The Negative Investment List The Negative Investment List Daftar Negatif Investasi is compiled by the Indonesia Investment

Coordinating Board, BKPM. It stipulates which sectors are open to foreign investment in Indonesia as well as the percentage of foreign ownership permitted. This list is regularly revised with the most recent version being Presidential Decree No.36/2010. a. Closed to Investment e.g. casinos, historical & sacred sites, alcoholic beverage production. b. Reserved for Small and Medium Enterprises (SMEs) e.g power plants below 10 MW, painted batik industry, small scale businesses engaged in tourism, construction and telecommunication services. An SME must meet the criteria prescribed by the Ministry of SMEs and Cooperatives as well as Law No.9/1995. c. Through Partnerships with SMEs e.g. silk cocoon industry, telephone value added service provider, ceramic industry. Partnerships Kemitraan with SMEs are defined by Presidential Regulation No.76/2007 as a non equity arrangement with an SME and a larger business for strengthening and mutual benefit. Note: When setting up as a PMA, the foreign company must submit to BKPM or relevant Ministry the Letter of Partnership Agreement with the SME as well as documentation testifying that the SME fulfils the relevant criteria as per Law No.9/1995. d. Limited Foreign Capital Ownership e.g. toll road business up to 95%, pharmaceutical manufacture up to 75%, power plants above 10 MW up to 95%. e. Defined Location e.g. pig germination and culture. This is industries that can only be carried out in areas that do not contradict local regulations of where it is to be set up. f. Requires a Special License e.g. radioactive mineral mining requires authorisation from the National Nuclear Energy Agency (BATAN), cigarette industry requires authorisation from the Ministry of Industry, crumb rubber industry requires authorisation from the Ministry of Agriculture. g. 100% Domestic Capital e.g. retail business such as supermarkets below 1,200 sqm and department stores below 2,000 sqm. h. Foreign Capital and Defined Location e.g. 1 & 2 star hotels may have up to 51% foreign ownership provided it does not contradict with local regulations of where it is to be set up. i. Foreign Capital and Special License e.g. commercial airline transportation can be held up to 49% by foreign ownership but subject to a domestic shareholder always holding a single majority. j. 100% Domestic Capital and Special License e.g. production of weapons and ammunition requires authorisation from the Ministry of Defence. k. Foreign Capital Ownership / Location for Capital Investment from ASEAN Countries e.g. recreational and entertainment facilities such as golf courses and leisure centres up to 51%/100% foreign ownership.

INCORPORATION OF PMA COMPANY

Regulations of The Investment Coordinating Board (BKPM) on Foreign Direct Investment (FDI): 1. Allows 100% FDI investment in selected areas of business 2. Limits foreign direct investment to 95%, with a minimum of 5% ownership by an Indonesian 3. Allows FDI investment with certain conditions 4. Stipulates the sectors which are closed to FDI investment For those companies choosing to make a 100% foreign investment, there is a requirement that 15 years from the commencement of commercial operations, the 100% foreign shareholder must sell at least 5% of the firm to an Indonesian entity. A company which is initially 95% foreign owned is not subject to any divestment requirement. The amount of capital to be invested in a foreign-owned company is decided by the investing parties themselves, and the BKPM approval is based on the economics and scale of the project. Foreign investment companies are basically free to choose where in Indonesia they will set up operations, with the proviso that factories must be in areas zoned for industry or in an industrial estate.

The requirements and steps establishing Foreign Direct Investment (FDI/ PT PMA) A. Apply a temporary permit from Indonesia Investment Coordianting Board (BKPM) a. Corporate identity to be established, which includes: i. Company Name ii. City as a place of domicile of business iii. Total Capital iv. Behalf of the shareholders and the percentage of capital v. The Board of Directors and Commissioners B. Documents to be attached along with the above request (INVESTMENT APPLICATION UNDER THE FOREIGN INVESTMENT LAW) : a. Foreign founders (shareholders) i. Company's articles of association in Indonesian or English along with all amendments and/or endorsements ii. b. Copy of valid passport of the individual shareholders b. From PMA i. Company's articles of association in Indonesian or English along with all amendments thereto, endorsement or reporting / notice ii. Company Tax ID c. Founders (shareholders) Indonesia i. Company's articles of association in Indonesian or English along with all amendments thereto, endorsement or reporting / notice or ID cards for individual ii. Personal Tax ID d. Flowchart of production process and raw materials (raw materials) are needed for the process industry & xplanation for business continuity processes e. Original power of attorney (in the case represented by the founder / others) f. -Completeness of other data required by the relevant department (if any) and is expressed in the "Technical guidance on the investment's book implementation". -For certain sectors, for example, the mining sector is doing the extraction, the energy sector, oil palm plantations and fisheries, require a letter of recommendation from the relevant technical department. g. In the business sector, which is required in terms of cooperation i. Cooperation agreement (can be a Joint Venture, Joint Operation, MOU, etc.) between the small and medium entrepreneurs / major-party mentions it, system cooperation, rights and obligations. ii. Statement of small companies that meet the criteria as a Small Business by Regulation. 9/1995.

The process of incorporation of a new foreign direct investment company:

1. Prepare and send the application with required documentation, compiled according to the investment plan. 2. Set up a joint venture agreement for the investment with Indonesian partners. 3. Obtain the Initial License (SPPP BKPM) 4. Incorporation of SPPP BKPM. Establish Articles of Association with a Public Notary detailing proof of capital investment, and send it to the Ministry of Justice for approval and issuance of State Gazette. 5. Registration of company address with local council (domicile) 6. IRD registration (NPWP + PKP) 7. Registration with the Department of Industry and Trade (TDP) 8. Key expatriate positions (work permits) and Fixed Operating License 9. Prepare and send the 6-month report (LKPM) to the provincial BKPM office as well as UUG (HO) nuisance act to the regional office of BKPM 10. Incorporate facilities - Master list/APIT or property ownership 11. Provincial approval for Fixed Licenses (BAP) 12. Fixed License (IUT) for 30 years is issued.

Set Up Foreign Direct Investment 1. 2. Notarial Deed for Establishment Liability Company 2. Approval from minister of justice 3. Domicile Letter from local goverment 4. Tax Number 5. Registering Company 6. State Gazzete Documents Required : 1. For Foreign Applicant: A. Articles of Association of the Company B. Copy of valid Passport for foreign individual 2. For Foreign Investment Company (PMA) : A. Articles of Association of the Company and its amendment B. Tax Registration Code Number (NPWP) 3. For Indonesian Applicant: A. Articles of Association of the Company and its amendment or Identity Card for Individual. B. Tax Registration Code Number (NPWP). 4. SOP and Company Profile A. Flowchart of the production process and raw materials requirement for processing industries. B. Description Explanation of business activities for services sector 5. Power of Attorney to sign the application if the participant(s) are represented by another party. 6. Other Documents A. Other requirements from the minister concerned, if any, as stated among others in the Technical Guidances Book on Investment Implementation. B. Certain sector namely mining sector which has extraction activity, energy sector, palm oil plantation and fishery, must obtain Letter of recommendation by the related/technical ministries. C. For the Palm Oil Processing Industry which does not have raw material supplied by its own plantations, the raw material guarantee document supplied by the plantation must be completed, and recogniced by the plantation Department of Regency/City Government. 7. In the business sector required for partnership cooperation: A. Agreement between Small Scale Enterprise and Medium/Large Scale Enterprise outlining among others name and address of each party, pattern of partnership, right and obligation of each party as well as guidance provided for Small Scale Enterprises. B. Letter of Statement from the Small Scale Enterprise concerning that the enterprise fulfills the criteria of Small Scale Enterprises based on Law No. 9 of 1995.

Obtain the standard form of the company deed ; arrange for a notary electronically; obtain clearance for the Indonesian company's name at the Ministry of Law and Human Rights. The uniqueness of the company name must be checked to ensure that it has not been used by another Indonesian company, to avoid a rejection by the Ministry of Justice and Human Rights of the company's deed of establishment and articles of association. Because the process must be done through a computerized processing system, the reservation and clearance must be done by a notary public (because the new computerized system for nontax state revenue payments may be accessed only by a notary public). The reserved name will be blocked for 60 days. If the founding shareholders are confident that the same name has not been used by another Indonesian company, this procedure is not necessary. Under Article 16 of Law No. 40 of 2007 on Limited Liability Companies, company must not use a name which: has been lawfully used by another company or is similar to the name of another company; contravenes public order and/or decency; is identical or similar to the name of a state agency, government agency, or international agency, except with their approval; does not conform to the purposes and objectives and business activities of the company, or only designates the purposes and objectives of the company without having its own name; consists of numbers or a set of figures, a letter or a set of letters that do not form any words; or means a Company, a legal entity, or a civil enterprise (persekutuan perdata). The Ministry of Law and Human Rights may reject a name application reservation if the requested name is, among others, the same or resembles similarities to name of other companies. Government Regulation No. 26 of 1998 on Use of Names of Limited Liability Companies also provides that an application to use a name that is the same or similar to a well known trademark shall be rejected unless approval is obtained from the holder of the trademark Notarize company documents before a notary public Law No. 30 of 2004 concerning Notaries (Article 36 paragraph 3) stipulates that the maximum notary fee for objects of deed with an economical value of above IDR 100.000,000 up to IDR 1.000,000,000 is 1.5% of the total value of the object of the deed. Obtain a certificate of company domicile from the local municipality All Indonesian limited liability companies must have a certificate of company domicile. This certificate is issued by the head of the village (the Lurah) where the company is located or by the building management if office space is leased. There is no official fee for this certificate. This certificate is required for several documents (SIUP, TDP, etc.). Pay the State Treasury for the non-tax state revenue (PNBP) fees for legal services at a bank Because the new computerized system for nontax state revenue payments (PNBP)which has been implemented by the Ministry of Justice and Human Rightsmay be accessed only by a notary public, payment for registering or establishing a company is normally easier through the notary.

The requirement to pay the non-tax state revenue (PNBP) fee for legal services in relation to the establishment of a PT is obtained from the information stated in the website of the Legal Entity Administration System (known as SABH (Sistem Administrasi Badan Hukum) (www.sisminbakum.go.id), where it is informed that there is a PBNP fee to be paid for the purpose of company establishment in the amount of IDR 200,000 and to be paid through the Notary. Apply to the Ministry of Law and Human Rights for approval of the deed of establishment Based on Article 9, 10, 29 and 30 Indonesian Company Law No. 40 year 2007, the application for approval of Ministry of Law and Human Right (the "Ministry of Law") on establishment of company should be be able to file electronically by attaching with the certificate of bank account, copy of the relevant bank transmittal advice, NPWP (Tax Registration Number), Certificate of Company Domicile. the process will be taken as follows: The application should be filled at the latest 60 days since the date of establishment deed Since the application has already fulfilled, the Ministry of Law directly electronically stated no objection on said application. However, if the application is not fulfilled, the Ministry of Law will directly electronically stated his objection on said application In 30 days since the date of no objection by Ministry of Law, the applicant should submit the original application and supporting documents 14 days after fulfillment of above requirements, Ministry of Law will issue the legalisation on the establishment of the company Data of company which its establishment has been approved by Ministry of Law i.e name, domicile, object and purpose, period, capital company will be inserted into Company Registry The Ministry of Law will announce the establishment of company in Supplement State Gazette (TBNRI) within 14 days of the Ministry's Approval Letter The cost of this procedure is based on the Schedule to the Government Regulation Number 38 of 2009 concerning Types and Tariffs on Non Tax State Revenues Applied for in the Department of Law and Human Rights which comes into effect on 28 May 2009 Apply at the One Stop Service for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP) and the company registration certificate (Tanda Daftar Perusahaan/TDP) The Surat Izin Usaha Perdagangan (SIUP) constitutes the business license for a non-facility company engaging in trading business. The SIUP contains details about the company activities and the person in charge of the company (normally the President Director). The Ministry of Industry and Trade, which issues the SIUP for a nonfacility company, may require a letter of good conduct from the Indonesian police in support of the person in charge of the company. Normally, the following copy of documents should be attached for the application for a SIUP: The articles of association (copy) An attestation of location and address of the companys offices Identity card of the company President Director Notary deeds After reviewing the application, the Municipality passes it to the technical agency at the regional

office for cooperatives for further review. It takes 2 days to get the signature of the head of that office as the authority is not delegated. Once the application is back, the SUIP is provided. Although there is no official charge, there is usually an unofficial administrative fee. Fees depend on negotiation and usually start from IDR 400,000 to 500,000 for a small company, IDR 600,000 to IDR 700,000 for a medium-size company; and IDR 750,000 to IDR 1.000,000 for a large company. SIUP and TDP can be obtained at the One Stop Shop Service, through the Standard Operating Procedure. Based on Regulation of Ministry of Trading No. 36/M-Dag/PER/9/2007 on Issuing Business Trading License (SIUP), the SIUP will be issued in 3 days since the receiving of completed documents but in practice it takes 3-7 days. Register with the Ministry of Manpower According to Law No. 7/1981, companies with more than 10 workers or a monthly payroll of IDR 1 million must register with the Ministry of Manpower. This procedure can be completed concurrently with other post-registration procedures by filing the manpower compulsory report and company regulations with the Ministry of Manpower. Although there is no official fee, there may an unofficial administrative fee that depends on negotiation and usually starts at IDR 100,000. Apply for the Workers Social Security Program (Jamsostek Program) According to legal provisions on workers social security (Law No. 3/1992), it is mandatory for every company or individual employing 10 workers or more or generating a monthly payroll of at least IDR 1 million a month to apply for the Workers Social Security Program (Jamsostek), operated by the executing agency. This social security program covers occupational accident security, death security, old age security, and health maintenance A company or an individual is not obligated to enroll its employees in the social security program if it offers an independent employee social security program with benefits comparable or better than those offered by the Package of Basic Health Maintenance Security (according to Government Regulation No. 14/1993, as amended by Government Regulation No. 28 /2002). Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP) Regulation of Directorate General of Taxation No. 44/PJ/2008 which comes into effect on 20 October 2008 concerning Procedures of Application of Taxpayer Registration and/or Taxable Enterpreneur Number, Amendment of Data and Transfer of Taxpayer and/or Taxable Enterpreneur aimed to incease the service to the taxpayer. The regulation states that within 1 year as of the issuance of NPWP, the relevant Tax Office will conduct field confirmation regarding the correct data/identity of the taxpayer a. The person/entity can apply for NPWP in the relevant tax office where the company is located or can apply it online through http://www.pajak.go.id , choose e-registration to make account as a taxpayer and then follow the procedures therein, by filling the form and attaching copies of deed of establishment and its amendment if any, identity card/KTP of one of active Director, statement letter regarding confirmation on place of business from one of the active Director (form is provided), POA and identity card/KTP of the authorizee.

The NPWP card and Registered Statement Letter is obtained within 1 calendar day upon the completeness of the required document without and fee, charge and/or retribution.

Pengurusan pada kantor kami antara lain : 1. Pesan Nama PMA di Sisminbakum 2. Surat Persetujuan BKPM ( Badan Koordinasi Penanaman Modal) 3. Akta Pendirian PMA 4. Surat Keterangan Domisili Perusahaan 5. NPWP ( Nomor Pokok Wajib Pajak) 6. Pengurusan PKP 7. SK Menkum Ham 8. TDP ( Tanda Daftar Perusahaan) 9. BNRI ( Berita Negara RI)

Syarat Pendirian PMA antara lain :

a. Foto copy Paspor / KTP para pendiri, minimal 2 orang b. Foto copy KK / Direktur bila penangung jawab WNI c. Foto copy PBB terakhir tempat usaha/ kantor apabila milik sendiri d. Foto copy Surat Kontrak, apabila status kantor kontrak e. Surat Keterangan Domisili dari pengelola Gedung, apabila berada di Gedung f. Kantor berada di wilayah Perkantoran/ Plaza, atau Ruko, atau tidak berada di wilayah pemukiman. g. Pas photo penanggung jawab ukuran 3X4 = 2 lbr berwarna h. Siap di survey i. Nama PMA j. Kedudukan dan bidang usaha k. Jumlah Modal Dasar dan Modal setor ( dalam US $ .) l. Komposisi Saham m. Susunan Direksi dan Komisaris