Indonesia: New Regulation on Capital Investment Licensing and Facilities

 
Business licenses are classified as temporary and permanent. Both types of licenses are granted once the PT PMA has been established and is ready to start its commercial operations. The temporary business license is valid for one year and could be extended for one more year only. It is granted to a PT PMA which is not deemed “large scale”. To be classified as large scale, a PT PMA needs to have (i) net assets exceeding IDR 10 bio, excluding the value of land and building or (ii) annual revenue exceeding IDR 50 bio based on the latest financial report. Based on unwritten policy, BKPM currently interprets net assets to mean issued and paid up capital; the required debt-to-equity ratio is 4:1. Accordingly, a permanent license requires the issued and paid up capital to be of more than IDR 10 bio. BKPM reviews the PT PMA’s articles of association as evidence that the company has the required minimum paid up capital.
 

According to the transitional provisions of Regulation 13, PT PMA that have obtained an investment registration based on BKPM Regulation No. 12 of 2009 on Guidelines and Procedures of Capital Investment Licensing must apply for a business license within six months after the effective date of Regulation 13, i.e. until 2 June 2018. Otherwise, BKPM might revoke the investment registration. Furthermore, principle licenses issued before Regulation 13 will remain valid until the expiry of their term, but the business license application of those licenses needs to be filed in observance of the provisions under Regulation 13. PT PMA that have obtained a business license but not yet fulfilled the large-scale requirements must, if they want to commence business, comply with the large-scale requirements.