Foreign Direct Investment (FDI) is a business investment that is made by an individual or a company from one country in another country, in the form of whether acquiring business assets or establishing business activities in the country they invest. Foreign direct investment in Indonesia is about controlling or owning interests in a foreign company. Foreign direct investment in Indonesia is different from portfolio investments. In portfolio investments is a form of investment where an investor only purchase equities from a foreign-based company.
The growth of foreign direct investment in Indonesia in the earliest quarter of 2017 was recorded at 0,9 % growth year-to-year to Rp. 97.000.000.000,-, compared with the previous quarter in which is 2,1 % of growth pace. The declining of the growth of foreign direct investment in Indonesia might be caused by the ethnic and religious tensions that surround Jakarta Regional Election in 2017. This article will help you to understand more about Foreign direct investment in Indonesia.
What You Need To Know About Foreign direct investment in Indonesia
- Investors’ Plan
There are two ways for the investors to establish a business presence in the form of foreign direct investment in Indonesia that is either by establishing a branch company in the form of limited liability foreign company or PT PMA or by establishing a Representative Office in Indonesia. PT PMA is a fully-developed legal company in which has a full range of business and commercial activities as governed by the rules and regulations in Indonesia. A representative office is one of the forms of a foreign company in Indonesia in which is a licensed office established by a foreign-owned company in Indonesia, but it has no legal status and also has some limitation in its activities.
- Minimum Amount of Investment
The requirement of foreign direct investment in Indonesia according to with Indonesia’s investment regulations are :
- The total of the foreign direct investment in Indonesia must be more than Rp. 10.000.000.00,- or in the equivalent USD, consisting loans and equities but excluding buildings and lands.
- Paid up capital of the investment is obliged to be equal to the subscribed capital in which of at least Rp. 2.500.000,- or in the equivalent USD.
- Interest participation of each shareholder in foreign direct investment in Indonesia must be Rp. 10.000.000,- at least or in the equivalent USD and the interest percentage should be calculated based on the value of shares nominal.
- Investors Shares Ownership in a PMA company
The Negative Investment List (DNI) in which is adopted in foreign direct investment in Indonesia contains a businesses list which is either opened for foreign investment with some requirements and closed for closed for foreign investment. Foreign direct investment in Indonesia in the form of PT PMA gives the right for the international company to hold the shareholding from 49% to 90%. Not listed types of business in the DNI are stated as 100% open for the foreign investment in general.
- Minimum Shareholders of a PMA company
Foreign direct investment in Indonesia in which is regulated by the Indonesian Law Company requires a limited liability company to have shareholders at least two. It can be an individual or a legal entity. For the foreign direct investment in Indonesia that is 100% open, the foreign investors need to find a second shareholder to hold interests in the PMA company. The second shareholder can be their affiliated party. Shareholders have the rights to own shares with some preferential rights.
Foreign investment contributes a considerable amount of income for Indonesia’s economy. Hopefully, some necessary information about foreign direct investment in Indonesia in the article above can be some help for you to understand more about foreign investment.