GENERAL INFORMATION CONCERNING VISA APPLICATIONS.

April 29, 2008

 

a. Visas Of The Republic Of Indonesia :

  •  A Visa of the Republic of Indonesia is issued in the form of  a sheet    of paper attached to a pass­port. The type of visa issued shall be based o­n the visa application.
  • A Diplomatic Visa or a Service Visa shall o­nly be issued to the bearer of a Diplomatic Passport or a Service Passport. Applications for Diplomatic or Service Visas should be accompanied by diplomatic letters or official letters.
  • Visa applications may be done by proxy, except for  Diplomatic or   Service Visa applications.
  • A visa application should be submitted to an Embassy or Consular  Office of the Republic of Indonesia or other official designated by Government of the Republic of Indonesia.
  • Visas shall be used within 90 (ninety) days, calculated from the date of issuance. Any foreign national who fails to use a visa within this designated period of time must submit a re-application for a new visa.

 b. Competent Authorities And Officials :

  • The Immigration Attache at an Embassy or Consular Office of the Republic of Indonesia or other designated official (hereafter, Visa Officer) is authorized to issue or reject Diplomatic or Service Visa applications in accordance with the decision of the Minister of For­eign Affairs.
  • The Visa Officer is authorized to issue or refuse requests for Transit Visas, Visit Visas, and Limited Stay Visas in accordance with the decision of  the Director General of Immigration o­n behalf of the Minister of Justice.
  • The Director General of Immigration may fully authorize the Visa Officer to issue or reject applications for Transit Visas or Visit Visas.
  • The Visa Officer shall have the full authority to grant  a visa to a foreign national who is in possession of a  national passport or other valid travel document.
  • The Visa Officer, upon the approval of the Director General of Immigration, shall grant a visa  to an individual not in possession of      a national passport or other travel document (a stateless person).
  • Admission to Indonesia remains under the authority of the Immigra­tion Officer at the port of entry.
  • For urgent cases, a Transit Visa or a Visit Visa may be issued at an Immigration Check Point.

c. General Visa Requirements :

  • Visa applications should be submitted to the Visa Officer after filling out the required form.
  • A visa application should be submitted along with the following :
  1.  
    1. a valid passport;
    2. a round trip or through-ticket to country of destination;
    3. 2 (two) photographs, size 4 x 6 cm.
    4. proof or written guarantee of possession of sufficient funds for living expenses during entire stay in Indonesia ;
    5. payment of the visa fee.

d.  The Approval Of Visa Applications:

    A visa application shall be approved if the applicant :

         a. has fully complied with the requirements;

         b. has paid the visa fee;

         c. is not included o­n the Blacklist.

 

e. The Rejection Of Visa Applications :

     A visa application shall be rejected if the applicant :

a. has not fully complied with the requirements;

b. is included o­n the Blacklist;

c. can be included in any of the following categories, specified in   Article 17 of Immigration Act No. 9/1992, which include any  foreign national who :

1.      is known to be or suspected of being involved in international  crime syndicate activities;

2.      has shown a hostile attitude toward the Government of  Indonesia, or has taken actions which demean the name of the  people and the country of Indonesia, in his/her own country or  in any other country;

3.      is suspected of having committed actions in conflict with national security, public order, the morality, religious values, or  the traditions or customs of the people of Indonesia;

4.      is under a request for extradition from another country, said   person having tried to escape indictment or the execution of a punishment,  having committed a criminal act which is also punishable according to Indonesian law; 

5.     has previously been expelled or deported from the territory of Indonesia; or

6.     has been found to be suffering from a mental illness or a contagious disease hazardous to public health.

d.   originates from a country which has no diplomatic relations with the Republic of Indonesia, unless otherwise established by Decision of the Minister of Justice.

 

 f. The Finalization Process :

·          The visa will be stamped or attached in a national passport, or a non-national passport, or a legal travel document.

·          All completed, original copies of visa application forms certified by the Visa Officer will be sent collectively o­n the same day to the Director General of Immigration.

·          The number and date of visa issuance will be entered o­n the visa application form.

·          The visa shall be signed by the Visa Officer.

·          The passport with the newly issued visa will be returned applicant.

 

 g. Special Procedure :

Under certain circumstances, visa applications can be arranged for in Indonesia by the sponsor of the applicant concerned. In such cases, the sponsor should appear in person at the Head  Office of the Directorate General of Immigration to begin the processing of the visa application as follows :

·         on behalf of the applicant, fill out and  complete all visa requirements according to the type of visa, which includes a letter from the sponsor stating the purpose  of the visit/invitation and a written statement guaranteeing the sponsor’s taking responsibility for the applicant during his/her stay in Indonesia;

·         submit the visa application to the Visa Section of the Directorate of Immigration Traffic.

In absence of any incriminating factors, the visa authorization for the applicant concerned shall be cabled, at the expense of  the sponsor, to the overseas Visa Officer  at the Indonesian Embassy or Consular Office at the applicant’s place of domicile.

The visa shall then be administered by Visa Officer in the presence of the applicant concerned.


Crude price hikes affect investment in RI, BKPM says

April 23, 2008

Jakarta, April 22, 2008 – The crude price hike which happened to reach US$117 per barrel is expected to discourage investors to realize their investments in Indonesia, investment agency chief said. ANTARA News reported (PubDate: 04/22/08).

“Investors will recalculate their investments if prices are now surging,” Capital Investment Coordinating Board (BKPM) Chairman M. Lutfi said here on Monday.

He said that investors who had obtained investment approvals were forced to delay the realization of their projects because they had to recalculate their investment in the first place.

“Let`s take an example. An investment of a 2.5 million ton capacity steel factory would need US$2 billion of fund three years ago. I estimate today that a fund of US$4 billion would no longer be enough because raw material prices and costs are all increasing,” Lutfi said.

Lutfi said that the oil price hikes affected investment not only in Indonesia but also in other countries in the world.

But now, he said, no investor has proposed an extension in the realization of his or her investment approval.

“Investors are given 24 months after they were awarded the approvals to realize their investment. If they fail within the given period we would grant them an extension but up to now none of them has applied for an extension. But I think there must be investors who are recalculating their investment,” he said.


LINGKUP WAJIB DAFTAR PERUSAHAAN

April 15, 2008

Landasan Hukum
  • Undang-undang No. 3 Tahun 1982 tentang Wajib Daftar Perusahaan
  • Undang-undang No.1 Tahun 1995 tentang Perseroan Terbatas
  • Keputusan Menteri Perindustrian dan Perdagangan RI No. 596/MPP/Kep/2004 tentang Standar Penyelenggaraan Wajib Daftar Perusahaan
  • Keputusan Menteri Perindustrian dan Perdagangan RI No. 597/MPP/Kep/2004 tentang Pedoman Biaya Administrasi Wajib Daftar Perusahaan Dan Informasi Tanda Daftar Perusahaan
  • Keputusan.Menteri Perdagangan RI No. 101/KP/VI/95 tentang Pengusulan Pengangkatan, Pemberhentian Dan Mutasi Penyidik Pegawai Negeri Sipil Di Lingkungan Departemen Perdagangan

 

Tujuan dan Sifat
  • Daftar perusahaan bertujuan mencatat bahan-bahan keterangan yang dibuat secara benar dari suatu perusahaan dan merupakan sumber informasi resmi untuk semua pihak yang berkepentingan mengenai identitas, data, serta keterangan lainnya tentang perusahaan yang tercantum dalam Daftar Perusahaan dalam rangka menjamin kepastian berusaha
  • Daftar Perusahaan bersifat terbuka untuk semua pihak
Manfaat

Bagi Pemerintah :

  • Memudahkan sewaktu-waktu dapat mengikuti secara seksama keadaan dan perkembangan sebenarnya dari dunia usaha di wilayah negara Republik Indonesia, termasuk tentang perusahaan asing.
  • Sebagai masukan dalam menyusun dan menetapkan kebijaksanaan dalam rangka memberikan bimbingan, pembinaan dan pengawasan atas dunia usaha serta upaya menciptakan iklim usaha yang sehat dan tertib

Bagi Dunia Usaha :

  • Menciptakan keterbukaan antar perusahaan;
  • Memudahkan mencari mitra bisnis;
  • Mendasarkan investasi pada perkiraan yang jelas;
  • Meningkatkan kepercayaan masyarakat akan kredibilitas suatu perusahaan.
Kewajiban Pendaftaran Perusahaan

Setiap perusahaan yang berkedudukan dan menjalankan usahanya di wilayah Negara Republik Indonesia wajib didaftarkan dalam Daftar Perusahaan, termasuk di dalamnya :

  • Kantor Cabang,
  • Kantor Pembantu,
  • Anak Perusahaan,
  • Agen,
  • Perwakilan Perusahaan yang mempunyai wewenang untuk mengadakan perjanjian

Perusahaan yang terkena kewajiban pendaftaran berbentuk usaha :

  • Perseroan Terbatas (PT);
  • Koperasi;
  • Persekutuan Komanditer (CV);
  • Firma (Fa);
  • Perorangan;
  • Bentuk Perusahaan Lain
Dikecualikan dari Wajib Daftar Perusahaan

Perusahaan Negara yang berbentuk Perusahaan Jawatan (Perjan)
Perusahaan kecil perorangan yang :

  • Dijalankan sendiri;
  • Memperkerjakan anggota keluarga terdekat;
  • Tidak memerlukan izin usaha;
  • Tidak merupakan badan hukum atau persekutuan

Usaha di luar bidang ekonomi yang tidak bertujuan mencari profit

  • Pendidikan formal
  • Pendidikan non formal
  • Rumah sakit

Yayasan dsb.

Apa yang wajib didaftarkan oleh perusahaan ?
  •  
    • Pengenalan Tempat
    • Data Umum Perusahaan
    • Legalitas Perusahaan
    • Data Pimpinan Perusahaan
    • Data Pemegang Saham Perusahaan
    • Data Kegiatan Perusahaan
    • Komoditi / Produk;
    • Modal;
    • Kategori Perusahaan;
    • Informasi Lainnya.

 

Khusus untuk Perseroan Terbatas Terbuka (PT Tbk) ditambahkan :

    • Tanggal Pernyataan Pendaftaran;
    • Tanggal & Nomor Izin Ketua Bapepam;
    • Harga nominal Saham
    • Tanggal Pencatatan (listing);
    • Tanggal Pencabutan Pencatatan (delisting)

Dimana & Bagaimana pendaftaran WDP ?

Tempat :

  •  
    • Kantor Departemen Perindustrian dan Perdagangan atau Dinas yang membidangi Perdagangan Kabupaten/Kota selaku Kantor Pendaftaran Perusahaan (KPP)
  •  

Cara :

  • Mengisi formulir pendaftaran yang disediakan
  • Membayar biaya administrasi
  • Pendaftaran Perusahaan wajib dilakukan oleh Pemilik/Pengurus/ Penanggung Jawab atau Kuasa Perusahaan
Sanksi apabila tidak melakukan pendaftaran :

  •  
    • Sanksi Pidana kejahatan (Pasal 32 UU-WDP) karena pengusaha dengan sengaja atau kelalaiannya tidak memenuhi kewajiban UU-WDP diancam pidana penjara selama-lamanya 3 (tiga) bulan kurungan atau pidana denda setinggi-tingginya Rp 3.000.000,- (tiga juta rupiah).
    • Sanksi Pidana pelanggaran (Pasal 33 UU-WDP) karena pengusaha melakukan atau menyuruh melakukan pendaftaran secara keliru atau tidak lengkap dalam memenuhi kewajiban UU-WDP diancam pidana penjara selama-lamanya 3 (tiga) bulan kurungan atau pidana denda setinggi-tingginya Rp 1.500.000,- (satu juta lima ratus ribu rupiah).
    • Sanksi Pidana pelanggaran (Pasal 34 UU-WDP) karena pengusaha tidak memenuhi kewajiban untuk menghadap atau menolak untuk menyerahkan atau mengajukan sesuatu persyaratan atau keterangan lain untuk pendaftaran dalam Daftar Perusahaan diancam pidana penjara selama-lamanya 2 (dua) bulan kurungan atau pidana denda setinggi-tingginya Rp 1.000.000,- (satu juta rupiah).

Source: Deperindag

 

Regional forum seeks to attract investors for RI development

April 15, 2008

Jakarta , April 11, 2008 – As reporting by Aditya Suharmoko to The Jakarta Post (PubDate: 11/04/2008), President Susilo Bambang Yudhoyono is set to open a regional investment forum in late May, designed to attract foreign and local investors in development projects across the country.

The Indonesian Regional Investment Forum, which will take place at the Ritz-Carlton in the Sudirman Central Busi­ness District in South Jakarta on May 26 and 27, is expected to secure at least US$6 billion, the organizer said Thursday.

“So far, more than 50 regions have reg­istered to participate in the forum,” the forum project leader Tony Gourlay told a press conference. A region must present three or more feasible projects worth a total of at least $50 million to participate in the forum. The projects will cover a range of areas, including agribusiness, planta­tions, biofuel, infrastructure, mining, power, oil, gas, property and tourism.

More than 500 foreign and local investors are scheduled to attend the forum and channel funds to provinces, cities or regencies, said Irman Gusman, the forum’s chairman and deputy speaker of the Regional Representatives Council. Irman said the forum would enable investors to discuss the projects direct­ly with leaders of provinces, cities and regions.

“The forum gives us the opportunity to improve the regions’ social and eco­nomic development … and to reduce unemployment and poverty,” he said. Tanri Abeng, a member of the forum’s advisory board, said Indonesia’s regions had abundant natural resources, as well as labor potency and high domestic demand, which could attract investors. The governor of Riau province, Rusli Zaenal, said his province had submitted three infrastructure projects to the forum. “The projects are for a turnpike — connecting Pekanbaru and Dumai — a railway line and Buton port,” Rusli said. He did not elaborate on the amount of funding needed for the projects. Riau, one of the fastest growing regions in the countiy, expects to secure Rp 223.1 billion ($24.25 million) of domestic investment and $95.2 million of foreign investment this year.

According to the Investment Coordi­nating Board, total foreign direct invest­ment in Indonesia between January and September last year reached Rp 125.94 trillion, an increase of almost 170 per­cent from Rp 74.51 trillion in 2006. Investment is estimated to have grown by 9.5 percent in the first quarter of this year from Rp 40.9 trillion in the same period in 2007, according to the Finance Ministry.


South Korea makes high technology investment in Indonesia

April 10, 2008

Jakarta, April 8, 2008 – As reported by the National News Agency thru its ANTARA News (PubDate: 04/08/08 13:41) the South Korean Ambassador to Indonesia Lee Sun-Jin said his country has expanded its investment in Indonesia to high technology industries from labour intensive investment.

“In the recent years our country’s investment in Indonesia was no longer dominated by labour intensive industries,” Lee, flanked by Councellor Yoon Moon-han, told ANTARA at his residence here on Monday.

Lee said that several South Korean companies had been operating in the business of machinaries, electronics, chemistry and expansion of natural resources processing, in addition to some existing labour intensive industries such as shoe, textile and wig industries.

Data issued by the South Korean Embassy showed that the country’s investment in Indonesia sharply rose to US$895 million in 2007 from us$320 million in 2002.

Regarding the balance of trade between the two countries, Indonesia enjoyed a US$3.3 billion surplus.

In 2007, Indonesia’s exports to South Korea reached US$9.110 billion, while the imports from South Korea reached only US$5.770 billion.

Some of Indonesia’s commodities exported to South Korea included LNG, coal, oil, forestry products, rubber, pulp and copper.

 As many as 1,200 South Korean companies operating in different sectors in Indonesia had absorbed more than 500,000 workers, he said, adding that 50 Memoranda of Understanding (MoUs) were signed since Desember 2006.

Data issued by the National Investment Coordinating Board (BKPM) showed that in 2007 South Korea was the third largest investor and the seventh largest investor in Indonesia in terms of investment realization and investment approval respectively.

Lee said further the bilateral relations have been improving, among other things by increasing exchange of visits by the two countries’ leaders and officials.

South Korean President Roh Moo-hyun visited Indonesia in December 2006, while Indonesian President Susilo Bambang Yudhoyono made a return visit to South Korea in July 2007. “The two countries’ leaders have a strong commitment to enhance their bilateral ties in several fields including politics, investment and trade,” the envoy said.

Jakarta and Seoul signed strategic and comprehensive agreements in 2006. “The strategic partnership agreement will become a basis for expansion of the relations between the two countries,” Lee noted. As a follow up of the agreement, the two countries have set minor committees, working groups and task forces in a bid to help improve the two countries’ business relations. Asked about obstacles to efforts to lure South Korean investors to Indonesia, Lee opined that the coordination between the central government and the regional administrations as well as easier licensing need to be promoted, while sustainable capacity building should also be conducted to create a conducive investment climate.

“Political stability should also be maintained,” Lee said, adding that his country was also ready to cooperate in military affairs, including in the joint manufacture of military arms and on exchange of visits of military personnel.

The Indonesian Navy is now also using Korean-built landing ship tanks (LSTs) and trucks.


Klasifikasi Baku Lapangan Usaha Indonesia

April 10, 2008

Untuk mengetahui klasifikasi Baku Lapangan Usaha Indonesia yang bisa dimasuki oleh Investor dapat dilihat di http://www.bkpm.go.id/id/vu_kbli_id


Peraturan tentang Daftar Perseroan

April 4, 2008

Menteri Hukum dan HAM RI mengeluarkan peraturan nomor M-01.HT.01.01 Tahun 2008 tentang Daftar Perseroan, untuk materi selengkapnya silahkan click link berikut ini http://www.sisminbakum.go.id/peraturan/data/peraturan-M01-HT01-01-2008.pdf


Public Warning Kosmetik Yang Dilarang.

April 4, 2008

Deperindag telah mengeluarkan public warning atas Kometik yang mengandung Bahan Berbahaya dan Zat Warna yang dilarang.

Selengkapnya : http://pustand.depdag.go.id/files/55066,226,PWKosBB.pdf


INFORMATION FOR FOREIGN INVESTMENT IN INDONESIA

April 4, 2008

A.1. Openness to Foreign Investment

Indonesia encourages private sector-led growth and foreign investment. It maintained a relatively open foreign investment regime and President Megawati declared 2003 as the “Year of Investment.” Official appeals for investment have not been matched by action on serious issues facing investors such as judicial reform and rampant corruption.

Investors reduced investment in the last few years; balance of payment statistics continue to reveal net negative investment flows. Foreign investment approvals in 2002 declined to USD 9.8 billion, from USD 15 billion and USD 16 billion for 2001 and 2000, respectively. Indonesia tracks only investment approvals, which, if they happen at all, may require years to realize. Investment approvals for Indonesian firms trended even more steeply downward amounting in 2002 to only USD 2.8 billion, from USD 5.8 billion and USD 11 billion in 2001 and 2000, respectively. Indonesia counts three categories for investment-new investment, expansions, and changes in status which inflates investment approval figures. Changes in status occur when a foreign investor purchases a domestic company–partially or wholly–in which case the entire equity of the Indonesian firm is added to the investment approval totals. Recent privatization sales greatly increased the amounts in the change in status category and resulted in inflated investment figures for 2002.

Draft Investment Law: Indonesia’s cabinet has not yet approved a new investment law to replace the existing law from 1967. The draft law provides for equal treatment of domestic and foreign investors, as well as a range of incentives, including tax holidays. It also creates a “one-stop shop,” concentrating investment approvals for all sectors within Capital Investment Coordinating Board’s (BKPM). However, some ministries strongly resist this dramatic increase in BKPM’s authority to approve investments. Regional governments oppose the bill and want to protect their right to approve investments. The Ministry of Finance opposes the law for budgetary reasons. Private investors, who were not consulted on the draft, oppose the tax holiday provisions and fear greater corruption in the investment approval process.

Under Indonesia’s current investment law, the Capital Investment Coordinating Board (BKPM) plays a key role in promoting foreign investment and approving many project proposals, including investments in Bonded Zones (Kawasan Berikat) and Integrated Economic Zones (KAPET). However, the Ministry of Industry and Trade, and relevant technical government departments responsible for oil and gas, banking, and insurance industries also have investment approval powers, leading to confusion among potential investors. Investors may also apply for investment approvals with Indonesian Embassies abroad or provincial Regional Capital Investment Coordinating Boards (BKPMDs). Regional autonomy legislation also appears to permit each province, district and city to accept and approve investment applications. Thus, additional regulations are needed to clarify the situation.

IBRA Asset Sales and Privatization: The Indonesian Bank Restructuring Agency (IBRA), established in the aftermath of the Asian financial crisis in early 1998, assumed control over bad corporate debts and insolvent banks estimated at USD 76 billion. Although the sale of these assets represent an opportunity for foreign investors, difficulties in asset valuation, labor resistance, nationalism, allegations of corruption and a lack of transparency, and the challenge of attracting buyers in an uncertain investment and security environment have slowed the program. In 2002 IBRA sold bank shares in Indonesia’s largest retail bank, Bank Central Asia (BCA), and Bank Niaga. In early 2003, IBRA sold shares in Indonesia’s fifth largest retail bank, Bank Danamon. IBRA plans to make an initial public offering for Bank Mandiri and sell shares of Bank Lippo, Bank Internasional Indonesia, Bank Permata, and Bank Rakyat Indonesia before the end of 2003. The government plans for IBRA to cease operations in February 2004. As of 1 January 2003, IBRA collected an estimated USD 13 billion from asset sales. IBRA officials plan to reduce their managed assets to USD 12 billion and transfer this amount to a yet undetermined government entity in the first quarter of 2004.

Sectoral Restrictions: Indonesia’s investment law allows the establishment of wholly owned foreign companies, except for sectors on the government’s “negative investment list.” Presidential Decree 96/2000 sets out the most recent list of sectors with investment restrictions of some sort. These include the following:

(a). Sectors closed to all investors: 

businesses that produce, process, or develop any of the following: marijuana, sponges, harmful chemical products, weapons, alcoholic drinks, casinos, air traffic systems.

(b) Sectors closed to foreign investors:

–germ plasm cultivation; –forest concessions; –lumbering contractors; –taxi/bus transport and small-scale water transport services; –print media, TV, radio, film and cinema, including distribution and exhibition; –small-scale retail trade.

(c). Industries with restricted ownership limits for foreigners:

–airport/seaport construction and operation; –electricity production, transmission and distribution; –atomic power plants; –shipping; –drinking water; –railway service; –certain medical services.

In addition, a variety of industries have limitation on foreign investment, usually restrictions on business locations and scope of operation. Projects in these industries require special licensing.

(d) Other sectors are reserved for domestic small-scale enterprises, or large or medium-scale foreign companies on condition that they partner with local small businesses or cooperatives before investment applications are approved, such partnerships need not include explicit domestic share ownership (See Appendix).

Government Regulation No. 20/1994 and Decree No. 15/1994 requires foreign investors with wholly owned companies to divest partial ownership to an Indonesian partner after fifteen years of commercial operations. The regulation does not specify the required divestment percentage, and may lead government officials to make arbitrary rulings in the future. BKPM officials maintain that foreign investors will only need to divest between one and five percent of ownership, but no companies are required to divest prior to 2008.

Under Indonesia’s Coal Contracts of Work (CCOW) foreign shareholders are required to divest up to 51 percent under a fixed timetable. The regulations, however, lack specific guidance on share transfer. This has spurred a major conflict between company management, provincial authorities and the central government over who will receive the shares for a major mining operation in East Kalimantan that represents the first case of divestment of majority ownership.

Distribution: The government has eliminated many restrictions on foreign investment in retail and wholesale operations. Foreign firms are now allowed to invest directly in both wholesale and large-scale retail trade sectors (generally interpreted as shopping centers, malls, supermarkets, and department stores), with the condition that they enter into a cooperative agreement with a small-scale enterprise. Such an agreement, in practice, did not require equity participation by the small-scale enterprise. In addition, many foreign firms use franchising, licensing, and technical service agreements to distribute their goods. Indonesia has lifted many restrictions on foreign participation in domestic distribution services.

Under current regulations, foreign companies manufacturing in Indonesia may distribute their locally produced goods at the wholesale level and may apply for permits to import and distribute other products as well. These licensing processes may be substantially affected by decentralization. Companies engaging in wholesale distribution may not conduct retail operations directly, but must form a separate retail company.

Investment Approval Process: Investment in Indonesia is categorized as either domestic (PMDN) or foreign (PMA). An investment with any degree of direct foreign ownership is defined as PMA. A foreign investor may be an individual or a corporate entity. A PMA must have a minimum of two managers/shareholders, and at least one director and chairman. There are no minimum or maximum total investment (debt plus equity) requirements, however investors in the manufacturing sector typically are expected to have a debt to equity ratio of 3:1 or less, while those in the agricultural or mining sectors may have ratios of 6:1 or greater.

Private entities may establish, acquire, and dispose of interests in business enterprises. Current regulations permit foreign firms to acquire domestic firms in sectors open for foreign investment after receiving approval from BKPM. When reviewing applications from foreign firms seeking to acquire locally established firms, BKPM frequently requires the buyer to reserve a small stake for a local buyer or the original owner. In cases where a foreign buyer is buying out a troubled Indonesian firm, BKPM frequently requires the investor to inject capital, not just provide management expertise, technology or assume outstanding loans. The approval process to take over a troubled firm may take as long as two months.

BKPM claims to require only ten days to process the initial investment approval (IIA) (or investment license) once the applicant has furnished all requested information and documentation. In practice, however, this process can easily be delayed for two to four weeks depending on the availability of officials and complete submission of documents. The IIA serves as a temporary operating license for a period up to three years (the IIA can be extended), and it enables the PMA company to start its commercial activities.

The IIA allows the parties to form a limited liability company (Perseroan Terbatas, or P.T.) by executing through an Indonesian notary a Deed of Establishment. The Articles of Association of the PMA company are included in the Deed of Establishment and must comply with Law No. 1/1995 on Limited Liability Companies. With the Deed of Establishment executed, the company may obtain a taxpayer registration number from the Directorate General of Taxation of Foreign Companies. This requires about one week. The PMA company must open a special foreign investment account at an approved foreign exchange bank in Indonesia. Should the PMA company’s IIA indicate plans to hire expatriates, it will need to file an application for approval of its manpower plan with BKPM.

A PMA company becomes a limited liability company after the Ministry of Justice and Human Rights (MOJHR) grants approval. The process takes a maximum of two months after the MOJHR receives the Deed of Establishment, tax ID number, PMA bank account information from the notary who initially prepared the Deed of Establishment. After obtaining approval from the MOJHR, the PMA should submit its Deed of Establishment to the Ministry of Industry and Trade (MOIT) within thirty days. Following registration at the MOIT, the Deed of Establishment should be published in the Supplement to the State Gazette (Tambahan Berita Negara), a process normally handled by the notary. During the time between receiving approval from the MOJHR and Deed of Establishment’s publication in the Gazette the founding shareholders are personally liable for all obligations undertaken in the company name. If importing, BKPM may require the firm to seek an additional license, and the PMA company may need to enroll employees in Indonesia’s mandatory employee social insurance program run by JAMSOSTEK. If the PMA employs more than 25 people, the Manpower Department must also approve.

The IIA can be used until the PMA company reaches the state of commercial operation or commercial production. At that point, the PMA company must submit an application for a Permanent Business License (Ijin Usaha Tetap, or IUT) with a recommendation letter from BKPMD to BKPM. Each IUT is valid for 30 years and subject to renewal. The investor must submit semi-annual reports to BKPM and BKPMD.

Oil and gas: As required under Oil and Gas Law 22/2001 of October 2001, the Indonesian government created two new bodies to take over Pertamina’s upstream and downstream regulatory functions. In July 2002, the government formed the Implementing Body for Oil and Gas Upstream Activities (BPMIGAS). This nominally independent body reports directly to the President and is principally responsible for managing the Production Sharing Contracts (PSCs). The government established the downstream regulatory authority, BPHMIGAS, in December 2002. Like its upstream counterpart, BPHMIGAS is also an independent body responsible for regulating the supply and distribution of oil fuel and natural gas, as well as setting tariffs for natural gas pipelines. According to the law, both authorities are termed “state legal entities” and therefore not government bodies. Full details on the functions and responsibilities of both organizations bodies will be contained in government implementing regulations that have not yet been issued.

In June 2003, the government passed a presidential decree changing state oil and gas company Pertamina into a limited liability company. This is the first step towards the complete privatization of Pertamina by 2006. The decree requires the Ministry of Finance and the Ministry of Energy and Mineral Resources to jointly decide which assets the new Pertamina will retain. This important issue includes whether or not Pertamina will retain non-core (i.e., non petroleum-related) assets, as well as core assets such as oil refineries and Liquefied Natural Gas (LNG) plants. The decree also requires Pertamina to transfer all geothermal sector activities to a subsidiary within two years.

Services: trade barriers continue to exist in many sectors, in particular professional services. Foreign accounting firms must operate through technical assistance arrangements with local firms, and only citizens of Indonesia can be licensed as accountants. Foreign agents and auditors may act only as consultants and cannot sign audit reports. Foreign law firms cannot establish a legal practice in Indonesia, so many foreign law firms enter into a cooperative work agreement with local firms. Indonesian law allows only Indonesian nationals who have graduated from an Indonesian legal facility or other recognized institution to join the local bar and practice law. Foreign engineering consultants can operate only by forming a joint venture with local partners in Indonesia.

A.2. Conversion and Transfer Policies

Exchange rate risk remains a major concern of investors, because of the volatility in the rupiah (Rp) since 1997. The rupiah has strengthened recently, but could be undermined should capital that has flowed into short-term bonds quickly reverse and exit Indonesia. The rupiah’s strength also depends on future actions by the Indonesian government, as well as overall political or economic stability. As of June 2003, the rupiah traded around 8,100/USD, an increase of over 9 percent since January 2003. At President Megawati’s inauguration in July 2001, the rupiah traded at Rp 11,440/USD. Previously, the rupiah was very volatile ranging from Rp 2,500/USD prior to the 1997 Asian Financial Crisis to a low of Rp 17,000/USD in January 1998.

28. Indonesia has no system of capital controls and foreign exchange flows freely in and out of the country. No prior permits are necessary to transfer foreign exchange, and foreign investors have the right to repatriate capital and profits at the prevailing rate of exchange. The government places no restrictions on outward direct investment. Since April 2000, Indonesian residents must report all foreign exchange transactions above USD 10,000 or the equivalent. Bank Indonesia introduced regulations prohibiting banks in Indonesia from transferring Rupiah to non-residents in January 2001 to control speculative trading of the Rupiah. The regulations also limit the quantity of derivative transactions against the rupiah by onshore banks to USD 3 million.

A.3. Expropriation and Compensation

Article 21 of the 1967 Foreign Capital Investment Law stipulates that the government shall not initiate nationalization of foreign investments except by law and when such action is necessary in the interest of the state. According to BKPM, Indonesia respects a company’s right to compensation if expropriated; however, the government has not expropriated any foreign investment since the passage of the 1967 law. In 1999, however, the Overseas Private Investment Corporation (OPIC) paid a claim by a US investor after the government failed to honor an arbitration award. Indonesia subsequently agreed to repay OPIC. The government also paid USD 15 million compensation to the Multilateral Investment Guarantee Agency (MIGA) for its insurance payment to a power project.

A.4. Dispute Settlement

The court system does not provide effective recourse for resolving commercial disputes. The judiciary is nominally independent under the law, and legal practitioners say irregular payments and other collusive practices often influence case preparation and the judicial ruling. The government recognizes the need for judicial reform, but has not yet taken action. In several instances the local courts accepted jurisdiction over commercial disputes despite contractual arbitration clauses calling for adjudication in foreign venues.

Indonesia is a signatory to the Convention On The Settlement Of Investment Disputes Between States And Nationals Of Other States (ICSID). So far only one US investment company has brought a case to the ICSID, which ruled in its favor. Indonesia’s Arbitration Law recognizes the right of parties to apply any rules of arbitration procedure they may mutually agree upon, and provides default procedural rules that apply if no other rules have been designated. An Indonesian commercial arbitration board, BANI, is available if both parties agree. Companies have resorted to ad hoc arbitrations in Indonesia using the United Nations Commission on International Trade Laws (UNCITRAL) arbitration rules, as well as others. Other companies in Indonesia have used ICC arbitrations.

On 12 August 1999 Indonesia’s Parliament passed Arbitration Law Number 30, endowing the District Court of Central Jakarta with the power to enforce international arbitration awards. Prior to the passage of the new Arbitration law in 1999, enforcement lay with the Supreme Court, which was slow to act on decisions. Since 1999, Indonesian courts have swiftly enforced international arbitration awards with some executed within a month of the request for enforcement. The new law greatly reduces instances where district courts fail to apply the law, and legal practitioners predict the process should improve as more judges educate themselves about arbitration. Since 1981 when Indonesia joined the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, fewer than two dozen foreign awards have registered with Indonesian courts (most of which have been enforced). The domestic and international press have widely publicized recent cases where those awards have not been enforced.

A.5. Performance Requirements and Incentives

The government notified the WTO of its compliance with Trade-Related Investment Measures (TRIMS) on 26 August 1998.

The Parliament revoked tax holiday incentives in 2000. However, a BKPM sponsored draft investment bill, under cabinet review, aims to reestablish such incentives. Various fiscal incentives are available to both foreign and domestic investors. A company producing for the domestic market may apply for import duty exemptions on all required machinery and equipment as well as on raw and supporting materials needed during the first two years of commercial production. A company producing for export markets may apply for restitution of import duties paid on inputs subsequently re-exported in finished form.

Indonesia expects foreign investors to contribute to the training and development of Indonesian nationals, allowing the transfer of skills and technology required for their effective participation in the management of foreign companies. Under Ministry of Manpower regulations, any expatriate who holds a work and residence permit must contribute USD 1,200 per year to a fund for local manpower training at regional manpower offices. As a general rule, a company can hire foreigners only for positions that the government has deemed open to non-Indonesians. Employers must have manpower-training programs aimed at replacing foreign workers with Indonesians.

At present, Indonesia does not have formal regulations granting national treatment to U.S. and other foreign firms’ participating in government-financed and/or subsidized research and development programs. The State Ministry for Research and Technology handles applications on a case-by-case basis. However, the Ministry is currently drafting regulations to enable interested parties to participate in research and development programs in certain circumstances.

Indonesia does not require investors to purchase from local sources or export a certain percentage of output. The government eased rules in June 1998 that encouraged investors to locate in industrial estates. Foreign firms are not required to disclose proprietary information to the government before investing.

A.6. Right to Private Ownership and Establishment

Indonesia recognizes the right to private ownership and establishment and relies on the private sector (albeit often heavily protected), as the principal engine of economic growth. At the same time, State-owned Enterprises (SOEs) play a dominant role in many sectors, including oil and gas retail and distribution, electric power generation and transmission, civil aviation, banking, and fertilizer production and wholesale distribution. In the past three years Indonesia promoted competition in some sectors and has decreased the privileges awarded to SOEs. The Parliament formed the State Ministry for SOEs in 1998; privatization is an important part of its mandate, but political opposition has effectively hindered attempts to privatize. Some provincial governments have improved management and transparency of provincially owned firms (BUMD’s) to stem losses and prepare them for privatization.

A.7. Protection of Property Rights 

Foreign entities have no freehold rights to land ownership in Indonesia. Foreign investors’ land holdings are usually obtained through long-term lease agreements (normally for 30 years) with the government or private parties. These lease holdings can be used as collateral. Government regulations allow mortgages to be registered against real property and seagoing vessels in their appropriate registries, as well as security interests in chattel, equipment, accounts receivable, and insurance proceeds. A search facility currently exists only for mortgages. The lack of transparency in Indonesia’s courts means uncertainty whether security interests will be recognized and enforced. Foreign companies may also establish a limited company under Indonesian law that can legally obtain rights to land.

The court system does not provide effective recourse for settling property disputes. The fall of President Soeharto’s regime and Indonesia’s decentralization process unleashed a flurry of new land claims by local residents against companies, often operating on government-granted concessions located in their communities. The problem of incomplete or inaccurate record keeping is compounded by an ineffective and corrupt enforcement system.

The US government in May 2003 again placed Indonesia on the Special 301 Priority Watch List for inadequate protection of Intellectual Property Rights (IPR), where Indonesia has been since the 1980s. The Indonesian government has steadily improved the regulatory and legal framework for the protection of IPR, however, enforcement continues to fall short. US businesses reported that Indonesia ranks as the third largest producer of pirated products. They maintain that 90 percent of all CDs (audio, video, and software) sold in Indonesia are pirated and estimate that industry suffered losses in 2002 of USD 253 million, a 33 percent increase over prior year.

Indonesia’s new copyright law (Law 19/2002) takes effect on July 29, 2003. The new law increases fines up to Rp 500 million (USD 62,000) and provides for prison terms of up to five years for dealers of pirated materials. The law directs cases of alleged copyright violations to be tried in commercial courts, and for the rendering of judgments within 90 days. As part of the law’s implementation, the Ministry of Industry and Trade plans to issue optical disc regulations that would enhance the government’s ability to identify and prosecute producers of pirated products. In an effort to enhance interagency coordination on enforcement, Indonesia’s Ministry of Justice recently formed an IPR task force made up of the national police, customs, attorney general, judiciary, and members of the computer software and entertainment industries. The task force has already conducted a few high profile raids.

Indonesia is a member of the World Intellectual Property Organization, but has not yet ratified the related WIPO Performances and Phonograms Treaty (WPPT). The Ministry of Justice prepared a Presidential decree ratifying WPPT last year, and Justice officials expect the President to sign the decree sometime in 2003. Indonesia acceded to numerous international conventions on intellectual property rights, including the Paris Convention for the Protection of Intellectual Property; the Berne Convention for the Protection of Literary and Artistic Works (with a reservation on Article 33); the Patent Cooperation Treaty; Trademark Law Treaty; the Nice Agreement for the International Classification of Unclassified Goods and Services.

Patents: The current patent law dates from 2001, which amended and consolidated in a single text all previous legislation. In 1997, Indonesian law extended the term of patent protection to 20 years from 14 years, and maintained the provision for a two-year patent extension. The amendment allows for the patenting of plant and animals. However, some of the weaknesses of the old law persist. Chief among these flaws is the requirement that an inventor must produce a product or utilize a value-added process in Indonesia in order to obtain patent protection for the product or process. Inventions that are contrary to Indonesian laws and regulations are excluded from patent ability, and the standard for excluding inventions without domestic content appears to be inconsistent with TRIPS requirements.

Trademarks: Indonesia enacted its new trademark law on August 1, 2001. Like the new patent law, the latest version consolidated into one text a series of trademark laws enacted over the past 20 years. The new law raised the maximum fine for trademark violations to Rp 1 billion (USD 95,000) and slightly reduced the maximum possible prison term. The government justified this move by claiming that financial penalties were a greater deterrent to IPR violators than imprisonment. Foreign rights holders, arguing that most IPR cases never result in the maximum sentence, had pushed for minimum sentencing guidelines rather than higher fines.

The trademark law provides for the determination of trademark rights by priority of registration, rather than by priority of commercial use. The law also provides for the protection of well-known marks, but offers no administrative procedures or legal ground under which legitimate owners of well-known marks can cancel pre-existing registrations. Currently, the only avenue for challenging existing trademark registrations in Indonesia is through the commercial courts, which generally have issued decisions within three months upholding legitimate trademarks.


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