Minimum Equity Requirement for Foreign Investors Wishing to Use OSS System Reduced to IDR 2.5 Billion
In our Legal Update titled OSS System Requires Foreign Investment Companies to Have More Than IDR 10 Billion in Equity, which was published on 5 September 2018, we reported that foreign investment companies ("PT PMA") could only register on and use the OSS System if they had a minimum equity (issued and paid up capital) of more than IDR 10 billion. We described how this was a deliberate policy that had been built into the OSS System so as to ensure the quality of investments and thwart any efforts to abuse the country's foreign direct investment ("FDI") regime. However, we also reported that the inflexibility inherent in this policy had given rise to concerns on the part of foreign investors, particularly those interested in investing in capital-light sectors, such as services.
We are pleased to report that the OSS System's administrators have acted promptly in response to these concerns, with a senior OSS System official recently confirming to us that the minimum equity requirement for a PT PMA to register on and use the system has beenreduced to IDR 2.5 billion, effective immediately.
In our view, such prompt action on the part of the OSS System administrators is to be warmlyapplauded indicating as it doesa commitment to responsiveness and an awareness of the importance of accommodating the interests of investors.
By Giffy Pardede (gpardede@abnrlaw.com)
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NEWS DETAIL
10 Sep 2018
Minimum Equity Requirement for Foreign Investors Wishing to Use OSS System Reduced to IDR 2.5 Billion
In our Legal Update titled OSS System Requires Foreign Investment Companies to Have More Than IDR 10 Billion in Equity, which was published on 5 September 2018, we reported that foreign investment companies ("PT PMA") could only register on and use the OSS System if they had a minimum equity (issued and paid up capital) of more than IDR 10 billion. We described how this was a deliberate policy that had been built into the OSS System so as to ensure the quality of investments and thwart any efforts to abuse the country's foreign direct investment ("FDI") regime. However, we also reported that the inflexibility inherent in this policy had given rise to concerns on the part of foreign investors, particularly those interested in investing in capital-light sectors, such as services.
We are pleased to report that the OSS System's administrators have acted promptly in response to these concerns, with a senior OSS System official recently confirming to us that the minimum equity requirement for a PT PMA to register on and use the system has beenreduced to IDR 2.5 billion, effective immediately.
In our view, such prompt action on the part of the OSS System administrators is to be warmlyapplauded indicating as it doesa commitment to responsiveness and an awareness of the importance of accommodating the interests of investors.
By Giffy Pardede (gpardede@abnrlaw.com)