Frequently Asked Questions: #investmentindonesia

Okusi Associates offers comprehensive project management services for setting up manufacturing facilities in Indonesia, including:

• Site selection and land acquisition - We assist in identifying suitable properties, negotiating terms, and managing the acquisition process for your factory location.

• Factory establishment - We oversee the entire process of setting up your manufacturing facility, from site selection to construction management and equipment procurement.

• Specialist licensing - Our team navigates the complex landscape of industry-specific licenses and permits required for manufacturing operations, ensuring full compliance with regulations.

• Import process management - We help optimize your supply chain by navigating import regulations and taking advantage of available government incentives to reduce costs.

• Recruitment of personnel - Our HR experts assist in identifying, screening, and hiring skilled workers needed for your manufacturing operations.

• Tax and accounting compliance - We ensure you understand and fulfill all tax and accounting obligations related to your manufacturing business.

• Local government relations - We leverage our network and relationships with local government entities to secure necessary approvals and support for your project.

Throughout the process, you’ll have a dedicated project manager as your single point of contact overseeing all aspects. Our experienced team provides customized solutions, regular progress updates, and proactive planning to efficiently deliver your manufacturing facility project while mitigating risks. We handle the complexities so you can focus on your core business.

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The duration of a due diligence process for an Indonesian company can vary depending on several factors:

• Scope of Due Diligence: A comprehensive due diligence typically takes 2-4 weeks, but can extend to 6-8 weeks for more complex cases.

• Company Size and Complexity: Larger companies with multiple subsidiaries or diverse operations may require more time.

• Data Availability: The process can be expedited if the target company has well-organized and readily available documentation.

• Type of Due Diligence:

  • Legal due diligence: 2-3 weeks
  • Financial due diligence: 3-4 weeks
  • Tax due diligence: 2-3 weeks
  • Operational due diligence: 2-4 weeks

• Cooperation of the Target Company: Timely responses and access to information can significantly impact the timeline.

• Regulatory Considerations: Certain industries may require additional regulatory checks, potentially extending the process.

• Red Flags: If issues are uncovered during the initial review, further investigation may be necessary, prolonging the timeline.

Factors that can expedite the process:

• Pre-due diligence preparation by the target company
• Engagement of experienced local professionals familiar with Indonesian business practices
• Clear communication and coordination between all parties involved

It’s important to note that while a thorough due diligence process takes time, it’s crucial for identifying potential risks and ensuring a sound investment decision in the Indonesian market.

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Okusi Associates offers comprehensive project management services for setting up a manufacturing facility in Indonesia. These services typically include:

• Feasibility Study: Assessing the viability of the project, including market analysis, location scouting, and financial projections.

• Regulatory Compliance: Ensuring all necessary permits and licenses are obtained, including environmental impact assessments if required.

• Company Establishment: Handling the PMA company setup process, including checking the Negative Investment List (DNI) for any restrictions on foreign ownership in the manufacturing sector.

• Land Acquisition: Assisting with land purchase or lease negotiations, due diligence on property titles, and zoning compliance.

• Factory Design and Construction: Coordinating with architects, engineers, and contractors to oversee the design and construction process.

• Equipment Procurement: Helping source and import necessary machinery and equipment, including handling customs clearance.

• Human Resources: Recruiting key personnel, developing HR policies, and ensuring compliance with Indonesian labor laws.

• Supply Chain Setup: Establishing relationships with local suppliers and setting up logistics networks.

• Financial Management: Assisting with capital budgeting, financial forecasting, and setting up accounting systems.

• Legal Support: Providing ongoing legal advice on contracts, intellectual property protection, and regulatory compliance.

• Liaison with Government Agencies: Facilitating communication and compliance with relevant government bodies.

• Risk Management: Identifying potential risks and developing mitigation strategies.

• Timeline and Milestone Management: Creating and monitoring project timelines to ensure timely completion.

• Quality Control: Implementing quality management systems to meet international standards.

• Environmental Compliance: Ensuring the facility meets all environmental regulations and standards.

• Technology Transfer: Assisting with any technology transfer processes required for the manufacturing operation.

• Operational Setup: Helping establish operational procedures and systems for the manufacturing facility.

These services can be tailored to meet the specific needs of your manufacturing project in Indonesia. Okusi Associates would work closely with you to understand your requirements and provide a customized project management solution.

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Okusi Associates provides sector-specific market analysis for various industries in Indonesia. Our specializations include:

• Tourism and Hospitality
• Real Estate and Property Development
• Creative Industries
• Digital and IT Services
• Health and Wellness
• Education and Training
• Manufacturing
• Renewable Energy
• Agriculture and Agribusiness
• Retail and E-commerce

Our market analysis services typically cover:

• Market size and growth potential
• Competitive landscape
• Regulatory environment and compliance requirements
• Consumer behavior and trends
• Investment opportunities and challenges
• SWOT analysis
• Economic and political factors affecting the sector

We tailor our analysis to the specific needs of each client, considering factors such as:

• The client’s business model and objectives
• Target market segments
• Geographic focus (e.g., specific regions or cities in Indonesia)
• Short-term and long-term business goals

Our team of experts utilizes various research methodologies, including:

• Primary research (interviews, surveys, focus groups)
• Secondary research (industry reports, government data, academic studies)
• Data analytics and trend analysis
• Benchmarking against industry best practices

To ensure the most accurate and up-to-date information, we:

• Regularly update our knowledge base on sector-specific regulations
• Maintain relationships with industry experts and government officials
• Monitor changes in the Negative Investment List (DNI) that may affect foreign investment in specific sectors

For detailed information on our market analysis services, including pricing and turnaround times, please refer to the Okusi Associates website or contact our office directly.

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Yes, there are restrictions on foreign ownership in certain business sectors in Indonesia. These restrictions are outlined in the Negative Investment List (DNI), which is a key regulation that foreign investors must consider when establishing a PMA company. Here are the main points to understand:

• The DNI categorizes business sectors into three main groups:

  • Open sectors: Fully open to foreign investment
  • Restricted sectors: Open to foreign investment with certain conditions or limitations
  • Closed sectors: Not open to foreign investment

• Restricted sectors may have limitations such as:

  • Maximum percentage of foreign ownership allowed
  • Requirements for partnerships with local companies
  • Specific location restrictions
  • Special licensing requirements

• Some examples of restrictions include:

  • Certain retail trade sectors: Limited to 67% foreign ownership
  • Construction services: Various ownership limits depending on the specific service
  • Tourism-related businesses: Some subsectors have ownership limits

• The DNI is periodically updated by the Indonesian government, so it’s crucial to check the most recent version when planning your investment

• Even in open sectors, there may be additional regulations or requirements that affect foreign investors

• Some sectors considered strategic or vital to national interests may have more stringent restrictions or be completely closed to foreign investment

• It’s highly recommended to consult with legal experts or investment advisors familiar with the current DNI and related regulations before proceeding with your investment plans

• The full DNI list and detailed explanations can be found on the BKPM (Indonesian Investment Coordinating Board) website or through authorized investment consultants

Always verify the current status of your intended business sector in the DNI before proceeding with PMA company establishment to ensure compliance with Indonesian foreign investment regulations.

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Okusi Associates can provide comprehensive assistance in setting up a PMA (Penanaman Modal Asing) company in Indonesia through the following services:

• Investment Planning: Checking the Negative Investment List (DNI) to ensure your business sector is open to foreign investment and advising on any ownership restrictions.

• Document Preparation: Assisting with the preparation of required documents such as Articles of Incorporation, Deed of Establishment, and Investment Plan.

• Application Submission: Helping submit the investment application to the Indonesian Investment Coordination Board (BKPM).

• License and Permit Acquisition: Guiding you through obtaining necessary licenses and permits, including:

  • Investment Permit
  • Company Registration (TDP)
  • Tax Identification Number (NPWP)
  • Business Identification Number (NIB)

• Bank Account Setup: Assisting with opening a corporate bank account in Indonesia.

• Social Security Registration: Helping register your company and employees for BPJS (social security and health insurance).

• Ongoing Compliance Support: Providing services for:

  • Accounting and Tax Reporting
  • Payroll Management
  • Corporate Secretarial Services

• Work Permits and Visas: Assisting with obtaining KITAS, MERP, and IMTA for foreign employees.

• Professional Shareholder Services: Offering nominee shareholder services if required.

• Company Domicile Services: Providing virtual office services for company registration purposes.

• Post-Establishment Support: Offering ongoing assistance with:

  • Legal and regulatory compliance
  • License renewals
  • HR consultancy
  • Business expansion strategies
  • Product registration
  • Intellectual property protection

By leveraging Okusi Associates’ expertise, you can navigate the complex process of establishing and operating a PMA company in Indonesia more efficiently, ensuring compliance with local regulations and optimizing your business operations.

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The minimum capital requirements for a PMA (Penanaman Modal Asing) company in Indonesia are as follows:

• Total Investment Value: The minimum total investment value for a PMA company is IDR 10 billion (approximately USD 670,000), excluding land and buildings.

• Issued and Paid-up Capital: The minimum issued and paid-up capital is IDR 2.5 billion (approximately USD 167,000).

• Foreign Ownership: If the company is 100% foreign-owned, the entire IDR 2.5 billion must be paid up.

• Joint Ventures: For joint ventures with Indonesian partners, the foreign portion of the IDR 2.5 billion must be paid up in proportion to the foreign ownership percentage.

• Exceptions: Some business sectors may have higher minimum capital requirements. It’s essential to check the specific regulations for your industry.

• Proof of Capital: The paid-up capital must be deposited in an Indonesian bank account under the company’s name and verified by a public accountant.

• Gradual Investment: The total investment of IDR 10 billion can be realized gradually over time, typically within 1-3 years, depending on the business plan submitted to BKPM (Investment Coordinating Board).

• Capital Increases: Companies can start with the minimum required capital and increase it later as needed.

It’s important to note that these requirements may be subject to change, and certain business sectors or special economic zones might have different capital requirements. Always consult with a qualified professional or the relevant Indonesian authorities for the most up-to-date information regarding your specific business case.

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Setting up a business in Indonesia offers several benefits for foreign investors:

• Large and Growing Market: Indonesia is the largest economy in Southeast Asia with a population of over 270 million, providing access to a vast consumer base.

• Strategic Location: Positioned at the crossroads of the Pacific and Indian Oceans, Indonesia offers excellent access to other Asian markets.

• Rich Natural Resources: The country is abundant in natural resources, including oil, gas, minerals, and agricultural products.

• Young Workforce: Indonesia has a large, young, and increasingly skilled workforce, providing a valuable talent pool for businesses.

• Improving Infrastructure: Ongoing infrastructure development is enhancing connectivity and logistics across the archipelago.

• Economic Stability: Indonesia has maintained relatively stable economic growth over the past decades.

• Government Incentives: The government offers various incentives for foreign investors, including tax holidays and allowances in certain sectors.

• Digital Economy Growth: Rapid adoption of digital technologies is creating new business opportunities, especially in e-commerce and fintech.

• Tourism Potential: Indonesia’s diverse culture and natural beauty make it a prime destination for tourism-related businesses.

• ASEAN Membership: As part of ASEAN, Indonesia provides access to a broader regional market through various free trade agreements.

• Improving Ease of Doing Business: Recent reforms have aimed at simplifying business processes and reducing bureaucracy.

• Cultural Diversity: The country’s cultural richness can be leveraged for various business opportunities, from creative industries to niche markets.

Before proceeding with any investment plans, it’s crucial to consult the Negative Investment List (DNI) to ensure your intended business activity is open to foreign investment and to understand any applicable restrictions or local partnership requirements.

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Yes, a foreign investor can obtain a KITAS (Kartu Izin Tinggal Terbatas, or Limited Stay Permit Card) without a job offer in Indonesia. This is possible through the following methods:

• Investor KITAS: Foreign investors who own shares in a PMA (Penanaman Modal Asing) company can apply for an Investor KITAS. This type of KITAS is not tied to employment but to the individual’s status as a shareholder in the Indonesian company.

• Requirements for Investor KITAS:

  • The foreigner must be a shareholder in a PMA company
  • The company must be properly established and registered in Indonesia
  • The investment amount should meet the minimum required by regulations (typically around USD 1 million, but this can vary)

• Benefits of Investor KITAS:

  • Allows the investor to stay in Indonesia for extended periods
  • Provides the ability to act as a director or commissioner of the company
  • Does not require a separate work permit (IMTA) for working in the invested company

• Alternative: Retirement KITAS:

  • For individuals aged 55 or older
  • Allows long-term stay without employment
  • Requires proof of pension or sufficient funds to support oneself

• Process:

  • Establish or invest in a PMA company
  • Prepare necessary documents (company registration, proof of investment, etc.)
  • Apply for the Investor KITAS through the immigration authorities
  • May require assistance from a sponsor company or agent

• Duration:

  • Initially granted for 1 or 2 years
  • Can be extended as long as the investment remains active

• Limitations:

  • Investor KITAS holders are generally restricted from working for companies other than the one they’ve invested in
  • Regular reporting and compliance with immigration regulations is required

It’s important to note that immigration regulations can change, and the process can be complex. Working with a professional service provider experienced in Indonesian immigration matters is advisable to ensure compliance and smooth processing of the Investor KITAS application.

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