INVESTING IN INDONESIA : Technical guidance and service improvement

Transcription

1 invest in EU-Indonesia Business Network Jakarta, 16 September 2014 INVESTING IN INDONESIA : Technical guidance and service improvement INDONESIAN INVESTMENT COORDINATING BOARD 2014 by Indonesian Investment Coordinating Board. All rights reserved

2 Invest In Indonesia WHY WHAT reasons why choosing Indonesia as an investment location and what the potential investment in Indonesia HOW Investment licensing service mechanism 2

3 invest in EU-Indonesia Business Network Jakarta, 16 September 2014 INVESTING IN INDONESIA : Technical guidance INDONESIAN INVESTMENT COORDINATING BOARD 2014 by Indonesian Investment Coordinating Board. All rights reserved

4 Investment in Indonesia Brief info on basic regulation Investment Legal entity Law No. 40/2007 Business field Law on each sector Investment/capital Law No. 25/2007 Authority Law No. 32/2004 Law No. 25/2007 Government Regulation No.38/2007 Central, province and regency/ municipality government Investment Services Investment license 4

5 Investment step by step New Expansion Merger Acquisition Summary on how to do business in Indonesia PRINCIPLE LICENSE Operational Licenses Regional Licenses Fiscal Incentives PREPARATION STAGE BUSINESS LICENSE COMMERCIAL PRODUCTION/OPERATION STAGE 5

6 Presidential Regulation No. 39 of 2014 The regulation consists of : 12 articles, and 2 attachments : 1. List of business fields closed to investment Clear/transparent conditions and restrictions on investment in Indonesia 2. List of business fields open, with condition, to investment : a. Reserved for micro, small, medium enterprises and cooperatives b. Partnership c. Foreign capital ownership d. Certain location e. Special licenses f. 100% domestic capital g. Foreign capital ownership and certain location h. Special license and foreign capital ownership i. 100% domestic capital and special licenses j. Foreign capital ownership and/or certain location requirements, for ASEAN investors 6

7 Implementation of negative liston Investment Licensing asguidance on doing business from establishment to commercial phase Most widely implemented articles Article 3 - negative list principle Article 5 - implementation of negative list for public listed company Article 8 - obligation to comply with other regulations Article 9 - grandfather clause principle 7

8 article 3 :. business fields not listed in the attachment I and II, are open for investment without conditions Implementation of article 3: two parameters in the attachment of negative list are business field and KBLI (business field classification number) the presidential regulation stipulates which business fields are closed for investment and which are open with the requirements the referenced parameter is business field if the proposed business field is not listed in the negative list despite the KBLI listed, BKPM can approve the proposal 8

9 Example 9

10 article 3 :. business fields not listed in the attachment I and II, are open for investment without conditions article 8: the provision does not reduce the obligation to comply with the terms and conditions of the ministry and local government regulation. Example : business field - five star hotel - is open without condition taking into account the saturation of the location in one regency for hotel operations, the local government closed the area for the hotel business activity, therefore although is open for investment but not possible to operate five star hotel in that regency 10

11 article 5 :. the provision is not applicable for indirect investment or portfolio, in which the transactions were being made through domestic capital market.. Implementation of article 5: referred as indirect investment and portfolio in article 5 is public shares which the transactions carried out in the domestic capital market Law No.25/2007 on investment, stipulates that PMA is a company wholly owned by foreign parties or a combination between foreign and domestic parties Public Company classified as a foreign direct investment (PMA) company, if the shareholders which listed in the company deed consist of public shares and individual foreign shareholder and/or foreign business entities or PMA company Public Company which classified as PMA company obliged to comply with the provisions of the negative list 11

12 Example PT. ABC Tbk(PMA), approval license in 2000, business field : restaurant, shareholder structure in the company deed : public shares 40%, Mr. Smith 20% (European) and Mr. Tono 40% (Indonesia) presidential regulation no. 39/2014, ---business field restaurant open with condition max foreign shareholder 51% If Mr. Tono sell his 40% share, and the share structure of the company become : Alt I : Mr. Smith share 20%, public shares increase become 80% (public buy Mr.Tono share) BKPM can approve this composition, based on article 5 the provision is not applicable for public shares, as long as the foreign share is not more than 51% Alt II : Mr. Smith 60% (he buy Mr.Tono shares), public shares remain 40% BKPM will not approve this composition, because the foreign share is more than the maximum share in the negative list regulation (51%) 12

13 article 9 :. the provision does not apply to investments that have been approved before the presidential regulationwas stipulated, as stated in the company license, unless such provision is more beneficial for the investment. Implementation of article 9: Expansion grandfather clause applied if expansion will be done in the same business field Merger grandfather clause applied for surviving company it means that the surviving company is possible to maintain the percentage of foreign share Acquisition grandfather clause applied for company that being acquired it means that the acquired company is possible to maintain the percentage of foreign share 13

14 Impact to divesting program Example: PT ABC (PMA), business field trading (distributor) approval license in % foreign shareholder with obligation for divesting, In 2013 PT. ABC has conducted the divestment obligation, the current share holders are Mr. Smith (European) 90% and Mr. Tono (Indonesia) 10% Presidential regulation no. 39/2014, business field trading (distributor) max foreign share holder 33% Alt I : On September 2014, Mr. Tono want to sell his 10% share, Mr. Smith or other foreign (individual/entities) or other PMA company, is not possible to buy the share, since the maximum foreign share for distributor only 33%, Alt II : On September 2014, Mr. Smith want to sell his 90% share, other foreign (individual/entities) or other PMA company, is possible to buy all Mr. Smith shares, since the maximum foreign share for PT ABC (grandfather clause) is 90% 14

15 Trading business activities Trading scope activities are export, import and main distributor (maximum foreign share for distributor activity 33% - KBLI 00000) the activity of distributor company is to distribute commodities / products in the country through the indirect distribution channel activities may also include after-sales services and/or products packaging, however it still have to obtain license to conduct activities other than distributor KBLI means the provision of negative list regulation is applied to distribute all types of commodities or products grandfather clause is possible to implement when a distributor company need to add types of commodities Modern stores supermarket, department store, hypermarket, wholesale (requirement based on minimum trading/sales area) Multi Level Marketing (MLM) (maximum foreign share 95%) 15

16 Importer ( API-U ) Overseas INDONESIA Importer ( API-P ) Manufacturing as importer Mfgconducting imports to meet their own needs (Direct) (Non-Direct) (Non-Final Products) MLM Distributor (Final Products) (Non-Final Products) Manufacturer (Non-Final Products) Modern Stores Wholesaler Agent Manufacturer Retailer End Customer

17 invest in EU-Indonesia Business Network Jakarta, 16 September 2014 INVESTING IN INDONESIA : Service improvement INDONESIAN INVESTMENT COORDINATING BOARD 2014 by Indonesian Investment Coordinating Board. All rights reserved

18 nswi.bkpm.go.id Source of investment related information and tools forall stakeholders (public and private sector) One stop services (PTSP) Presidential Regulation No. 27 of 2009 All provinces and regencies/cities in Indonesia are mandated to conduct integrated investment services through PTSP to provide legal certainty, transparency, accountability, equal treatment and efficiency Online/electronic investment services (SPIPISE) System used by government officials at PTSP to process investment licenses Investment step by step Flow of investment procedure in Indonesia, from establishment, construction, commercial phase including investment incentives and facilities Investment progress report (LKPM) Report on investment realization progress made by company and submitted through direct to BKPM, airmail, or LKPM online system Quarterly for construction phase and every semester for commercial phase Investment data Statistic on investment realization based on location, sector and country of origin 18

19 Implementation of online system More transparent and simplificationof investment licensing procedure Tracking system : launch online tracking system implementation 2013 : granted ISO and mandatory online master list : mandatory online for Principle License application (prior to company establishment) existing companies are required to create a folder in the BKPM data base which must be filled with all administration documents of the company such as company deed, BKPM and Ministry licences, Regional Government licenses etcand should always be updatedby the company gradually will be mandatory online application for other licenses 2016 : BKPM will only receive application for all types of license issued by BKPM through online, no more face to face services in the front office area 19

20 Online SPIPISE service online-spipise.bkpm.go.id 20

21 Investor Relation Unit (IRU) for any investment related inquiries via and phone P : E : info@bkpm.go.id 21

22 Thank You Lestari Indah Indonesia Investment Promotion Centre (IIPC) Badan Koordinasi Penanaman Modal (BKPM) Indonesia Investment Coordinating Board Jl. Jend.Gatot Subroto No. 44 Jakarta Indonesia t , f e. info@bkpm.go.id