LEGAL OPINION

A. INTERNAL LEGAL OPINION (FROM YOUTH TO SENIOR LAWYER)

B. LEGAL OPINION TO CLIENTS
C. LEGAL OPINION FOR A CONTRACT
A. LEGAL OPINION FOR INTERNAL

Subject Foreign companies want to make an investment in Indonesia by establishing a Joint Venture
company and do business cooperation with domestic companies:

Facts
Shinagawa Australasia Pty REFRACTORIES LIMITED is located at 23 Glastonbury Avenue, Unanderra, New
South Wales, Australia or abbreviated (SRA) in fact acting as a foreign investor and position themselves
as the FIRST who want to do investment in Indonesia, in cooperation with PT Jakarta ADUCCO MIGHTY ,
Indonesia or abbreviated (AP) next to the position as the SECOND PARTY system through a joint venture
partnership that will operate in the region of Indonesia. SRA is a company that manufactures and
supplies products of certain refractory materials in Australia, while the AP itself is a company engaged in
the scope of the service provider (marketing services and expertise in the sale and distribution of
products) in Indonesia.

SRA and AP want together to develop refractory products in both the sales and distribution business in
Jakarta, Indonesia (and elsewhere in the approved objectives of this joint venture) the business will
operate and be registered by Indonesian Investment Coordinating Board as (Joint Ventures ) that the
plan would essentially establish a PT that incorporate PT into two by adopting the name of both the PT
as PT Shinagawa Refractories Indonesia or abbreviated (SRI), to be operated as a joint venture in
Indonesia for the purpose than the Joint Venture alone.

Problem
1. Shape entities to be established by the foreign investor, whether such area is open to foreign
investors?
2. Adoption PT Shinagawa Refractori name as the name of PT Indonesian Joint Venture?
3. How the system in the event of dispute between foreign investors and the Government of
Indonesia?

Legislation
1. The Legislation of the Republic of Indonesia No. 25 of 2007 on Investment.
2. Presidential Regulation No. 39 Year 2014 about List of Business Fields Closed and Open with
Conditions of Business.
3. Presidential Regulation No. 76 of 2007 on Criteria and Requirements Formulation List of Business
Fields Closed and Open with Conditions of Business in the Field of Investment.
4. The Legislation of the Republic of Indonesia No. 40 of 2007 on Limited Liability Companies.
5. Legislation no. 30 of 1999 on Arbitration and Alternative Dispute resolution.
6. Convention ICSID (International Centre for Settlement Investment Dispute)
 DISCUSSION
Fact

1. Establishment of a joint venture partnership involving the Company's foreign investors with
domestic companies.
2. Rights and obligations needs to be / can be owned and carried out by foreign investors?

1. Accordance with the content of Article 5 paragraph (2) the Legislation of the Republic of Indonesia
No. 25 of 2007 on Investment, explained that:

Foreign investment shall be in the form of a limited liability company under the laws of Indonesia
and domiciled in the territory of the Republic of Indonesia, unless otherwise provided by the Act.

2. Accordance with the Legislation of the Republic of Indonesia No. 25 of 2007 on Investment, it is
mentioned that the government give equal treatment to all investors from Indonesia and foreign.
Assurance that there will be nationalized, in the event of nationalization will be compensated based
on market value of the contents according to Article 7 of the Legislation of the Republic of Indonesia
No. 25 of 2007 subsection (2).

Investor rights
- Has the right to repatriate foreign currency in the form of the capital, profits, bank interest,
dividend and other income, compensation for damages and compensation for expropriation.
- The right to information and services on the field of business is in compliance with existing
regulations.
- If the appropriate line of business then there are few incentives for certain sectors including the
reduction of income tax by 30% for 6 years, accelerated depreciation and amortization, the
imposition of PPH over dividends and compensation for losses that are older than 5 years but not
more than 10 years.
- When meeting the requirements of inter-ministerial team to obtain tax holiday that has been
required in accordance with the Regulation No. 94 of 2010.

Investor Liability
- Applying the principles of good corporate governance.
- Implement the corporate social responsibility in accordance with the Legislation of the Republic of
Indonesia No. 40 of 2007 on Limited Liability Companies.
- Creating Investment Activity Report to the BKPM.
- Realization of investments in accordance with the submission of an application that has been
done.
- Creating a climate of fair competition and avoid monopolies and it is detrimental to the state.
Problem
1. Shape entities to be established by the foreign investor, whether such area is open to foreign
investors?
2. Adoption PT Shinagawa Refractori name as the name of PT Indonesian Joint Venture?
3. How the system in the event of dispute between foreign investors and the Government of
Indonesia?

1. Platform law Article 12 of Law No. 25 of 2007 on Investment:

Paragraph (4) "The criteria and requirements of business fields closed and open with the
requirements of business as well as a list of open field with the requirements of each will be
regulated by Presidential Decree".
 Presidential Decree. 76 of 2007 on Criteria and Requirements Formulation List of Business
Fields Closed and Open with Conditions of Business in the Field of Investment.
 Presidential Decree. 39 of 2014 on List of Business Fields Closed and Business Fields Open with
Conditions to Investment.

2. Establishment In a Limited Liability Company (PT), there is no prohibition to use the company
name in a foreign language. According to Article 16 paragraph (1) of Law No.. 40 of the Limited
Liability Company, which could not / are not allowed to be used as the name of PT is the name of:
a. It has been used legitimately by another company, or the same as the name of another
company;
b. Contrary to public order and / or morality;
c. Same or similar to the name of the State institutions, government agencies, or international
agency, unless the consent of the person concerned;
d. Not in accordance with the intent and purpose, as well as business activities, or serve the
purpose and objectives of the Company without proper name;
e. Consists of a number or series of numbers, letters or series of letters that do not form a word;
f. The Company shall have the meanings as, legal entity, or civil partnership.

3. No. Act. 25 on Investment in Chapter XV describes Settlement in Article 32 paragraph (1),

paragraph (2), paragraph (3) and (4):

Paragraph (1) "In the event of a dispute in the field of investment between the Government and
investors, the parties must first resolve the dispute through consultation and consensus".

Paragraph (2) "In case of dispute settlement referred to in paragraph (1) is not reached, the dispute
can be made through arbitration or alternative dispute resolution or court in accordance with the
statutory provisions ".

Paragraph (3) "In the event of a dispute in the field of investment between the Government and
domestic investors, the parties can resolve the dispute through arbitration is not agreed, the
dispute settlement will be made in the court".

Paragraph (4) "in the event of a dispute in the field of investment between the Government and
 foreign investors, the parties will resolve the dispute through international arbitration which must
be agreed upon by the parties".

4. According to Law. 5 of 1968 on the Settlement of Disputes Between States and Nationals
Regarding Foreign Investment, Indonesia ratified the ICSID Convention. Thus the settlement of
disputes between foreign investors and the Government of Indonesia could be resolved through
ICSID.

Conclusion
1. Scope of Work to be established is open to foreign investors included and listed in Presidential
Regulation. 39 of 2014 on List of Business Fields Open with Conditions in the Field of Investment.
2. Adoption PT Shinagawa Refractory name as the name of PT Indonesian Joint Venture which
could otherwise be in use by the consideration that no one has used the name of the PT, did not
have the slightest resemblance to both state agencies, Government, International and others
have intents and purposes by the line of business of the Joint Venture with PT.
3. Settlement of disputes that may occur or arise between the Government of Indonesia to foreign
investors can be resolved through international arbitration.

Legal Opinion For Clients

Dear
Shinagawa REFRACTORIES LIMITED Australasia Pty and PT Perkasa ADUCCO
 Dear Sirs,
Herewith we submit our Legal Opinion as requested by the preparation of Legal Opinion (Legal
Opinion) in May last about investment planning in the field of trade-pruduk refractory products in
Indonesia as follows.
Legal Opinions and / or legal opinion we made our research based on the provisions of law and
rules contained and / or while the case in Indonesia is as follows:
1. The Law No. 25 of 2007 on Investment.
2. Presidential Regulation. 39 of 2014 on List of Business Fields Closed and Open with Conditions
of Business.
3. Presidential Regulation. 76 of 2007 on Criteria and Requirements Formulation List of Business
Fields Closed and Open with Conditions of Business in the Field of Investment.
4. The Law No.. 40 of 2007 on Limited Liability Companies.
5. Law no. 30 of 1999 on Arbitration and Alternative Dispute resolution.
6. Convention ICSID (International Centre for Settlement Investment Dispute)

1. The Legislation of the Republic of Indonesia No.25 of 2007 on Investment

 That to create a just and prosperous society based on Pancasila and the Constitution of the
Republic of Indonesia Year 1945 should be implemented sustainable national economic
development with democracy based economy to an end state;
  That in accordance with the mandate contained in the Consultative Assembly of the Republic of
Indonesia Number XVI/MPR/1998 of Political Economy in the context of Economic Democracy,
the investment policy should always underlie democratic economy that involves the
development of micro, small, medium, and cooperatives;
 That to accelerate national economic development and realizing Indonesia's political and
economic sovereignty is necessary to increase investment to cultivate economic potential into
real economic strength is derived by using the capital, both domestic and foreign;
 That in the face of changes in the global economy and Inonesia participation in various
international cooperation is necessary to create a conducive investment climate, promotion,
provide legal certainty, justice, and efficient by taking into account the interests of the national
economy;
 That the Law No. 1 of 1967 concerning Foreign Investment as amended by Act No. 11 of 1970 on
the Amendment and Supplement Act No. 1 of 1967 concerning Foreign Investment and Law
Number 6 of 1968 on Investment of the Interior, as amended by Act No. 12 of 1970 on the
Amendment and Supplement Act No. 6 of 1968 on Domestic Investment needs to be replaced
because it no longer fit the needs of accelerating economic growth and development of national
laws, particularly in the field of investment ;

2. Presidential Regulation No. 39 Year 2014 About List of Business Fields Closed and Open with
Conditions of Business.
Appendix..
3. Presidential Regulation. 76 of 2007 on Criteria and Requirements Formulation List of Business
Fields Closed and Open with Conditions of Business in the Field of Investment.

Considering:
 That in the framework of the implementation of Article 12 paragraph (4) and Article
13 paragraph (1) of Law No. 25 on Investment is necessary menentapkan Presidential
Decree on Criteria and Requirements for Preparation of Business Fields Closed and
Business Fields Open with Conditions to Investment ;

Recollect:

1. Article 4 paragraph (1) of the Constitution of the Republic of Indonesia Year 1945;
2. Legislation of the Republic of Indonesia No. 25 of 1992 on Cooperatives (State
Gazette of the Republic of Indonesia of 1992 Number 116, Additional State
Gazette of the Republic of Indonesia Number 3502);
3. Legislation of the Republic of Indonesia No. 9 of 1995 on Small Business (State
Gazette of the Republic of Indonesia Number 47 of 1995, additional State Gazette
of the Republic of Indonesia Number 3611);
4. Legislation of the Republic of Indonesia No. 32 of 2004 on Regional Government
(State Gazette of the Republic of Indonesia of 2004 Number 125, Additional State
Gazette of the Republic of Indonesia Number 4437)
5. Legislation of the Republic of Indonesia No. 25 of 2007 on Investment (State
Gazette of the Republic of Indonesia of 2007 Number 67, Supplement to State
Gazette of the Republic of Indonesia Number 4724);
6. Government Regulation No. 44 of 1997 on Partnership (State Gazette of the
Republic of Indonesia of 1997 Number 91, Supplement to State Gazette of the
Republic of Indonesia Number 3718);
7. Government Regulation No. 32 of 1998 on the Development and Small Business
Development (State Gazette of the Republic of Indonesia of 1998 Number 46,
Supplement to State Gazette of the Republic of Indonesia Number 3743);

4. The Legislation of the Republic of Indonesia No. 40 of 2007 on Limited Liability Companies

The requirements and steps for to establish Limited Liability Company (PT) PMA
While Filing Permit for Establishment of Limited Liability Company (PT) PMA through BKPM

1. Identification of the company to be established, include:

a. Name of the Company;
b. City as a place of business domicile;
c. The number of authorized capital with the minimum provisions Rp.50.000.000 (fifty million
dollars) placing and depositing the provision of capital by at least 25% (twenty five percent) of
the authorized capital and paid up capital into the Company in accordance with Article 31 and
Article 32 Legislation of the Republic of Indonesia No. 40 in 2007 on Limited Liability Company;
d. Name of shareholders and percentage of capital;
e. The Board of Directors and Commissioners;
2. Submission of application must fill out a letter of application (Application Investment Under the
Foreign Investment Law) and attach the following documents:
1) Founder (Shareholders) foreign
a. Articles of Association in Indonesian or English, and all the changes, endorsement, or report
the notice;
b. A copy of the valid passport of the individual shareholders;
2) PMA Company
a. Articles of Association in Indonesian or English, and all the changes, endorsement, or report
the notice;
b. TIN Company;
3) Founder (Shareholders) Indonesia
a. Articles of Association in Indonesian or English, and all the changes, endorsement, or reports
for individual notifications or ID card;
b. Personal TIN;
4) The flow of the production process and raw materials (Raw Materials) required for the process
industry and process descriptions for business continuity;
5) Original Power of Attorney (with postage labels) in the case of the founder or represented
person / other party;
6) Completeness of other data required by the relevant departments expressed in the form of the
"Technical Guidance's Book on Investment Implementation"
Note: BKPM coordinated by the institutions / departments concerned. Once the file is complete,
the new license DAPT processed in the BKPM for a period of 2 months + valid license by the
board as well as Trading License (License) in the regular Limited Liability Company (PT).
7) In the business sector in terms of cooperation required
a. Cooperation Agreement (Joint Venture, Joint Operation, MOU, etc.) between small
businesses and entrepreneurs medium / large-party mentions it, the system of cooperation,
as well as rights and obligations.
b. Affidavit of small companies that qualify as a small company based Regulation No. 9 of 1995.

Establishment process of PMA

1. Having a license from BKPM issued then can begin the process of establishment of PT. PMA
Note: The name of PT. PMA can be used or has obtained the approval of the Minister.
2. Copies of certificates to be completed within a maximum period of 2 weeks of work since the signing
of the deed is done.
3. Handling domicile and TIN on behalf of PT. concerned. TIN is made to PT. PT PMA must be specific
TIN. PMA (Time + 12 working days).
Note: In this process could simultaneously do the management letter PFM (Taxable Person) on
special KPP PMA, and the next survey will be conducted by the company location or review the local
Tax Office clerk (Time  12 working days).
4. Opening an account in the name of the share capital of the Company and paid in cash to the
Company's cash. Setornya evidence submitted to the notary to complete the request validation at RI
Department of Justice.
5. Filing endorsement to the RI Department of Justice (Time  1.5 months)
6. Upon approval from the Department of Justice published, then be in the care of TDP (Help) and
WDP (Compulsory Registration Company), (Time  2 weeks)
7. Subsequently after all resolved then proceed to the maintenance of the Official Gazette (Time + 3
months) after all the procedures passed, and continued with the type of business.
Note: If the business is included in the business industry, it must do a site license, permit disorders
(HO), Industrial Permit.