FOREIGN INVESTMENT IN INDONESIA

In the era of globalization, investment becomes an option to develop business at international level. According to data released by World Bank, foreign funds invested around the world reached 2,436 Trillion by 2016. For Indonesia, incoming foreign investment attained 4,468 Billion in 2016. Seeing that number, it means that Indonesia became one of the countries targeted by foreign investors.

Before discussing how to invest, it is essential to understand the applicable investment law in a country. For example, if you’re interested in investing in Indonesia, it’s necessary to know more about foreign investment law in Indonesia. So firstly, we do need to know the Indonesian law which deals with investment.The law on investment or capital market in Indonesia has been regulated by Law no. 25 of 2007. In this Act, we will find some articles that regulate the rules of investment in Indonesia. As for investors referred to the Act, is an investor in or outside the country. Then the investment itself is divided into two types, namely domestic and foreign.

For the domestic investment, it has a meaning as an investment intended for domestic business and conducted by local investors. Meanwhile, for foreign investment, it means that the investment is intended for domestic business and conducted by foreign investors. In this case, the investment can be done entirely by foreign investors or jointly. According to Article 5, paragraph 2, foreign investment must be a Limited Liability Company which is based on Indonesian law and is within the territory of the Republic of Indonesia. Whereas in paragraph 3, it is mentioned that domestic and foreign investors who invest in Limited Liability Company may:

• Take stock when the establishment of a Limited Liability Company

• Buy shares

• Perform other procedures in accordance with the provisions of the legislation.

As an overview of foreign investment law in Indonesia, overseas investors are also given some facilities. This has been set in article 23, paragraph 3. The article states that foreign investors will get:

• Two years limited stay permit.

• Change status of a limited stay permit to permanent stay permit. This can be obtained after living in Indonesia for 2 years in a row.

• Reentry permission (for multiple trips) for a holder of limited stay permit and with a validity period of 1 year. This permit is granted for a maximum period of 12 months, from the date the limited stay permit is issued.

• Reentry permission (for multiple trips) for a holder of limited stay permit and with a validity period of 2 years. This permit is granted for a maximum period of 24 months, from the date the limited stay permit is obtained.

• Reentry permission (for multiple trips) for a holder of permanent stay permit. This permit is granted for a maximum period of 24 months, from the date the permanent stay permit is issued