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In our previous column we discussed the changes put through by the Indonesia Investment Board (known as “BKPM”) with regard to the principle license. The principle license is the primary license required for foreign investors to start a company in Indonesia. In this week’s column we discuss BKPM regulation number 15 of 2015 on the Guidelines and Procedures for Obtaining Investment Licenses and Non-Licenses (“New Investment Regulation”). Together with the previously discussed BKPM regulation the New Investment Regulation aims to simplify investment procedures in Indonesia (both foreign and domestic).
Licensing under the New Investment Regulation
The New Investment Regulation regulates procedures for licensing and non-licensing products. Under licensing, the following licenses are included:
1. Business license, which is the license required to start business operations in the territory of Indonesia. Without this license a company may not start its business operation.
2. Business license for expansion, which is an expansion to the original business license.
3. Business license for merger, which is a business license for the surviving company out of a merger.
4. Business license amendments, which are changes to the existing business license which are not considered an expansion. Example is the change of capital.
5. License for Representative Office, which is a license required for a representative office to start business operations in Indonesia.
Important to note is that the previous BKPM regulation number 5 of 2013 as amended by number 12 of 2013 (“Old Investment Regulation”) which was replaced by the New Investment Regulation, only regulated (i) the foreign representative office (KPPA) and (ii) the foreign trade representative office (KP3A). The New Investment Regulation also adds provisions regarding the procedures for obtaining a Construction Representative Office (BUJKA) license, which are set out in article 28 and 29 of the New Investment Regulation.
Non-Licensing under the New Investment Regulation
Non-licensing products under the New Investment Regulation, include amongst others:
1. Provisions regarding the use of foreign workers in Indonesia, regarding
a. Procedures regarding the plan to use foreign workers (known as RPTKA); and
b. Procedures regarding the foreign worker work permit (known as IMTA)
2. Provisions regarding the issuance of an import identification number:
a. API-U, the general import identification number which is e.g. issued to trading companies that which to import goods into Indonesia
b. API-P, then production import identification number which is issued for industrial companies (factories)
The New Investment Regulation also sets specific guidelines and procedures for several specific business fields. The New Investment Regulation is enforced as of October 26, 2015 at BKPM and January 8, 2016 at provincial level.
This column is provided by PNB Law Firm Jakarta