New BKPM Regulation on Guidelines and Procedures for Investment

The Indonesian Investment Coordinating Board (“BKPM”), which is now also known as the
Ministry of Investment, has issued a new regulation on the guidelines and procedures for
investment, namely the BKPM Regulation No. 4 of 2021 concerning Guidelines and
Procedures for Risk-Based Business Licensing Services and Investment Facilities (“BKPM Reg
4/2021”).

KEY PROVISIONS

1. Higher Paid-Up Capital for Foreign Investment Company (“PMA Company”)

BKPM Reg 4/2021 introduces the new minimum paid-up capital requirements for
PMA Company which is IDR 10 billion (unless determined otherwise by the prevailing
laws). This is significantly higher than the previous requirement which is IDR 2,5
billion.

While this new paid-up capital requirement must be fulfilled immediately by new
PMA Company to obtain the required licenses from the Online Single Submission
System (“OSS”), it remains to be seen whether it will have retrospective effect on the
existing PMA Company as the BKPM Reg 4/2021 is silent on this matter. Regardless,
this is certainly unfavourable for the development of foreign investment in Indonesia
despite the relaxation of the negative list recently implemented by the government.

2. Risk-Based Business Licensing

Following the implementation of the Presidential Regulation No. 5 of 2021

concerning the Implementation of Risk-Based Business License, BKPM now
implements the risk-based business licensing through the OSS based on the
determination of the level of risk, the scale rating of business and land area.

The risk level is associated with the standard business code (KBLI) of the business
fields and will determine the type of requirements that must be fulfilled to conduct
said business fields. The risk level consists of the following:

a. low;
b. medium low;
c. medium high; and
d. high

The determination of risk level will refer to the Criteria and Standard Procedure
(NSPK) of the supervisory Ministry/Agency of each business field.

3. Immigration Facility for PMA Company

PMA Company may apply for immigration facility from the BKPM in the form of
recommendation for the following scope:

a. Recommendation to convert Visit Permit to Limited Stay Permit

 The persons sponsored by the PMA Company must be fulfilled the following
criteria to be eligible for this recommendation:

i. He/she is the shareholder and Director/Commissioner in said PMA

Company, with the minimum share ownership of IDR 1 billion or its
equivalent in USD; or

ii. He/she is the shareholder in said PMA Company (not

Director/Commissioner), with the minimum share ownership of IDR
1,125 billion or its equivalent in USD.

b. Recommendation to convert Limited Stay Permit to Permanent Stay Permit

The persons sponsored by the PMA Company must be fulfilled the following
criteria to be eligible for this recommendation:

i. He/she is the shareholder and Director/Commissioner in said PMA

Company, with the minimum share ownership of IDR 1 billion or its
equivalent in USD; or

ii. He/she is the shareholder in said PMA Company (not

Director/Commissioner), with the minimum share ownership of IDR 10
billion or its equivalent in USD.

4. Submission of Mandatory Manpower Report (“WLTK”)

For companies that have not submitted the WLTK, the Business Identification
Number (“NIB”) is the proof of the first submission of the WLTK. Upon obtainment of
the NIB, companies will be obligated to periodically submit the WLTK each year in the
month of December in accordance with the prevailing laws in manpower sector.