INDONESIA Law and Practice Contributed by: Agus Ahadi Deradjat (Agung), Gustaaf Reerink, Adri Dharma, Karina Widyaputri and Ilma Sulistyani, ABNR Counsellors at Law
Foreign Ownership Limitation In addition to the above, businesses must also comply with applicable foreign ownership limitations. Pursuant to Presidential Regulation No 10 of 2021 on Investment and Business Lines, as amended by Presidential Regulation No 49 of 2021 (the “Invest - ment List”), all business sectors are generally open to foreign investment, except for those that are: • expressly closed to investment; or • reserved exclusively for the central government – namely, activities of a service-oriented nature or those related to defence and security that are considered strategic and cannot be conducted in co-operation with other parties. Although the majority of business sectors permit up to 100% foreign ownership, certain sectors remain subject to foreign ownership restrictions or limitations as set out under the Investment List. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance Investors seeking to operate in Indonesia may apply for business licences via the RBA OSS System. For businesses categorised as low-risk or medium-low risk, the licensing process is primarily self-assessed. Upon submission of a complete application, the sys - tem will automatically issue the relevant licence. In contrast, businesses classified as medium-high or high risk are subject to an additional licensing pro - cess. These include the fulfilment of specific business requirements and verification by the relevant supervi - sory ministries. Once these requirements are met and verified, the RBA OSS System will proceed to issue the appropriate licence. Operating a business in Indonesia without proper licensing may result in administrative sanctions under the Investment Law (Law No 25 of 2007, as amended). These sanctions include: • written warnings; • limitations on business activities; • suspension of business operations and/or invest - ment facilities; and
• revocation of business operations and/or invest - ment facilities. Additional sanctions, including criminal sanctions, may also be imposed in accordance with other appli - cable laws and regulations. 2.3 Commitments Required From Foreign Investors Foreign investment ( penanaman modal asing or PMA) companies are subject to a minimum invest - ment requirement pursuant to BKPM Regulation No 5 of 2025 on the Guidelines and Procedures for the Implementation of Risk-Based Business Licensing and Investment Facility through the Electronically Integrated Business Licensing System (“BKPM Reg. 5/2025”). In general, the minimum investment for a PMA company must exceed IDR10 billion (approxi - mately USD600,000), excluding the value of land and buildings, calculated per KBLI (Indonesian Standard Business Classification or Klasifikasi Baku Lapangan Usaha di Indonesia ) code and per project location. Different minimum investment criteria apply to busi - nesses engaged in certain activities, such as F&B, real estate, accommodation, agriculture, plantation, live - stock, and aquaculture businesses. Certain business activities are also subject to a higher minimum invest - ment threshold, including those in the financial institu - tions, port operations, and activities that depend on sea terminals or jetties. The required investment amount may be funded through a combination of equity (capital injection), loans, retained earnings (applicable only to existing companies) and/or share premium. This investment is intended to support the company as a going concern and is not required to be fully expended at the outset. The realisation of the investment may be carried out gradually, in line with the company’s operational and financial needs. In addition to the minimum investment requirement above, PMA companies are also required to have a minimum issued and paid-up capital of at least IDR2.5 billion. This reflects one of the key updates introduced under BKPM Reg. 5/2025, which reduces the previous minimum issued and paid-up capital requirement of IDR10 billion.
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