LAW OF

INVESTMENT AND
CAPITAL MARKET
Group 4
Amanda Wulansary (1706065551)
Djuan Dennis Sihotang (1706065614)
Nicolette Alicia Johnson (1706028751)
Sasongko Soeparno (1706065816)
Outline

1. Incentives vs Limitation
2. Nationalization
3. Foreign Direct Investment and Transfer
Tech
 Incentives
- The applicable law Government Regulation No. 24 year 2019
- Article 1 point 4 : incentives are the support of fiscal policies from the Regional
Government to the community and/or investors to increase investment in the
regions.
- Heidjrahman Ranupandojo and Suad Husnan (1984: 1): Incentives are
wages that provide different rewards because of different achievements.
- Pangabean (2002: 93) Incentives are compensation that links salary to
productivity.
- Article 4 Provision of Incentives and/or Provision of Ease (kemudahan) is
given to the Community and/or Investors who meet the following
criteria:
- a. contribute to the increase in community income;
- b. absorb labor;
- c. use most tokal resources;
 Incentives
- The main function of incentives is to provide responsibilities and encouragement
to employees.
- Incentives guarantee that employees will direct their efforts to achieve
organizational goals.
- While the main purpose of providing incentives is to increase individual and
group work productivity (Panggabean, 2002: 93).
- Article 6 Providing incentives can take the forms of:
- a. reduction, relief or tax exemption area;
- b. reduction, relief or exemption from retribution area;
- c. providing capital assistance to micro, small businesses, and / or cooperatives
in the regions;
- d. assistance for research and development for businesses micro, small, and /
or cooperative in the area;
Limitations
- Article 7 (1): Provision of Incentives and / or Provision of Facilities to the
Community and / or Investors shall be regulated by regional regulations.
- Regional regulations referred to in paragraph (1) at least contain:
- A. the criteria for Giving Incentives and/or Giving Convenience;
- b. forms of incentives and / or facilities provided; c. type of business or
investment activity that is obtained incentives and / or facilities;
- d. the procedure for Giving Incentives and / or Giving Convenience;
- e. time period and frequency of incentives and / or Provision of facilities for
investment;
- f. evaluation and reporting of Incentives and / or Provisions.
- Article 12 : Provision of Incentives and / or Provision of Ease can be reviewed if
based on evaluation it no longer meets the criteria referred to in Article 4 or
contravenes the provisions of the legislation.
Nationalization

- Article 7 of Law No. 25 of 2007

- Nationalization = Expropriation Against the Proprietary
Rights of Investors
- By the virtue of Law, Government can take
“Nationalization” but it must be supplemented with the
amount of compensation in accordance with Market
Value
- If both parties fail to reach an agreement of
compensation, the settlement shall be made through
arbitration
 Foreign Direct Investment
Definition

Article 1 (3) of Law Number 25 Year 2007 (“Investment Law”)

concerning Investment:

“Foreign investment” means an investing activity to do business in the territory of the state of
the Republic of Indonesia that is carried out by a foreign investor both by use of all of foreign
capital and by engagement in a joint venture with a domestic investor

M. Sornarajah in his book ‘The International Law of Foreign Investment’ :

“Foreign investment involves the transfer of tangible or intangible assets from one country to
another for the purpose of their use in that country to generate wealth under the total or partial
control of the owner of the assets”
 Foreign Direct Investment

Article 5 (2) of the Investment Law:

“Foreign investments must be in the form of a limited liability company under Indonesian law, and domiciled within the
territory of the state of the Republic of Indonesia, unless provided otherwise by law.”

Article 5 (3) of the Investment Law:

“Domestic and foreign investors who make an investment in the form of a limited liability company shall:
a. subscribe for shares at the time the limited liability company is established
b. purchase shares
c. take another method in accordance with provisions of laws and regulations”

Foreign Investment relates to the Presidential Regulation of the Republic of Indonesia Number 44 of 2016
concerning Lists of Business Fields that are Closed and Business Fields that are Open with Conditions to
Investment
 Technology Transfer

Article 10 (3) of the Investment Law:

“Investment companies must improve the competency of Indonesian-national workers through job training in
accordance with provisions of laws and regulations”

Article 10 (4) of the Investment Law:

“Investment companies that employ foreign workers must conduct training and transfer technology to
Indonesian-national workers in accordance with provisions of laws and regulations”
 Technology Transfer
Government Regulation Number 20 Year 2005 concerning Transfer of Intellectual Property Technology and
Results of Research and Development Activities by Higher Education and Research and Development
Institutions:

“Alih teknologi adalah pengalihan kemampuan memanfaatkan dan menguasai ilmu pengetahuan dan teknologi antar
lembaga, badan atau orang, baik yang berada dalam lingkungan dalam negeri maupun yang berasal dari luar negeri
ke dalam negeri atau sebaliknya”

Article 18 (3) of the Investment Law:

“An investment to receive facilities as intended by section (2) shall be an investment that meets at least one of the
following criteria:

…”

d. transfers technology

…“
THANK
YOU
Andrew: how does
transfer of technology
work when it comes to
the limitations of
proprietary information
Joint venture agreement
Nationalization
It may be done by
compensation by
market value price.
How to calculate
market value does it
count the immaterial
and material cost if
the company does
not .. ?