Therefore, this situation has attracted many investors inside and outside the country to invest in busines sectors in Indonesia. Foreign investors still playing an important role in business' funding here. especially in big project, such as in natural resources field. But, Indonesian Law has provided some regulations that must be obeyed by foreign investors. there are requirements that should be fullfiled before they invest the money. they are including the status of legal entity of the company, the negative list of investment, the permission of related government institutions, and so forth.
There are two ways for foreign investors to make an investment in Indonesia. First, by establishing a Foreign Capital Company (also known as Perusahaan Modal Asing: "PMA") according to Indonesian Law. Second, by making a joint venture agreement with domestic company (domestic capital company). I will explain about the establishing of pure Foreign Capital Company (PMA) in Indonesia, fist. then, about the joint venture investment later on.
the requirements of establishing of the PMA are:
- Filing a temporary permission for Limited Liability Foreign Capital Company ("PT PMA") through The Investment Coordinating Board ("BKPM"). Here, we should notice the negative list of investment first according to Presidential Regulation Number 36 Year 2010 to find out which sectors are opened or closed for foreign investment. there are the composition of investment for the open sectors. some sectors have different composition.
- Filing an application to the BKPM for investment registration, and attach the following documents;
- Filing a principles of investment license permission (Izin Prinsip) from BKPM, a permission to conduct investment activities on attempted business sector.
- The company must obtain a business license (Izin Usaha) from BKPM, and attach the following documents;