Procedures, Approvals & Licenses To Invest In Indonesia Part 1

This section explains approval, license and permits and their application procedures that are to be completed before an investor can implement his/her intention to invest in Indonesia. The sector of business of interest to the investor should not conflict with the restrictions stated by the Government of Indonesia. Therefore, it is suggested that an investor should first consult the investment sector restrictions before making his/her decision to invest.
Approvals and/or licenses are grouped into 4 main categories:

1. Approval in Investment Stage
2. Approval, Licenses, Decrees, and Permits in Implementation Stage
3. Approvals and Letters on Changes in Investment Plan
4. Miscellaneous

1. Approval in Investmen Stage

An Approval in investment stage can be categorized in two main type: approval for domestic investment and approval for foreign investment.In Domestic investment , there are some approval type i.e: Approval For Domestic Investment, Plan For Employment of Foreign Personnel Decree,TA.01 Recommendation, Expatriate Work Permit Decree, Other Approvals, Licenses, Decrees and Permits Not issued by BKPM or BKPMD, Approval For Expansion of Investment, Approval For the Modification of Project Location, Approval For The Modification of Lines of Business and Production, Approval For The Modification Of The Use Of Expatriates, Approval For The Modification in Investments and Sourcing of Financing, Approval For The Modification of Share Ownership Of PMA Companies, Approval For The Modification in Status OF PMA Companies Into PMDN Companies, Approval For The Modification in Status Of PMDN or Non-PMA/PMDN Companies into PMA Companies, Approval For Extension of Project Completion Period, Approval For Merger, Letter of Modification in Names of Companies, Letter of Modofication in Forms/Patterns of Partnership and/or Business Partners Especially For Business Lines Requiring Partnership with Small-scale Business, Approval For Domestic Investment in Non-Oil/Gas Mining Sector, Approval For Foreign Investment in Non-Oil/Gas Mining Sector, and Approval For The Establishment Of Capital Participation-Based Companies.


APPROVAL OF DOMESTIC INVESTMENT

According to Decrees of the Chairman of The Investment Board (BKPM) Numbers 57, 58, 59, 60 and 61 Year 2004 concerning the Application Procedures, applications for new investment as well as the alteration projects under PMA and or PMDN arrangements shall be filed to the Head of BKPM.

A.How To Apply

Applications for new investment under PMDN arrangements can be filed by:

• limited liability companies (Perseroan Terbatas, PT);
• partnership companies (Commanditaire Vennootschap, CV);
• firms (Firma, Fa);
• cooperatives business units (Badan Usaha Koperasi);
• state owned enterprises (Badan Usaha Milik Negara, BUMN);
• regional-administration owned companies (Badan Usaha Milik Daerah; BUMD);
• individuals.

Applications for new investment as well as the alteration projects under PMDN arrangements shall be filed to the Head of BKPM. Applications for new investments under PMDN arrangements shall be filed by using Model I/PMDN form. Applications for alterations of investment projects under PMDN arrangements shall be filed using other model forms.

B. Approval Of Application

Approval of the applications for new investment under PMDN arrangements shall be issued in the form of letter of approval of domestic investments (Surat Persetujuan Penanaman Modal Dalam Negeri, SP-PMDN) in the form of letter approval for alterations/extension of domestic investments (Surat Persetujuan Perubahan/Perluasan Penanaman Dalam Negeri, SP Perubahan/Perluasan-PMDN)..

SP-PMDN shall be issued by Head of BKPM and shall be issued not later than 10 (ten) working days starting from the receipt of correct and complete applications.

Local Permits shall be issued by;

1. Governors/Heads of Provincial Regions (in this case Chairmen of local Investment Bodies) when the applications were filed to the Chairmen of local Investment Bodies for the Extension of Working Permits of the foreigners working in the regions within the province. Notice that the Chairmen of local Investment Bodies are staffs of Governors/Heads of Provincial Regions. Approvals issued by Governors/Heads of Provincial Regions are, in principle, approvals issued by Chairmen of local Investment Bodies for the Governors/Heads of Provincial Regions. For simplicity, approvals issued by Chairmen of local Investment Bodies, hereafter, refer to approvals issued by Chairmen of local Investment Bodies for the Governors/Heads of Provincial Regions.
2. Regents/City Majors or Heads of Regencies/Cities in Regions (in this case Chairmen of local Investment Bodies of regencies/cities) when the applications were filed to the Chairmen of local Investment Bodies of regencies/cities for the Sites/Locations, Land Title/Usage of Land, Building Permit and the Environmental permit. Notice that the Chairmen of local Investment Bodies of Regencies/Cities are staffs of Regents/City Majors or Heads of Investment Bodies of Regions/Cities. Approvals issued by Regencies/Cities in Regions are, in principle, approvals issued by Chairmen of local Investment Bodies for the Regents/City Majors of Regencies/Cities. For simplicity, approvals issued by Chairmen of local Investment Bodies, hereafter, refer to approvals issued by Chairmen of local Investment Bodies for the Regents / City Majors or Heads of Regions.

C. Other Provisions

PMDN companies with SP-PMDN shall file applications for investment implementation licenses required for the realization of their investments. SP-PMDN shall be automatically cancelled if no realization of projects taken place in the form of concrete activities for 3 (three) years for the new projects and for 2 (two) years for the extension projects starting from the date of its issuance. Concrete activities consist of administrative and physical ones.

Concrete administrative activities shall be those for the following licensing:

• the location, building/space contracts for services business; and
• bank accounts in the names of PMDN companies; and
• customs approval letter for capital goods; and/or
• limited importer's identification number; and/or
• decision on the plan for employment of foreign personnel; and/or
• building construction permit; and/or
• Nuisance Act permit; and/or
• deed of the establishment of companies already validated by the Minister of Justice for capital participation based companies).

Concrete physical activities shall be those already conducted: for industries: there are main activities in the form of land clearance covering at least 25 percent of the areas contained in SP-PMDN; or for services and capital participation (holding): there are main activities in the form of land clearance covering at least 25 percent of the areas contained in SP-PMDN, or office/building space

2. Plan For Employment Of Foreign Personnel Decree

A. What is Plan For Employment Of Foreign Personnel?

Plan for employment of foreign personnel (Rencana Penggunaan Tenaga Kerja Asing Pendatang, RPTKA) is a plan regarding the number, functions and employment periods of foreign personnel needed by PMDN or PMA companies to implement their investment projects.

B. How to Apply

• Applications for RPTKA shall be filed to Head of BKPM.
• Applications for RPTKA shall be filed by using Form RPTKA.

C. Approval Of Application

Approval of application for RPTKA shall be issued in the form of RPTKA decrees (SK-RPTKA).SK-RPTKA decrees shall be issued by Head of BKPM on behalf of the Minister of Manpower. SK-RPTKA decrees shall be issued not later than 4 (four) working days after the receipt of correct and complete applications

APPROVAL OF FOREIGN INVESTMENT

A. How to Apply

Applications for new investment under PMA arrangements can be filed by:

• foreign citizens and/or foreign statutory bodies and/or PMA companies;
• foreign citizens and/or foreign statutory bodies and/or PMA companies along with Indonesian citizens and/or Indonesian statutory bodies.

Applications for new investment as well as the alteration projects under PMA arrangements shall be filed to the Head of BKPM Applications for new investments under PMA arrangements shall be filed by using Model I/PMA form. Applications for alterations of investment projects under PMDN arrangements shall be filed using other model forms.

B. Approval of Applications

Approval of applications for new investment as well as the alteration projects under PMA arrangements shall be issued in the form of letter of approval of foreign investments (Surat Persetujuan Penanaman Modal Asing, SP-PMA) and in the form of letter approval for alterations/extension of foreign investments (Surat Persetujuan Perubahan/Perluasan Penanaman Modal Asing, SP Perubahan/Perluasan-PMA).

SP-PMA shall be issued by the Head of BKPM and shall be issued not later than 10 (ten) working days starting from the receipt of correct and complete applications.

Local Permits shall be issued by;

1. Governors/Heads of Provincial Regions (in this case Chairmen of local Investment Bodies) when the applications were filed to the Chairmen of local Investment Bodies for the Extension of Working Permits of the foreigners working in the regions within the province. Notice that the Chairmen of local Investment Bodies are staffs of Governors/Heads of Provincial Regions. Approvals issued by Governors/Heads of Provincial Regions are, in principle, approvals issued by Chairmen of local Investment Bodies for the Governors/Heads of Provincial Regions. For simplicity, approvals issued by Chairmen of local Investment Bodies, hereafter, refer to approvals issued by Chairmen of local Investment Bodies for the Governors/Heads of Provincial Regions.
2. Regents/City Majors or Heads of Regencies/Cities in Regions (in this case Chairmen of local Investment Bodies of regencies/cities) when the applications were filed to the Chairmen of local Investment Bodies of regencies/cities for the Sites/Locations, Land Title/Usage of Land, Building Permit and the Environmental permit. Notice that the Chairmen of local Investment Bodies of Regencies/Cities are staffs of Regents/City Majors or Heads of Investment Bodies of Regions/Cities. Approvals issued by Regencies/Cities in Regions are, in principle, approvals issued by Chairmen of local Investment Bodies for the Regents/City Majors of Regencies/Cities. For simplicity, approvals issued by Chairmen of local Investment Bodies, hereafter, refer to approvals issued by Chairmen of local Investment Bodies for the Regents / City Majors or Heads of Regions.

C. Other Provisions

PMA companies with SP-PMA shall file applications for investment implementation licenses required for the realization of their investments. SP-PMA shall be automatically cancelled if no realization of projects taken place in the form of concrete activities for 3 (three) years starting from the date of its issuance. Concrete activities consist of administrative and physical ones.

Concrete administrative activities shall be those for the following licensing:

1. the location license or building lease agreement (especially for PMA companies in services sector) or regional mining license or mining concession (especially for PMA companies in the field mining); and
2. bank accounts in the names of PMA companies (especially for new PMA companies); and
3. customs approval letter for capital goods; and/or
4. limited importer's identification number; and/or
5. decision on the plan for employment of foreign personnel (especially for PMA companies using expatriates); and/or
6. building construction permit; and/or
7. Nuisance Act permit; and/or
8. deed of the establishment of companies already validated by the Minister of Justice for capital participation based companies). Concrete physical activities shall be those already conducted:

• for industries: there are main activities in the form of land clearance covering at least 25 percent of the areas contained in SP-PMA; or
• for services and capital participation (holding): there are main activities in the form of land clearance covering at least 25 percent of the areas contained in SP-PMA, or office/building space.