Direct Foreign Investment in Indonesia

If you plan to make direct foreign investment in Indonesia, this page will give an overview of the whole process, procedure to make a direct investment.

Three Major Steps on Foreign Investment

STEP 1: PREPARATION

Basically, there are three major steps to make a foreign investment in Indonesia. The first step is the preparation.  On this step, you need to provide basic information of your business such as identity of investors, type of business you are going to do, share composition, a brief description of business activity, planned gross income you are going to earn or total production to be achieved from that business.

All above information will be provided in a Principle License Application Form.

This process will take about 3 to 4 days assuming all data is clear.

STEP 2: CONSTRUCTION

On this step, you need to implement what you have already planned on the first step. Your reference will be your Principle License which you have already got on the first step. If you make a change to your plan (Direct Foreign Investment), you need to submit Principle-Change License Application Form.

To break down the process, on this step, you need to establish a new company. The name of company should be registered in the Department of Law and Human Rights. If the name of your new company is approved, then, Article of Association of your company could be signed by shareholders. If the Article of Association has been signed, then, an application for approval is submitted to Department of Law and Human Right.

You will also inform local community officer about the location of your company. The local community will issue a letter about your company address.

Once you get the approval from Department of Law and Human Rights, you need to get Tax ID, and Company Registration Number from related local government on area which your company is located.

For example, if your company is located on South Jakarta area, then you need to get company registration number from Local Government of South Jakarta.

You may need other licenses so that your company could legally operate on this step. It depends what type of business (direct foreign investment) you are going to run.

To get basic licenses or document on step two is about 2 months. The duration depends on the nature of your business you are going to do. If it is manufacturing-type company, it will take longer.

If you have obtained all required licenses and your company is ready to operate, then, you are ready to obtain Operational License which I will explain on Step Three.

STEP 3: READY FOR OPERATION

Before your company commences the operation, you need to get Operating Licenses (In bahasa called, Izin Usaha Tetap).

Basically, you will start to process this license when your company is 85 or 90 % ready to operate.

On this step, you need to provide all documents that you have already obtained on fist step and second step. There may be additional licenses that you need to submit. It depends on your type of business. Different business needs different additional license from related government body. For example, if your business is manufacturing-type, you will need additional licenses from the Department of Industry, Department of Environment, etc.

Time required to get this license is about 7 to 10 days assuming all data is clear.

What Is the Share Limit in Foreign Investment?

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