The New Regulations on Guidelines for Doing Business in Indonesia
On 26 October 2015, Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM) has just issued 4 (four) new regulations as part of the Indonesian Government’s Economic Stimulus package. The newly issued regulations are as follows:
- Head of BKPM Regulation No. 14 of 2015 on Guidelines and Procedures for Capital Investment Principle Licenses (“BKPM Regulation 14/2015”)
- Head of BKPM Regulation No. 15 of 2015 on Guidelines and Procedures for Licensing and Non-Licensing Matters of Capital Investment (“BKPM Regulation 15/2015”)
- Head of BKPM Regulation No. 16 of 2015 on Guidelines and Procedures for Capital Investment Facilities (“BKPM Regulation 16/2015”)
- Head of BKPM Regulation No. 17 of 2015 on Guidelines and Procedures for Capital Investment Implementation Control (“BKPM Regulation 17/2015”)
The first 3 (three) regulations above replace BKPM Regulation No. 5 of 2013 as amended by BKPM Regulation No. 12 on 2013 on Guidelines and Procedures for Licensing and Non-Licensing Matters in relation to Investment. The fourth regulation replaces BKPM No. 3 of 2012 on Guidelines and Procedures for Capital Investment Implementation Control.
The purpose of the above regulations is to facilitate the new BKPM One Stop Service Center, which centralizes all applications for investment licenses in Indonesia under one office, the central BKPM. The new regulations also simplify and shorten the investment procedure in Indonesia. Each BKPM Regulation focuses on a specific phase of investment to help investors more efficiently.
Under these new regulations, every Investment established in Indonesia requires Principle License and Business License. The provision applies to both foreign investment companies (“PMA Companies”) and/or domestic investment companies (“PMDN Companies”).
Principle License must be obtained before: (i) the establishment of PMA Companies or PMDN Companies, and (ii) the change of status from PMA to PMDN and vice versa. Business License must be obtained before the established PMA or PMDN can start to operate or manufacture in Indonesia.
Aside from the provisions above, PMA Companies also have to comply with other prevailing investment regulations in Indonesia, including the newest Investment Negative List (Daftar Negatif Investasi or DNI) under President Regulation No. 39 of 2014.
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