Foreign Investment Guideline

The Indonesian Government periodically issues what is known as the Negative List of Investment (Daftar Negatif Investasi or “DNI”). The DNI provides the list of area in which foreign investors are prohibited or restricted to enter into business in Indonesia. In concept, any area that is not listed in the DNI is open for foreign investment and domestic investment.

The establishment of PMA Company in Indonesia shall be under the supervision of Investment Board and in the form of a Limited Liability Company.

The recent law and regulations, which become the basis for the foreign investment in Indonesia are:

  • Law No. 1 Year 1967 and its amendments pertaining the Foreign Investment
  • Law No. 1 Year 1995 pertaining the Limited Liability Company
  • Presidential Decree No. 96 Year 1998 pertaining the Negative List of Investment.
  • Presidential Decree No. 99 Year 1998 pertaining the Sectors of Business for Small-Scale Enterprises and Sectors of Business open to Medium-Scale or Large-Scale Enterprises under a Partnership Arrangement.
  • Government Regulation No. 20 Year 1994 pertaining the Share Ownership in the Foreign Investment Company.
  • BKPM Decree No. 15 Year 1994 pertaining the Implementation Guidelines on the Share Ownership in the Foreign Investment Company.
  • BKPM Decree No 12 Year 1999 pertaining to the Foreign Investment in Holding Activity.
  • BKPM Decree No. 38 Year 1999 pertaining the Procedure of Foreign/Domestic Investment in Indonesia.

Pursuant to the above regulations, a PMA Company can be set up under Joint Venture scheme between Indonesian and Foreign Investors (where the Indonesian citizen or legal entity holds at the minimum of 5% of the share ownership of the PMA Company) or 100% foreign owned company.

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