25 Nov 2015
NEW BKPM REGULATION ON INVESTMENT PRINCIPLE LICENSE

The Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) has revoked Head of BKPM Regulation Number 5 of 2013 concerning Guidelines and Procedures for Investment Licenses and Non-Licenses as amended by Head of BKPM Regulation Number 12 of 2013. In its place, it has issued Head of BKPM Regulation Number 14 of 2015 concerning Guidelines and Procedures for Investment Principle License (“BKPM Regulation No. 14/2015”).

We highlight the following provisions of the new BKPM Regulation No. 14/2015:

1. Investment Value and Capitalization

The provisions regarding investment value are in general the same as the previous provisions, which is more than 10 billion Rupiah total investment not including land and building. The 10 billion Rupiah total investment requirement applies

1. for the industrial sector, to every same business line sub-category under the Indonesian Standard Classification of Business Field (“KBLI”), in one project location in one regency/city; and
2. for non industrial sector, to every same business line sub-category under the KBLI in one regency/city.

Investment Value for Project Expansions

1. For the expansion of a project in one line of business within one business group under the KBLI in the same project location, the investment value may be less than 10 billion Rupiah provided that the accumulated investment value for all of the projects in the same location has exceeded 10 billion Rupiah not including the land and building value;
2. For the expansion of one or more line of business within one business line sub-category under the KBLI, whether it receives no facility or whether it receives facility outside of the industrial sector, in one location in one regency/city, the investment value may be less than 10 billion Rupiah provided that the accumulated investment value for all of lines of business is greater than 10 billion Rupiah not including the land and building value.

Capitalization

The minimum issued and paid-up capital is 2,5 billion Rupiah and the minimum shareholder participation is 10 million Rupiah.

PMA (Foreign Investment) Companies which have obtained their principle license will be required to increase their paid-up capital to minimum 2,5 billion Rupiah when applying for (a) an extension of the project completion period or (b) an expansion principle license, if their current paid-up capital is less than 2,5 billion Rupiah.

2. Validity Period of the Principle License

The validity period of the Principle License is one to five years, depending on characteristic of the line of business. PMA Companies whose Project Completion Period has expired are not qualified to submit applications for other licenses and non-licenses.

3. Divestment Requirement

The new BKPM Regulation No. 14/2015 allows the sale of the Indonesian shareholding being the result of the divestment requirement compliance to an Indonesian or foreign citizen or Indonesian or foreign business entity after obtaining the approval of the Minister of Law and Human Rights.

4. Investment License
To speed up the realization of investments, certain projects with
1. minimum investment value of 100 billion Rupiah; and/or
2. minimum Indonesian employees of 1,000;
   will receive the so called Investment License (Izin Investasi), which is basically an accelerated Principle License.

Projects which have received an Investment License which are located in certain BKPM designated industrial areas may start their construction without having to first obtaining (a) Building Construction Permit and (b) Environmental License. These licenses may be applied for while the construction is in progress.

BKPM Regulation No. 14/2015 takes effect as follows:

• 26 October 2015, for the BKPM One Stop Service (Pelayanan Terpadu Satu Pintu or “PTSP”);
• at the latest 90 working days as of its enactment date, for the provincial Investment Board and One Stop Service (Badan Penanaman Modal dan Pelayanan Terpadu Satu Pintu or “BPMPTSP”), the regents’ and cities’ BPMPTSP, PTSPs of free trade zones and free ports and PTSPs of special economic areas. (by: Isabella Cynthia Edgina)