FAQ

What are the form of foreign investment in Indonesia?

Foreigners can do investment in Indonesia, in a way:

1. Foreign Direct Investment (FDI), where foreign investors can invested their capital in new company or existing company, for establish a business in Indonesia and participated in company management; and
2. Portfolio Investment where investors invested through purchasing commercial papers in capital market, such as equity, obligation or both. However, investors ussualy did not interested in this investment because did not directly participated in company management or control.

How the foreigners to participated in Indonesian company?

One of the way is establishing a new company in the form of Limited Liability Company (PT).

What is meant by Limited Liability Company (PT)?

Limited Liability Company (PT) is a legal entity which is capital alliance, established based on agreement, implementing their business activities with authorized capital which divided into shares and fulfill the stipulated requirements in this Act also its implementation regulations.

How long is Director and Commissioner occupied?

It depends on Shareholders decision. Ussualy, it can be occupied for 5 (five) years. If the term already ends, shareholders can change them, or appoint back. Shareholders also can change the Board of Director and Board of Commissioner even though the term is not ends yet through Resolution of General Meeting of Shareholders.

What is the requirements for establishing a Limited Liability Company (PT) for foreign investors?

Requirements for establishing Limited Liability Company (PT) for foreign investors are as follows:

1. Paid up capital must be more than 2.5 Billion Rupiahs;
2. Because of Limited Liability Company is a capital alliance, Limited Liability Company (PT) must have minimum of 2 (two) shareholders. The shareholders can be individually or legal entity.

Is the company shares can be owned by 100% foreigners?

Following the issuance of Government Regulation No. 24 of 2018. It is important to stress that various sectors in Indonesia are closed, or partially closed, to foreign investment. To find out which sectors are open to foreign investment you need to access the Negative Investment List (Daftar Negatif Investasi), a list compiled by the Indonesia Investment Coordinating Board (BKPM). In case a sector is partially closed to foreign investment, then the list states the maximum allowed percentage of foreign ownership. This means that you will need to have a local (Indonesian) partner in order to engage in business in that particular sector.

How is the Company management structure in the form of Limited Liability Company(PT)?

Indonesia’s Law Number 40 of 2007 on Limited Liability Companies (the Company Law) and implementing regulations establish a ‘two-board’ system of governance:

the Board of Commissioners that supervises the performance of the Board of Directors and policies made by the board, and provides advice to the board; and
the Board of Directors that manages the company’s operations and serves as the authorised organ and representative of the company in all matters, subject to compliance with the law, the company’s rules and resolutions of the general meeting of shareholders.

Board of Commissioner can consists of several Commissioners, and determine on of them as President Commissioner, besides with the Board of Directors, it can consists of several Directors, with determine one of them as President Director.

Whom can occupy the Board of Commisioner and Board of Directors position?

It depends on Shareholders decision. It could be all shareholder can be a part of Board of Commissioner and Board of Directors, or The Shareholders appoint the others out of Board of Director and Board of Commisioner.

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