11 May 2021
New BPKM Rules to Require PMA Companies to Have IDR 10 Billion in Paid-up Capital: Will Existing Investors Be Affected?

The Investment Coordinating Board (Badan Koordinasi Penanaman Modal / “BKPM”) recently issued Regulation No. 4 of 2021 on Guidelines and Procedures for Risk-Based Licensing and Investment Facilities (“Reg. 4”),[1] which requires a foreign direct investment company (“PMA”) to have at least IDR 10 billion[2] in issued and paid-up capital (previously, IDR 2.5 billion[3]). It is as yet unclear whether this will apply retroactively to existing PMAs or whether they will be ‘grandfathered’ and be exempted from the requirement.

Reg. 4 allows for exemptions if these are provided for by other legislation; however, to date we have yet to see any such exemptions stipulated in other regulations. ABNR has requested clarification from the BKPM and will update this newsletter accordingly.

The IDR 2.5 billion requirement was first introduced under a 2013 BKPM precursor to Reg. 4 (and several reiterations have been issued since then). While the 2013 regulation did not expressly state whether or not it was of retroactive application, it was clear from our discussions with the BKPM that the 2013 regulation was not intended to apply retroactively to applications that had been approved prior to its issuance (in other words, their investments were grandfathered). It is to be hoped that this will also be the case with Reg. 4.

Whilst Reg. 4 was issued on 1 April 2021, it does not enter into force until June 2. ABNR will provide a further update after the BKPM has responded to our request for clarification.

By partner Mr. Giffy Pardede (gpardede@abnrlaw.com) and associate Mr. Gerry Razi (grazi@abnrlaw.com).

[1] Peraturan BKPM No.4 Tahun 2021 tentang Pedoman dan Tata Cara Pelayanan Perizinan Berusaha Berbasis Risiko dan Fasilitas Penanaman Modal

[2] Approx. USD 690,000

[3] Approx. USD 173,000

This ABNRNewsand its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.