By Rusmaini Lenggogeni, Syahdan Z. Aziz and Arvin Raharja
The minimum capital requirements for foreign investment in Indonesia differ from one industry to another. In general, a foreign investment company (PMA company) must have a total investment of more than IDR10 billion, excluding land and buildings, for each line of business as determined by the five digits of its Indonesian Standard Business Classification (Klasifikasi Baku Lapangan Usaha Indonesia) (KBLI) number.
However, there are exceptions to this requirement, as follows:
- Wholesale businesses must have a total investment of more than IDR10 billion, excluding land and buildings, for each line of business as determined by the first two digits of its KBLI number.
- Food and beverage businesses must have a total investment of more than IDR10 billion, excluding land and buildings, in one regency/city.
- Construction businesses must have a total investment of more than IDR10 billion, excluding land and building, for one activity.
Total investment can consist of IDR2.5 billion paid-up and issued capital, payable on the establishment of the company, and IDR7.5 billion in loan capital. These amounts exclude the investment made in land and buildings.
This policy amends the previous requirement for foreign investment to fulfil the minimum IDR10 billion in net assets, which can also be determined from paid-up and issued capital. Some business activities are required to have a minimum of IDR100 billion to be entitled to 100% foreign ownership (for example, the E-commerce Marketplace).
In addition to the above, specific industries can have higher minimum paid-up and issued capital requirements, for example the:
- Insurance sector has a minimum IDR10 billion capital requirement.
- Construction implementation business has a minimum IDR50 billion net worth requirement.
- Commercial banks have a minimum IDR3 trillion capital requirement.
In any case, the government, through the Online Single Submission (OSS) system and the Ministry of Law and Human Rights (MOLHR), will ensure that the intended business is properly capitalised, and therefore the BKPM should be consulted on the appropriate capitalisation before establishing a business.
This first appeared in Establishing a Business in Indonesia, published by Thomson Reuters Practical Law. You can find the full chapter here.
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