy: e-commerce, financial technology, IT-based creative economy
In addition to the above, most industries and other business fields in Indonesia are open for foreign investments unless mentioned otherwise in the Investment Guidance or previously called the negative investment list. This regulation attaches to the Investment Law under Presidential Regulation.
Investment together with manufacturing industry and export are expected to be the pillars of the Indonesian economy. There are three aspects where investments shall contribute the most to the economy.
First, supporting sustainable economic growth. We seek quality investments, that do not only see Indonesia as a market but also as a production base. Investments that add value to our natural resources, contribute to our export and substitute our import. We also seek responsible investments that considering environmental and social factors to embrace long term benefit.
Second, creating jobs, improving productivity and competitiveness. Investment in manufacturing sectors is prioritized, especially labor-intensive industry, export-oriented and import-substitution industry, and also downstream industry of natural resources.
Third, promoting equal development distribution. We encourage more investments realized outside Java Island, the most populated island in Indonesia. We offer more incentives especially to investments located in the eastern part of Indonesia, such as Nusa Tenggara, Maluku, and Papua.
Currently, there are 12 Special Economic Zones (SEZ) in Indonesia. Each of SEZs is developed for specific sectors. The existing SEZs are:
To establish a foreign direct investment company in Indonesia you must first decide what business sector you are going to invest based on Indonesian Classification for Business Sector (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI).
Then, you must check whether the business sector is open with requirements or closed for foreign direct investment based on the Presidential Regulation about Negative Investment List (Daftar Negatif Investasi or DNI). If the business sector which you are interested in is not regulated, and no other restrictions from related technical ministries, then it means the business sector is open for foreign direct investment with a maximum foreign ownership of 100%.
The legal entity of the Foreign Direct Investment or FDI company should be a Limited Liability Company or Ltd (Perseroan Terbatas or PT). The ‘PT’ company should be owned by a minimum of 2 shareholders. Those can be individual or corporate shareholders or a combination of both.
The minimum investment for an FDI company is above IDR 10 billion (excluding land and building cost), while the minimum paid up and issued capital is IDR 2.5 billion. For each shareholder, at least IDR 10 million or its equivalent in USD is required.
Yes, you can set up a company in any part of Indonesia. However, there are restrictions for some business sectors in certain regions, Industrial Law No. 3 Year 2014 and Government Regulation No. 142 Year 2015 has mandated that any industrial activities shall be located in industrial estates.
Today, the Indonesian Industrial Estates Association (Himpunan Kawasan Industri Indonesia or HKI) has 87 company members, in 18 provinces, covering a total gross area of about 86,059 hectares. There are more than 9,950 manufacturing companies operating and these figures do not include industrial estates non-HKI members.
Main attractions of industrial estates are that the development is comprehensively planned to assure a strategic location, accessibility, building ratio, infrastructure and supporting services, secured land titles, and continuous maintenance and operation management, as well as integrated environmental management.
Several industrial estates will be developed until 2019, 14 of those located outside Java Island will be allocated for the natural resources-based processing industry. While the other 2 in Java Island will be allocated for labor-intensive, high-technology, and consumer goods industry.
The process of company establishment in Indonesia requires Investor to issue Article of Association and legalization of the company, including taxpayer number (Nomor Pokok Wajib Pajak or NPWP), through Public Notary.
Yes, a foreign investor could set up a Representative Office to study the market. Foreign Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA) is an office incorporated by an overseas company to represent itself 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 are other profit-generating activities.
The requirements and procedure to form a representative office in Indonesia is governed by the Regulation of BKPM No. 6 of 2018 regarding Guidelines and Procedures for Licensing and Facility of Investment. To obtain the license, all requirements should be submitted online at https://nswi.bkpm.go.id
The functionality of KPPA is limited to:
Important Notes for KPPA:
The regulation of the Central Bank of Indonesia requires that all banking transactions (such as capital injection, administration of loans, payment of capital equipment, raw material, etc.) of a newly established PT. PMA should be administered through a special foreign investment bank account in Indonesia. In general, the required documents to open such account are as follows:
Basically, to start a business company should obtain the following licenses:
Yes, There are. You can get them through OSS (Online Single Submission). An online system creates by Indonesia Government to simplify your investment registration.
All new and existing individual or business entity (Include MSMEs) and representative office can register through OSS Account.
I. Registering OSS Account
II. Single Business Number (NIB)
1. Log in to https://oss.go.id
2. Fill the data as follows:
3. NIB also serves as:
III. Business License is a license to start business operations
IV. Location Permit (Izin Lokasi)
V. Environmental Permit (Izin Lingkungan)
An environmental permit is given to investors for conducting business and/or activity which requires an environmental protection plan (Analisis Mengenai Dampak Lingkungan or AMDAL, Upaya Pengelolaan Lingkungan Hidup - Upaya Pemantauan Lingkungan Hidup or UKL-UPL):
VI. Building Construction Permit (Izin Mendirikan Bangunan or IMB)
Building Construction Permit is issued by the local government (Regency/City) to the company in order to build new, alter, expand, decrease, and/or foster building:
Maximum 30 days after receiving a building permit from OSS, investors should start to fulfill its commitment to regional government or if the project required AMDAL, the fulfillment of commitment of ‘IMB’ is 30 days after the completion of AMDAL.
VII. Commercial/Operational License
The license is required when the company is ready for starting commercial/ operational stage:
The investor should make payment of non-tax state revenue (Penerimaan Negara Bukan Pajak or PNBP), retribution or regional levies as required and send payment receipt to OSS System:
IX. Expansion of Business Licenses and Data Renewal
Business licenses can be applied online through OSS except for several business sectors. They are financial, mining (oil and gas, mineral and coal, and geothermal), and property sectors.
For these sectors, licenses can be applied through One Stop Service Center (Pelayanan Terpadu Satu Pintu or PTSP Pusat) BKPM.
Regarding the business licenses, PTSP Pusat has 3 types of service, that are:
Other than that, PTSP Pusat BKPM also provides consultation and complaint services.
PTSP Pusat at BKPM is established to provide a simpler, faster, more transparent and integrated service for investors in Indonesia.
At the PTSP Pusat, there are Representative Officers from 19 ministries and government institutions providing consultation and accepting the application for licenses which are not included in OSS.
PTSP Pusat in BKPM offers activities such as:
Priority Service (Layanan Prioritas) is a service provided for eligible investors who meet requirements.
Through Priority Service, investors will obtain:
8 Types of licenses:
The criteria to get this service are:
The exemption from the above criteria is valid for:
Priority Service for ESDM Sector
Yes. Indonesian Government provides investment incentives as follows:
Import Duties as regulated in the Regulation of BKPM No. 6 of 2018 based on the Regulation of Minister of Finance No. 176/PMK.011/2009 of 2009 as amended by No. 188/PMK.010/2015 of 2015.
All investment projects of FDI as well as Domestic Direct Investment or DDI (Penanaman Modal Dalam Negeri or PMDN) projects which are issued by the Online Single Submission (OSS) system, will be granted the exemption of Import Duty so that the final tariffs become 0%. This facility applicable on:
According to the Regulation of Minister of Finance No. 66/PMK.010/2015, the exemption of import duty will also be granted to the importation of capital goods of electricity for an import period of 2 years and can be extended by a maximum 1 year. This facility is not applicable for transmission, distribution, supporting services and repairing equipment.
As stated in the Regulation of Minister of Finance No. 259/PMK.04/2016, the importation of goods in term of Contract of Work or CoW (Kontrak Karya or KK) or Coal Mining Business Work Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara or PKP2B) will be granted the exemption and/or relief from import duty based on the owned contract.
The application can be requested by attaching a recommendation letter from Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources of the Republic of Indonesia.
Tax Facilities (Tax Allowance) as regulated in the Regulation of BKPM No. 6 of 2018:
Based on the latest Government Regulation No. 18 of 2015 as amended by No. 9 of 2016, pertaining to Income Tax facilities for investment in certain business sectors and/or in certain locations, the domestic and foreign investors will be granted tax allowances in certain sector and/or area.
Facilities provided by the Government Regulation No. 18 of 2015 as amended by No. 9 of 2016 are:
For detailed information on the list of business sectors that are eligible for tax allowance, please refer to the Attachment I & II of Government Regulation No. 9 of 2016. There are 71 business sectors listed in Attachment I and 74 business sectors listed in Attachment II.
Procedure on the Application for Tax Allowance
Below is the framework on the application procedures:
The following procedures are the simplified framework on tax allowance application procedure. The full and complete detail of it is available in the Regulations of BKPM No. 6 of 2018.
According to the Regulation of the Ministry of Finance No. 35/PMK. 010/2018 and the Regulation of the Chairman of BKPM No. 5 of 2018 the applicant or company should meet the following criteria:
As regulated in the Ministry of Finance No.35/PMK.010/2018 of 2018 and the Regulation of BKPM No.5 of 2018, reduction in Corporate Income Tax (Tax Holiday) is given at 100% (one hundred percent) of the amount of the Corporate Income Tax owed. The period of the reduction is provided with the following conditions:
Starting in 2016, the government accelerates the customs clearance process for imported capital goods, aiming at speeding up a project under construction. Capital goods no longer need screening at the ports. So, it will cut the processing time from five days to only 30 minutes.
Since September 2015, the Indonesian government has been issuing several economic policy packages, among others, to improve the investment climate. We set a minimum wage formula so investors can predict the annual increase of wage, considering inflation and economic growth.
We support business to reduce their production costs, by cutting the price of fuel, gas, and electricity for industry. We revised the Negative Investment List (DNI) to be more open for foreign investment, specifically intended for sectors: industrial, creative economy, and tourism.