INDONESIA LAW AND PRACTICE Contributed by: Agus Ahadi Deradjat (Agung), Gustaaf Reerink, Adri Dharma, Karina Widyaputri and Ilma Sulistyani, ABNR Counsellors at Law
complete application, the system will automati - cally issue the relevant licence. In contrast, businesses classified as medium- high or high risk are subject to additional licens - ing process. These include the fulfilment of spe - cific business requirements and verification by the relevant supervisory 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 prop - er licensing may result in administrative sanc - tions 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 investment facilities; and • revocation of business operations and/or investment facilities. Additional sanctions, including criminal sanc - tions, may also be imposed in accordance with other applicable laws and regulations. 2.3 Commitments Required From Foreign Investors Foreign investment ( penanaman modal asing or PMA) companies are subject to a minimum investment requirement pursuant to BKPM Regulation No 4 of 2021 on Guidelines and Procedures for Risk-Based Business Licens - ing Services and Investment Facilities. In gen - eral, the minimum investment for a PMA com - pany must exceed IDR10 billion (approximately USD700,000), 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. Certain business activities are subject to a higher minimum investment 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 injec - tion), loans, and/or retained earnings (the lat - ter applicable only to existing companies). 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 require - ment above, PMA companies are also required to have a minimum issued and paid-up capital of at least IDR10 billion. Furthermore, to obtain the relevant business licences, investors may be required to fulfil addi - tional business-specific requirements depending on the nature of their activities. 2.4 Right to Appeal Generally, investments that meet all stipulated requirements should not be withheld by the authorities. Consequently, there is no dedicated investment-specific mechanism for investors to challenge the authorities’ refusal to authorise an investment. However, unlawful refusals by the authorities may be challenged through the State Administrative Court. Additionally, in accordance with the Investment Law, any disputes between the Indonesian gov - ernment and foreign investors regarding invest - ment activities must first be resolved through amicable means. If an amicable settlement can -
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