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:
1. Sei Mangkei in North Sumatra Province, for Crude Palm Oil (CPO) and rubber industry, fertilizer industry, logistics, and tourism.
2. Tanjung Api-api in South Sumatra Province, for CPO, rubber, and petrochemical industry.
3. Tanjung Lesung in Banten Province, for tourism.
4. Maloy Batuta in East Kalimantan Province, for CPO, coal, and mineral industry.
5. Bitung in North Sulawesi Province, for fishery and agro industry and logistics.
6. Palu in Central Sulawesi Province, for smelters, agro industry, and logistics.
7. Mandalika in West Nusa Tenggara Province, for tourism.
8. Morotai in Maluku Province, for tourism, manufacturing industry, and logistics.
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.
- Name and address of the company
- Line of business of the company
- The articles of association
- The composition of the Board of Directors or BoD (Direksi) and the Board of Commissioners or BoC (Dewan Komisaris) of the company
- The identity of the company shareholders and the share of ownership
After the establishment of the legal entity, the public notary will register the new PT PMA to the Ministry of Justice and Human Rights of the Republic of Indonesia. Once registered, the establishment of new PT PMA will be published in the state gazette. The ratification of legal entity by the Ministry of Justice and Human Rights of the Republic of Indonesia will serve as the basis of establishment of PT PMA. From this point, the PT PMA will be able to start setting-up the company infrastructure and related operational licenses.
- Foreign Company Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA);
- Foreign Company Trade Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing or KP3A);
- Foreign Company Construction Representative Office (Kantor Perwakilan Badan Usaha Jasa Konstruksi or BUJK).
- Business Permit is a license shall be owned by the company to begin the implementation of production operations that produce goods or services, unless it’s stipulated by legislation.
- Business Permit issued separately for each sector or certain business sectors, according the provisions of the laws and regulations of the Ministry/Institutions that foster the sector or line of business.
- Business Permit valid throughout the company is still conducting business, unless 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:
- BKPM Principle License (IP), the Deed of Establishment, Company Domicile Certificate (SKDP), Tax ID (NPWP);
- The power of attorney to the person who is given the authority to open bank account;
- Resident Identity Card (KTP) or passport of the authorized person to open bank account;
- Photo of the authorized person to open bank account;
- Minimum deposit of IDR 10 million or USD 1.000.
- Written and/or online warnings;
- Restrictions on business activities;
- Suspension of business and/or investment facilities; or
- Cancellation/Revocation Investment and/or business Licenses and/or the Investment facility.
- Purchase of land as expenses incurred for procurement, including the cost of development of land.
- Buildings including factory buildings, warehouses and infrastructure that exist within the project location.
- Machinery/equipment including spare parts, whether imported or local purchases including environmental pollution prevention equipment.
- Others include transport equipment, office equipment, office inventory and the cost of feasibility studies. The Working Capital is filled with the value of expenditures for raw/auxiliary materials, salaries/wages of employees and overhead expenses.
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.
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.
- The investment license (Principle License or IP).
- The Deed of Establishment and legal entity approval from the Ministry of Justice and Human Rights of the Republic of Indonesia.
- Tax ID (NPWP).
- Company Registration Number (Tanda Daftar Perusahaan or TDP).
- Foreign Worker Employment Permit (IMTA).
- Foreign Worker Employment Plan (Rencana Penggunaan Tenaga Kerja Asing or RPTKA).
- Producer Importer Identification Number (API-P).
- Custom Registration Number (Nomor Induk Kepabeanan or NIK).
- Letter on Land Availability Information (optional).
The criterias to get this investment quick service are:
- Planned value of investment at least IDR 100 billion, and/or absorbing at least 1,000 local workers.
- The investor come in person into BKPM OSS-C, if a candidate of shareholder represents other shareholders, he/she has to bring the letter of authority.
- Import Duties
- Tax Facilities (Tax Allowance)
- Incentives for Export Manufacturing
- Incentives for Bonded Zones
- Incentives for Free Trade Zone
- The company was established as an Indonesian business entity after 15th August 2011.
- Having new investment plan which has institution of no less than IDR 1,000,000,000,000,- (one trillion Rupiah).
- Submitting statement of ability to place fund in Indonesia banking of not less than 10% of the total investment plan as refered to in letter point 2, and such fund shall not be withdrawn before the commencement of investment realization implementation.
- Be involved in “Pioneer Industry” such as:
- Upstream metal industry;
- Oil refining industry;
- Industry of organic basic chemicals derived from oil and natural gas;
- Industry of machinery that produces industrial machinery;
- Processing industry of agricultural, forestry and fishery products;
- Industry of telecommunications, information and communication;
- Marine transportation industry;
- Processing industry which is a major industry in the Special Economic Zone or SEZ (KEK); and/ or
- Economic infrastructure in addition to the use of Government and Business Entity or Public Private Partnership (PPP/KPBU) Scheme.
It is, then, eligible for the following incentives:
- An exemption from corporate income tax for a period from 5 (five) and up to 15 years, beginning from the first date of commercial production.
- Corporate Income Tax Reduction shall be granted not exceeding 100% and not less than 10% of the total amount of payable Corporate Income Tax.
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.
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:
- Foreign Company Representative Office (Kantor Perwakilan Perusahaan Asing/KPPA);
- Foreign Company Trade Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing/KP3A);
- Foreign Company Cosntruction Representative Office (Kantor Perwakilan Badan Usaha Jasa Konstruksi/BUJK).
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:
- Central Java Province:
- Kendal Industrial Park
- Bukit Semarang Baru Industrial Park
- Wijayakusuma Industrial Park
- East Java Province:
- Java Integrated Industrial and Port Estate (JIIPE)
- South Sulawesi Province:
- Bantaeng Industrial Park
- Banten Province:
- Modern Cikande Industrial Estate
- Krakatau Industrial Estate
- Cilegon Industrial Park
- West Java Province:
- Bekasi Fajar Industrial Estate Industrial Park
- Delta Silicon 8 Industrial Park
- Karawang International Industrial City Industrial Park
- Suryacipta City of Industry Industrial Park
- Medan Industrial Park
- GT Tech Park Industrial Park