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Seven Important Points of BKPM Regulation No. 5/2013
June 18th 2013
 

On April 8, 2013 the Head of Indonesia Investment Coordinating Board (BKPM), Mohamad Chatib Basri, who is now the Minister of Finance has issued the Regulation Number 5 year 2013 regarding the Guidance and Procedure of Investment Licensing and Non-Licensing. (“BKPM Regulation No. 5/2013”), which consisted of 11 chapters and 111 articles and being effective 30 working days after being legalized on April 12, 2013 and 90 working days for investment application in Province, Regency/City and Special Economy Zone.

Some important issues to be noticed properly and will become discussion topics, also some interesting matters to be briefly noticed are as follows:

FIRST, the authorized person for applying the Licensing and Non-Licensing. Article 103 subs (5) mentioned the authorized persons to do the application, which are directors or chief of the applicant company, company employee with special power of attorney to handle the application, and consultant service/legal consultant which is legal entity and receiving the special non-substitution power of attorney. The power of attorney format should be complying with the BKPM Regulation No. 5/2013.

SECOND, the delegation of authorities with the Integrated One Door Service (PTSP) through 3 doors, which are National door, Province government, and Regency/City government (Article 4). The National PTSP is covered the industry related with natural resources with high risk damage to environment, high priority industry on national scale, industry related to function of integrating and inter-regional connecting or cross province coverage, industry related to national defense and security, industry with foreign government capital and other investment under government authority by the laws.

THIRD, the category of Licensing and Non-Licensing Service (Article 12), which consisting of license of investment, business license for various business sectors, principle license of investment extension, changing business license for various business sectors, principle license of investment company merger, business license for investment company merger for various business sectors, license for branch establishing, license of foreign company representation and business license letter of foreign trading company representation. The Non-Licensing category is consisted of facility of import duty for machine, goods and material, proposal of facility for legal entity’s income tax for certain business and regency, the Producer Importer Identification Number (API-P), the General Importer Identification Number (API-U), expatriate quota (RPTKA), Visa recommendation and expatriate permits (IMTA).

FOURTH, the minimum capital for foreign investment and domestic investment. Article 22 set out the minimum capital for foreign investment is IDR 10 billion excluding land and building, with minimum subscribed and paid capital is IDR 2,5 billion, and minimum subscription for each shareholder is IDR 10 million. For the domestic investment with minimum capital amounted to IDR 500 million should be processed by electronic entry (SIPISE). To be compared with the Company Law No. 40/2007, this BKPM Regulation No. 5/2013 is apparently exaggerated and therefore need more discussions.

FIFTH, the prohibition of venture capital to be the shareholder in foreign investment and major domestic investment. Article 24 subs (2) also set out the prohibition of venture capital ownership in foreign investment and major domestic investment. However, the existing venture capital is allowed to be continued with limitation of 10 years of compliance by transferring the ownership to the national shareholder.

SIXTH, the exception for the company located in Special Economy Zone for the business field that opens with conditions. Article 20 subs (3) set out the exception for the company located in special economy zone for business field that opens with conditions. Means that the negative list for investment is not applicable for the company located in special economy zone.

SEVENTH, the controller of foreign public company is applied under rules for closed business field and open with conditions, including the change of controller (Article 28 subs 3, article 29, article 49 and article 50). The permit for the change of controller in public company conducted by foreign party prior to approval from BKPM. In order to ensure the effectiveness of this regulation, it is necessary to synchronize the rules of public company acquisition with this BKPM Regulation No. 5/2013.

ENCLOSURE

The various changes under the BKPM Regulation No. 5/2013 is apparently over authority of the Head of BKPM, especially regarding the limitation of minimum capital and the prohibition of venture capital. In order to ensure the business certainty and to prevent the overlapping between regulations, the policy of regulation change in Indonesia including in investment area should be aimed clearly to the certain line of change. This BKPM Regulation No. 5/2013 may has its positive impact, due to the efficiency by PTSP and the delegation of authority to the province and regency/city, but at the same time may has the negative impact due to the different effective between national PTSP and local PTSP, also because of the limitation of minimum capital for foreign investment which is very large for the service sector. However, such capital standard should be re-regulated based on certain scale for each business sector, which is industry, trade, and service. ***

Copyright (c) 2013 by LexRegis

 
 
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