Shifting to digital age : Toward paperless licensing

REGULATION OF
INVESTMENT COORDINATING
e-Licensing BOARD
NO. 13 of 2017

Deputy Chairman for Investment Services

ONE STOP SERVICE CENTER - BKPM
Jakarta, February 2018
BASIC PRINCIPLES OF FOREIGN DIRECT INVESTMENT (FDI)

Law No. 25/2007 – definition of FDI (Article 1 (3))

“Foreign investment is an investment activity to conduct business in the territory of the
Republic of Indonesia by foreign investor, whether fully funded by foreign capital or in
partnership with domestic investor”

Law No. 20/2008 – Large Companies Qualification for FDI

having net assets of more than ten billion Rupiah exclusive of land and building at their
place of business; or having maximum annual sales proceeds of more than fifty billion
Rupiah

Presidential Regulation No. 44/2016 – Lists Of Business Fields That Are

Closed To And Business Fields That Are Open With Conditions To
Investment:
Foreign investors should check whether their business field is Closed or Open With
Conditions To Investment i.e. reserved for or should be in partnership with Small, Micro, and
Medium Enterprises and/or Cooperatives; limited foreign capital ownership; should be in
certain locations; should has special licenses/permits

Regulation BKPM No. 13/2017 – procedure of investment license

The Investment Coordinating Board of the Republic of Indonesia
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INVESTMENT
LICENSING PROCEDURES
BASIC PROCEDURE FOR INVESTMENT LICENSING

Pemerintahan 3 Penanaman
Construction
persiapan Pelayanan
4 Production
1 Preparation
Daerah Modal Publik

2 PERIZINAN
REGIONAL PERIZINAN
TECHNICAL
DAERAH
LICENSING TEKNIS
LICENSING
The Investment Coordinating Board of the Republic of Indonesia
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 Before
(Chairman of BKPM Regulation
No. 14 / 2015)
investment procedures are
not differentiated
base on location and business fields
AFTER
BKPM Regulation No. 13 of 2017
investment procedures are differentiated base on location and
business fields
BUSINESS FIELD
a. Investment in the business field that BUSINESS LOCATION
requires construction phase before their
production phase (phases for building a.Investment located INSIDE SEZs,
construction, machine installation, fiscal KPBPB, IEs dan KSPN
facility utilization, enviromnetal pollution b.Investment located OUTSDIE
potential, etc). SEZs, KPBPB, IEs dan KSPN

Special Economic Zones (SEZs), Free Ports and Free

Trade Zones (KPBPB), Industrial Estates (IEs) and
b. Investment in the business field that National Tourism Strategic Zones (KSPN)

does not requires construction phase

before their production phase

Investment Licensing Products:

-Investment Registration (PI)
-Business Licenses (in accordance with business license format on each Ministerial Regulation)
The Investment Coordinating Board of the Republic of Indonesia
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INVESTMENT
NOT REQUIRED CONSTRUCTION PHASE
direct BUSINESS LICENSE

PREPARATION CONSTRUCTION PRODUCTION

• For business field that is not required construction phase,

example: trade, consultation services, etc.

BUSINESS
LICENSE
PT
(Indonesia Legal Entity)
Business License is valid during
1. Notarial Deed + operational phase
Decree of the Minister
of Justice and Human
Rights OTHER LICENSES Except if it is stated otherwise by Law.
2. Tax registration
3. Domicile legality if applicable

The Investment Coordinating Board of the Republic of Indonesia

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ASSESSMENT OF BUSINESS LICENSE

1. Legal Aspect of Legal Entity

• Notarial Deed + Decree of the Minister of Justice and Human Rights

• Tax registration, company registration, etc

2. Legal Aspect of Domicile

• Right to Build, Building permit, Leasing proof BUSINESS
LICENSE

• Foreign companies is only able to conduct their business based

on approval from government as stated on their licenses
• Every changes in licenses MUST be registered.
The Investment Coordinating Board of the Republic of Indonesia
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INVESTMENT
REQUIRED CONSTRUCTION PHASE
Project location is INSIDE SEZs/KPBPB/IEs/KSPN

Pemerintahan
1 Preparation* 2 Penanaman
Construction
persiapan Pelayanan
3 Production
Daerah Modal Publik

INVESTMENT
REGISTRATION
+ 7 LICENSES*
+ CHECKLIST
REGISTER

* Notes:
1.Notarial Deed + Decree of the
Minister of Justice and Human
Rights PARALLEL
2.Tax registration
3.Company registration 2 PERIZINAN
REGIONAL PERIZINAN
TECHNICAL
4.Employment plan
5.Working permit DAERAH
LICENSING TEKNIS
LICENSING
6.Import identification
7.Customs registration The Investment Coordinating Board of the Republic of Indonesia
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Project location is OUTSIDE SEZs/KPBPB/IEs/KSPN (START FROM JANUARY 2018)

Pemerintahan
1 Preparation* 3 Penanaman
Construction
persiapan Pelayanan
4 Production
Daerah Modal Publik

INVESTMENT
REGISTRATION
+ 3 LICENSES*

*Notes:
1. Notarial Deed + Decree of
the Minister of Justice 2 PERIZINAN
REGIONAL PERIZINAN
TECHNICAL
and Human Rights
DAERAH
LICENSING TEKNIS
LICENSING
2. Tax registration
3. Company registration The Investment Coordinating Board of the Republic of Indonesia
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ASSESSMENT OF BUSINESS LICENSES

1. Legal Aspect of Legal Entity

• Notarial Deed + Decree of the Minister of Justice and Human Rights
• Tax registration, company registration, etc
2. Legal Aspect of Domicile
• Right to Cultivate, Right to Build, Building permit, Leasing proof
• Foreign companies is only able to
conduct their business based on
3. Legal Aspect of Business Activities approval from government as stated
• Recommendation from Ministries/Government Agencies on their licenses
• Technical/operational licenses • Every changes in licenses MUST be
registered.
4. Legal Aspect of Environment
6. Minutes of Inspection (BAP)* for
• Environmental and Social Impact Assessment
industrial sector
(AMDAL/UKL-UPL) + Environmental Licenses
5. Investment Online Report (LKPM) *) Minutes of Inspection (BAP) is a report of field inspection on
the investment realization.

• Every reporting period The Investment Coordinating Board of the Republic of Indonesia
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LICENSE ISSUANCE MECHANISM AT ONE STOP SERVICE (OSS) CENTER AT BKPM

Manual submission of Online submission and product digitalization

Business license*) Investment Registration and Business License
On Stop Service
Center at BKPM
License submitted
to Ministries’
liaison officer
1
1 2

Apply through BKPM On-Line System Back

2 Applicant http://nswi.bkpm.go.id office
Applicant
3
Back
office

3
4
5

Approval
4 Stored at Company Folder Approved License will be
Administration Signing License can be Signed with Digital Signature
dowloaded by investor
http://nswi.bkpm.go.id

*) gradually depend on the readiness of the related Ministries Shifting to digital age : Toward paperless licensing

The Investment Coordinating Board of the Republic of Indonesia

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INVESTMENT PROVISIONS
REPRESENTATIVE OFFICE TYPE IN INDONESIA

Foreign Construction
Foreign Foreign Oil and Gas
Company
Representative Foreign Trade Company
Representative Office
Office Company Representative Office
(BUJKA)
(KPPA) (KPPA Migas)
Representative Office
(KPPPA)

Presidential Decree Ministry of Public Work & Law no. 22 of 2001 &
No. 90 of 2000 Ministry of Trade Public Housing Ministry Energy and Mineral
Regulation No. 10 of 2017 Resources Decree No 1454
No. 10 of 2006
K/30/MEM/2000

Issued by OSS Center at BKPM

The Investment Coordinating Board of the Republic of Indonesia
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OPENING BRANCH OFFICES IN INDONESIA

BRANCH OFFICES
may be opened in all
regions of Indonesia FDI Company

OSS Center at BKPM

Unless otherwise specified by Law (Trade, Transportation (JPT))

The Investment Coordinating Board of the Republic of Indonesia

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IMPLEMENTATION OF DIVESTMENT OBLIGATION

Obligation based on BUSINESS FIELDS PROVISION

1 Divestment obligations according to its business fields MUST EXECUTE the
divestment provision in accordance with laws and regulations.

DIVESTMENT The Obligations based on Government Regulation No. 20/1994

Divestment obligation CAN BE NOT EXECUTED if General Meeting of
Shareholers (GMS) Document does not state commitment/agreement with
any Indonesian party to sell the shares.
2 If in the future there are Indonesian parties demand to do divestment
obligations and approved by all shareholders, then it becomes
Company licenses shareholders/company’s responsibility TO EXECUTE THE DIVESTATION.
before 2007

Implementation of Divestment:
 conducted based on GMS Document  minimum share is IDR 10 million
 It is possible to buyback, with reference to the DNI regulation
The Investment Coordinating Board of the Republic of Indonesia
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VENTURE CAPITAL COMPANY PROCEDURE

Venture Capital Company (PMV) can be a shareholder in the investment company

Capital investment PMV is temporary and

DOMESTIC
should not exceed 10 (ten) years*
PMV
are treated as a The time period can be extended twice
nationwide capital with a total renewal period should not
exceed 10 (ten) years.
investment
FOREIGN
PMV If the time period is expired, the
company must transfer the PMV shares
to another party.

*Since it is approved by Ministry of Law and Human Rights

The Investment Coordinating Board of the Republic of Indonesia

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INVESTMENT FACILITIES
PROCEDURE ON EXEMPTION OF IMPORT DUTY ON IMPORTED MACHINERY, GOODS AND MATERIALS

MoF regulation 176/2009 Jo. 76/2012

ALTERATION/REPLACEMENT
application is submitted online
Decree of the MOF on
Determination for Granting ADDITION*
Exemption Facility of import duty
INVESTMENT on the imported machines EXTENSION PERIOD OF
REGISTRATION (2 Years) IMPORTATION

MOVING LOCATION OF
IMPORTED MACHINES

Main requirements to get import duty exemption for

machines:
Main requirements to get import duty exemption for BUSSINESS LICENSE -having a valid investment registration / Principle license
goods and materials : -Submitted at the latest 3 years after PI/IP is issued
having a valid business license (IU)
Submitted at the latest 2 years after IU is issued
*only for industrial sector

ALTERATION/ REPLACEMENT Decree of the MoF on

Determination for Granting *the ALTERATION application could be
Exemption Facility of import duty submitted 3 months BEFORE the Decree of
on the imported goods and Facility is issued, unless it’s completed with
EXTENSION PERIOD OF
materials * import documents (Bill of Landing, Invoice ,
IMPORTATION
(1 Year) (2 years) Contract)

The Investment Coordinating Board of the Republic of Indonesia

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PROVISION OF LOADING AND UNLOADING PORT IN ONE KPPBC

Facility of Import Duty for Machinery

Loading and unloading location for

imported machineries that have
received fiscal facility can be done in
several ports located in one KPPBC

If it is still located in one KPPBC,

company does not need to submit
masterlist amandment

The Investment Coordinating Board of the Republic of Indonesia

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PROCEDURE ON IMPORT DUTY EXEMPTION FOR CAPITAL GOODS (ELECTRICITY)

APPLICATION IS SUBMITTED ONLINE

RIB (approved by Decree of the ALTERATION/

BUSINESS ENTITY: Minister of
Directorate REPLACEMENT*)
A. PT. PLN Investment Finance on
(PERSERO) General of Determination for
Registration (PI) Granting
B. Electric Power Electricity, Exemption Facility ADDITION*)
Supply Business &
Ministry of Energy of import duty on
License (IUPTL) IUPTL the
and Mineral Imported machine EXTENTION PERIOD
Holders Resources) (2 YEARS) OF IMPORTATION *)

*Based on recommendation from Plan to Import Goods (RIBP) from Directorate General of Electricity, Ministry of
Energy and Mineral Resources

The Investment Coordinating Board of the Republic of Indonesia

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PROCEDURE ON IMPORT DUTY EXEMPTION FOR GOODS (KK/PKP2B)

APPLICATION IS SUBMITTED ONLINE

Decree of the
Minister of Finance
ALTERATION/
Masterlist on Determination for REPLACEMENT*)
Recommendation Granting Exemption
CONTRACT OF
Letter from Facility of import duty
CONTRACTOR WORKS on the importation ADDITION*)
Directorate
(KK)/PKP2B machine
General of (VALID SINCE
Mineral and Coal EFFECTIVE DATE until EXTENTION PERIOD
31 DEC current year) OF IMPORTATION *)

*Based on recommendation from Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources

The Investment Coordinating Board of the Republic of Indonesia

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TAX ALLOWANCE FACILITY
Agriculture For those taxpayers who have :
• Livestock •Principal licenses (IP) and its changes issued by
TAX ALLOWANCE • Corn Plantation
Government Regulation No. 18 of 2015 BKPM;
jo. No. 9 of 2016 • Soybean Plantation •Principal Licenses for Expansion (IP-PL) and its
• Rice farming changes issued by BKPM; or

30
• Tropical fruits plantation •Investment licenses issued by other authorized
% of investment value Power Generation agency
Reduction of corporate net • Geothermal
income tax for 6 years, 5% These three types of license must be issued after 5
each year. • Alternative/energi terbarukan
May 2015
Oil and Gas Industry

145 business fields

Eligible for tax allowance,
expanded from 143
segments in the previous
• Oil refineries
• Liquefied Natural & Petroleum Gas
• Lubricants
Manufacturing Industry
Tax payers who have chosen to obtain Tax Allowance
according to PP No. 18/2015 jo. No. 9/2016.

Taxpayers who have applied for import duty facility

regulation with additional • Iron and Steel
segment: clothing industry. • Clothing
• Semi conductors
• Electronic components
Under certain requirements • Computer
among others: investment value or • Communication devices
export orientation, manpower • Television
absorption, local content, and project • Wheel
location (especially outside Java island). • Pharmaceutical
• Comsetics
• Fish and Shrimp processing
The Investment Coordinating Board of the Republic of Indonesia
or corporate income tax reduction according to
Article 29 of Government Regulation No. 94 of 2010 is
rejected by Ministry of Finance
Notes:
Certain business fields and location are based on on
Attachment I and II of Government Regulation No. 18
of 2015 Jo. No. 9 of 2016
SOP to process TA facility is 25 working days
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TAX HOLIDAY FACILITY
8 ELIGIBLE PIONEER INDUSTRIES: CRITERIA:
TAX HOLIDAY
Ministy of Finance Regulation No. No.159/PMK.010/2015 jo. 1. Basic metal industries; •New Taxpayers
No. 103/PMK.010/2016 •One of pioneer industries
2. Oil refinery industries including
PPP •The investment plan is IDR 1 trillion at

Rp
1 trillion
Minimum investment plan
(~USD 80 million).
3. Basic organic chemicals from
natural oil and gas;
4.Machinery industries;
minimun
•Fulfilling the DER (Debt to Equity Ratio) as
stipulated in this MOF Regulation which
5. Communication devices regulate the determination of the ratio of
industries. the debt and capital of the company for

5-15 years tax exemption

With potential 20 years exemption for
project that considered strategic for
6.Agricultural processing
7. Marine transportation
8.Economic infrastructures other
the purposes of calculating the Income
Tax;
•Statement of placement funds in
Indonesia economy. than PPP. Indonesian banking at minimum 10% of
investment value;
•A legal entity whose legalization is
%
10- 100 CIT deduction established on or after August 5 of 2011.

The amount of corporate income tax

deduction shall be granted at the same
percentage every year for the period of
granting of the facility SOP to process TH facility is 45 working days
The Investment Coordinating Board of the Republic of Indonesia
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 Thank You
Terima Kasih

Indonesia Investment Promotion Centre (IIPC)

Contact Us:

LESTARI INDAH : 0811- 180-632

CONTACT US
BADAN KOORDINASI PENANAMAN MODAL (BKPM) One Stop Service Contact Center:
Jl. Jend. Gatot Subroto No. 44, Jakarta 12190 0807 100 BKPM (2576)
P.O. Box 3186, Indonesia or
Front Office at 2nd fl OSS office
or 26
E-mail to info@bkpm.go.id