BKPM Regulations No.14/2015 and No. 15/2015 regarding Investment Principle License and Investment Procedure and Licensing are revoked by BKPM Regulation No. 13/2017. The revisions are among other as follows:

1. Subject to certain conditions, Principle License is not required and that the investment company can directly apply for obtaining Business License (IU)

Article 10 of the new regulation stipulates that business sectors which do not require certain time for conducting construction or do ask for import facilities, can directly apply to obtain a Business License (IU) and no preliminary application for obtaining a principle license (which under the new regulation it is now called as “investment registration”).

The investment company can be directly given  IU if: (i) the entity has been established as an Indonesian legal entity, (ii) it has obtained a Tax Registration Number (NPWP), and (iii) it has secured a place of activity/office. However, before applying for IU, the investment company must first obtain a principle license which is now called as “investment registration” if: (a)  it will carry out  construction for conducting such of investment, (b)  it will ask import facilities, (c)  it has high or medium environmental impacts, or (d)  it relates to national security, management of natural resources and energy, and infrastructure projects.

2. Minimum Investment

No change of the minimum investment requirement under this new regulation as it is stipulated in Article 12 that the minimum investment value must be more than Rp 10 billion (not including investment for land and building). The new regulation however makes clarification that such minimum investment can be including land and building for investment company which is engaged in the development and management properties, either the property which is in the form of whole buildings or in the form of  integrated residential complex with the requirement of debt to equity ratio 4:1.

3. Expansion License (Izin Perluasan)

Under the new regulation, business expansion for Investment in Industry Sector is defined as increase of production capacity under the same five digit KBLI code as stipulated in industry business license.   Thus, it is no longer connected to the increase of 30% production capacity as regulated under the previous regulation.

4. Divestment Obligation

Article 16 (1) and (2) of the new regulation, clarify the enforcement of divestment obligation between the 2 types of divestment requirement; namely one is the divestment requirement which is based on and stated under BKPM’s approval/business license as stipulated in Article 16 (1) and the other is the divestment requirement based on certain business sectors which must be conducted pursuant to the applicable regulations as stipulated in Article 16 (2).

The new regulation stipulates that divestment obligation for an investment company stipulated in Article 16 (1) can be avoided, if general meeting of shareholders resolution of the company approves the followings:

-    For JV companies:  that Indonesian shareholders do not want to claim the offered shares in accordance with divestment obligation.

-    For 100% foreign-owned PMA company:  that all shareholders do not have any commitment to sell their shares to Indonesian parties.

           In the above case, the company needs to apply for amendment of their investment registration to BKPM to cancel such divestment requirement and the shareholders shall be liable to a future claim from Indonesian party for such divestment, if there will be any.

5. Branch office permits now applies to BKPM

Under Article 45-46 of the new regulation, the application for opening of a branch office of a PMA company can be submitted directly to BKPM through BKPM online system. Previously, the application must be submitted to the investment division of Provincial Government where the branch office is located.

6. Venture capital companies can own shares up to 20 years

Under the previous regulation a venture capital company can become a shareholder of an investment company up to a period of 10 years extendable 1 time for 5 years at the longest. Under Article 15 of the new regulation the period can be up to 20 years, namely the initial period of 10 years and two time period of extension with total period of extension 10 years.

7. Indonesian Investor holder of KMILN/Indonesian Overseas Community Card

Based on Article 23 (7) and (8) of the new regulation, the investor who is an Indonesian citizen residing in overseas, holder of diaspora card /KMILN (Kartu Masyarakat Indonesia Luar Negeri), can use such diaspora card as the replacement of identification card/KTP and they need not to provide NPWP if he/she does not stay in Indonesia for more than 183 days.


Disclaimer: This article is intended as general information only and it does not constitute a legal advice. We accept no responsibility for any loss that may arise from reliance on this information. Please contact us if you need full legal advice.