Information on Investment in Bali
By Bali Regional Investment Coordinating Board of Bali Province

V. IMPLEMENTATION PROVISIONS OF FOREIGN CAPITAL INVESTMENT
Content of This Session
Implementation Provisions of Foreign Capital Investment
A. Foreign Capital Investment Approval
B. A Foreign Capital Investment Can Be Conducted in ...
IMPLEMENTATION PROVISIONS OF FOREIGN CAPITAL INVESTMENT
A . Foreign Capital Investment Approval
  1. Approval for foreign capital investment shall be the approval for a capital investments, including the facilities there-of, provided by the President of the Republic of the Indonesia, se forth in the SPPP/ Notification Letter on Presidential Approval by the state Minister for Mobilization of investment Funds / Chairman of the capital investment Coordination Board { MENINVES / Chairman of the BKPM ).
  2. The foreign capital investment approval as referred, is proved in the framework of the implementation of the capital investment activities, by establishing a foreign capital investment company.
  3. A company, established in the framework of foreign capital investment as referred, shall Be in the form of a limited Liability Company, according to the laws of Indonesia, and domiciled in Indonesia.

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B . A Foreign Capital Investment Can Be Conducted in the form of
  1. A joint venture between a foreign Capital, owned by a foreign national and / or a foreign Legal entity, with capital owned by an Indonesian national and / or Indonesian Legal Entity, consisting of a state-owned Enterprise, Regional Administration-owned business entity, cooperative, PMA company, PMDN company, non PMA / PMDN company, or
  2. Directly, in the sense that the entire { 100%) of its capital consists of foreign capital, owned by a foreign national and or a foreign legal entity.
  3. A foreign capital investment can enter the business sectors, stated to be open for foreign Capital investment.
  4. Investment value of the Foreign Investment { PMA ).
    • The investment may consist of own equity capital entirely or own equity capital plus Loan capital.
    • The stipulation of the investment amount shall be determined fully by the capital investor concerned, in accordance with the economic feasibility and the reasonability of the investment amount for is business activities
  5. The business permit for Foreign capital Investment
    • A capital investment company, established in the framework of foreign capital investment, which is ready to produce commercially, shall have a permanent business permit
    • The business permit for foreign capital investment stipulated for a period of 30 ( thirty ) years as of the time the company is producing commercially, as set forth in its Permanent Business Permit.
    • A foreign capital investment company, which is conducting a business expansion, is Given a business permit extension for 30 { thirty ) years as of the date said business expansion is commercially producing as set forth in the business Expansion permit.
    • The business permit, of which the effectiveness has expired, can be renewed, if in ist Business activities implementation development, it clearly gives a positive impact on the national economy, among other the provision of employment opportunities, the payment of taxes, the increase of export, and the safeguarding of environment preservation and balance.
    • The renewal of the permit, is given for a period of 30 years, in accordance with the Conditions and procedure for the application of a business permit.
  6. The business Location
    • The business activities of a company, established in the framework of foreign capital Investment,  may be located in all territories of the Republic of Indonesia.
    • The business activities of a company, established in the framework of foreign capital Investment, shall be located in an allocated region, in accordance with its business activities as stipulated in the Space Lay-Out General Plan, or the Space Lay-Out Detailed Plan.
    • In case the land. Grade Region / Regency / Municipality has an Industrial Zone, which is Already physically ready for use, then the manufacturing industrial business activities shall preferably be located in the Industrial Zone.
    • A foreign capital investment company can be located outside the Industrial Zone, in Accordance with allocated area, as long as the forwarded technical and economical reasons can be approved.
  7. Join Foreign Capital Investment.
    • The share equity capital participation in a joint company, established in the framework of foreign capital investment, is stipulated based on mutual agreement of the parties involved in the establishment of said joint company.
    • Any change in the ownership as well as in the share capital amount of the company, is conducted based on mutual agreement of the parties.
  8. A foreign capital investment company, which is conducting business activities in the sector {s) of :
    • Harbors;
    • Production, transmission and distribution of electricity for the public;
    • Telecommunication;
    • Navigation;
    • Aviation;
    • Drinking water;
    • Public railways;
    • Atomic energy generating;
    • Mass media;
  9. The joint venture company as referred shall be established with a company equity / share Capital and a subscribed capital of at least 5% {five percent) of the total equity capital of the company, subscribed by Indonesia National and / or an Indonesia legal entity, of which the entire capital is owned by the state and / or Indonesia nationals.
  10. The change in shares ownership shareholding directly in a joint foreign capital investment company as referred, because of a transfer of share ownership as well as of an increase of equity capita, shall not cause the shares ownership shareholding of the Indonesia party to become smaller than the paid-up company share equity capital, previously subscribed
  11. The implementation of the business activities as referred by a joint venture company, shall still With due observance of the prevailing legislative regulations.
  12. A capital investment company, establish in the framework of joint foreign capital investment,which is already commercially producing as set forth in ist permanent business permit, can establish a new company.
  13. The new company,established as referred has the status of;
    1. A company established in the framework of foreign capital investment, if among the participants in the new joint venture company, there is a new foreign national and / or foreign legal entity
    2. A company established in the framework of domestic capital investment, if;
      • 100% of its equity capital is owned by the foreign capital investment company concerned and or
      • The participants consist of an Indonesian legal entity and / or Indonesian
  14. Direct Foreign Capital Investment.
    A capital investment company,established in the framework of direct foreign capital investment, is not permitted to conduct business activities in the business sector, such as ; Harbors, Production, transmission and distribution of electricity for the public, Navigation, Aviation, Drinking water, Public railways, Atomic energy generating, Mass media.
    1. A foreign capital investment company, of the which the whole { 100% ) of its equity capital is owned by a foreign national and / or foreign legal entity, shall sell part of its share to Indonesia nationals and / or an Indonesia legal entity, within a period of at the latest 15 {fifteen ) years since it is commercially producing, as set forth in its permanent business permit.
    2. The deposited paid – up and placed equity capital, sold to the Indonesia party is stipulated, based on mutual agreement of the parties.
    3. A capital investment company, established in the framework of a direct foreign capital Investment, which is already commercially producing as set forth in the permanent Business Permit there – of, can establish a new company.
    4. The new company, established as referred has the status of :
      • A company established in the framework of foreign capital investment, if among the Participants in the new joint venture company, there is a new foreign national and / or foreign legal entity,
      • A company established in the framework of domestic capital investment, if;
        1. 100% of its equity capital is owned by the foreign capital investment company concerned ; or
        2. The participants consist of an Indonesian legal entity and / or Indonesian Nationals.
  15. Transfer of shares ownership / shareholding 0f companies, established in The Framework of Foreign Capital Investment.
    • The transfer of shares ownership / shareholding of companies, established in the framework of foreign capital investment, already producing commercially and / or already legally constituting an Indonesian legal entity, shall be conducted by way of selling the shares through direct ownership and / or through the domestic capital market.
    • The transfer of shares ownership shareholding shall be with the mutual agreement of the Parties, as set forth in the RUPS / General Meeting of Share holders.
    • For companies, established in the framework of foreign capital investment, which are not yet commercially producing and ? or which are not yet legally an Indonesian legal entity, the transfer of equity capital ownership shall be conducted through a change in the shares ownership / share holding.
    • The change in the equity capital ownership, shall be with the approval of the parties, Mentioned in the Notification Letter on Presidential Approval.
  16. The purchase of Company Share
    1. By Joint Foreign Capital Investment Company.
      • Joint foreign capital investment companies, which are already commercially producing as set forth in its Permanent Business Permit, can buy shares of an already   established company, which as already the form of a Limited Liability Company, according the Indonesia law.
      • A company, of which the shares are going to be purchased as referred shall be :
        1. A company, which is already commercially producing, as set forth in the Permanent Business Permit there – of ; or
        2. A company, not yet commercially producing, but which is already legally a legal Entity, according to the Indonesian Law.
      • The implementation of the purchase of shares of an already established company by a joint foreign capital investment company, can be conducted through direct ownership and / or through the domestic capital market.
      • The purchase of shares by a joint foreign capital investment company, conducted direct ownership, can only be carried out, if the business sector of the company, at the moment of the purchase, is open for foreign capital investment.
      • The status of a company, of which the shares are to be purchased shall be the same as the status of the said capital investment company, at the time of the establishment.
      • In case a company, of which the shares are to be purchased is not yet commercially producing, and is not yet legally a legal entity according to Indonesian Law, wheres the period for the project completion as stipulated in the capital investment approval letter has not yet expired, then the founders can conduct an amendment in the shares ownership shareholding in the capital investment company concerned.

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    2. By Foreign Legal Entities, Direct PMA, Foreign Nationals.
      1. A foreign legal entity and / or a direct foreign capital investment company and / or a foreign national can purchase shares of an already established company, which has the form of a Limited Liability Company, according to the Laws of Indonesia.
      2. A company, of which the shares are to be purchased, shall be :
      3. The implementation of the purchase of shares from an already established company by a foreign legal entity and / or a foreign capital investment company and / or a foreign national, is for the purpose, that is can be conducted through direct ownership and or through the domestic capital market.
      4. The purchase of company shares conducted through direct ownership, can only be conducted, if a business sector of the company, of which the shares are to be purchased, at the time of the shares purchase, is open for foreign capital investment.
      5. The number of shares of the Indonesian participants in the company, shall not become smaller than 5% { five percent ) of the paid-up and subscribed share equity capital amount. The purchase of company shares, is conducted of the framework of the safety and soundness of the company concerned, for the purpose of :
        • Continuing the development, which is still at the construction stage; and / or
        • conducting the conversion of the loan capital into equity capital; and / or
        • Increasing the marketing of the production results; and or
        • Increasing the export and / or utilizing new technology
      6. The status of a company, of which part of the shares are purchased by a foreign legal entity and / or direct foreign capital investment company and / or a foreign national, shall be the same as the company status at time it was established.
      7. For companies, of which the shares have been purchased through direct ownership and through the capital market, can only be conducted, if the business sector of the company the of which the shares are to be purchased, at the time of the shares purchase, is open for foreign capital investment.
      8. In case the company, of which the shares have been purchased, is a company, established in the framework of domestic capital investment, and wants to change the company status into a company established in the framework of foreign capital investment, the it shall have the approval from Meninves / Chairman of BKPM.
      9. In case the company, of which the shares have been purchased, is a company, established not in the framework of domestic capital investment, and not the framework of foreign capital investment, and wants to change the company status, established in the framework of foreign capital investment, then the company concerned shall obtain the approval of Meninves / Chairman of BKPM
      10. In case a company, which is already established, is not yet commercially producing, and is not yet a legal entity according to the Laws of Indonesia, where as the period for the project completion as stipulated in its capital investment agreement letter, has not yet expired , can conduct a change in the shares ownership shareholding in the capital investment company concerned.

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    3. Foreign Capital Investment Companies, Of Which The Entire Share/Equity Capital has been Sold.
      A foreign capital investment company, of which the entire { 100% of the ) equity capital has already been sold to Indonesia nationals and / or an Indonesian legal entity, of which the entire { 100% of the ) shares are owned by the state and / or by Indonesian nationals, intending to change the company status into a domestic capital investment company, shall obtain the approval of Meninves / Chairman of BKPM.

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    4. Purchase of Shares Through The Capital Market.
      The purchase of shares from an already established company a foreign legal entity and / or Foreign capital investment company and / or a foreign national, through the domestic capital Market, shall be conducted, based on the prevailing legislative regulation.

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