Client Update New BKPM Regulation Oct 2015

CLIENT UPDATE:
OCTOBER 2015
NEW BKPM REGULATIONS
For further information please contact:
MELLI N. DARSA
Senior Partner
E. melli_darsa@darsalaw.com
P. +62 21 2553 2019
Background
On 8 October 2015, the Head of Indonesian Investment Coordinating Board (BKPM) issued (i) Head of BKPM
Regulation No. 14 of 2015 on Guidelines and Procedures of Investment In-principal License, (ii) Head of BKPM Regulation
No. 15 of 2015 on Guidelines and Procedures of Investment License and Non-License, (iii) Head of BKPM Regulation No.
16 of 2015 on Guidelines and Procedures of Investment Services Facilities, and (iv) Head of BKPM Regulation No. 17 of
2015 on Guidelines and Procedures of Investment Implementation Management (together referred to as the New
BKPM Regulations).
INDRA ALLEN NASUTION

Junior Partner
E. indra_allen@darsalaw.com
Direct Phone. +62 21 2553 2013
The New BKPM Regulations revoke and replace (i) Head of BKPM Regulation No. 5 of 2013 on Guidelines and
Procedures of Investment License and Non-License as amended by Head of BKPM Regulation No. 12 of 2013 on the
Amendment of BKPM Regulation No. 5 of 2013 on Guidelines and Procedures of Investment License and Non-License,
and (ii) Head of BKPM Regulation No. 3 of 2012 on the Guidelines and Procedures of Investment Implementation
Management.
Key Changes
We outline several key changes in the New BKPM Regulations as follows:
No.
1.
Key Changes
Old BKPM Regulations
Investment
Value
and Capitalization
of PT PMA
Head of BKPM Regulation No.

5 of 2013 as amended
Article 22
It regulates that the total
investment value of a Foreign
Investment Company (PT
New BKPM Regulations

Head of BKPM Regulation No. 14 of 2015
Article 13
It regulates that the investment value
and capitalization of a PT PMA must be
in accordance with the following
requirements:
How Does this Affect You

In general, the New BKPM Regulations
stipulate similar provisions on the
minimum investment value of a PT
PMA, which is IDR 10 billion excluding
the lands and buildings.
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However, the New BKPM Regulations

emphasizes
that
such
minimum
Page | 1 |New BKPM Regulation
No.
Key Changes

PMA) must be more than IDR
10 billion excluding the land
and buildings.

a.
the total investment value is more

than IDR 10 billion excluding the
land and buildings, unless otherwise
specified under any other laws and
regulations:
-
b.
c.
for each of the same subcategory line of business in

accordance
with
the
Indonesian
Business
Classification Code (KBLI),
within one project location in
one district/city (for industrial
business); or
for each of the same subcategory line of business in
accordance with KBLI, within
one district/city (for nonindustrial business).
the investment value of a project

expansion of one line of business
within one business category in
accordance with KBLI in the same
location can be less than IDR 10
billion with condition that the total
investment value of all projects in
such location has reached more
than IDR 10 billion excluding the
lands and buildings;
the investment value of a project
expansion of one or more lines of
business within one sub-category in
accordance with KBLI, which has no
facility or has facility outside the
industrial sector in one location
within one district/city can be less
than IDR 10 billion with condition
that the total investment value of all
investment value applies to (i) each of

the same sub-category line of business
in accordance with KBLI, within one
project location in one district/city (for
industrial business), or (ii) each of the
same sub-category line of business, in
accordance with KBLI, within one
district/city (for non-industrial business).
The New BKPM Regulations also
stipulate a new provision on the total
investment value in respect to the
project expansion.
MELLI N. DARSA
Senior Partner
P. +62 21 2553 2019

Junior Partner
Direct Phone. +62 21 2553 2013
Pursuant to the New BKPM Regulations,

the investment value of a PT PMA,
which
intends
to
increase
its
production capacity can be less than
IDR 10 billion with condition that the
total investment value of all projects in
such location has reached more than
IDR 10 billion excluding the lands and
buildings.
Meanwhile, the investment value of a
PT PMA that intends to increase its
production capacity (the PT PMA has
no facility or has facility outside the
industrial sector) can be less than IDR
10 billion with condition that the total
investment value of all business sectors
is greater than IDR 10 billion excluding
the land and buildings.
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No.
Key Changes
business sectors is greater than IDR

10 billion excluding the land and
buildings;
d.
MELLI N. DARSA
Senior Partner
P. +62 21 2553 2019
the minimum issued and paid-up

capital is IDR 2.5 billion.
Further, this regulation also stipulates that

a PT PMA which has obtained its inprincipal license before the effectiveness
of this regulation with the paid-up
capital of less than IDR 2.5 billion that
intends to apply for the:
a.
extension
period
completion; or
of
b.
expansion of in-principal license;
Junior Partner
Direct Phone. +62 21 2553 2013
project
is required to increase its paid-up capital

to become at least IDR 2.5 billion.
2.
Divestment
Obligation
Head of BKPM Regulation No.

5 of 2013 as amended
Article 108

Article 16
It
regulates
that
the
divestment obligation of a PT
PMA under its approval letter
and/or
business
license
before the enactment of this
regulation is still binding and
must
be
performed
in
accordance with the time
period determined under the
approval
letter
and/or
business license.
It regulates that the divestment

obligation of a PT PMA under its
approval letter and/or business license
before the enactment of this regulation
is still binding and must be performed in
accordance with the time period
determined under the approval letter
and/or business license but it stipulates
that the minimum nominal value of
shares ownership in respect to the
fulfillment of such divestment obligation
is IDR 10 million.
The shares ownership of the

Indonesian shareholder in a PT
PMA, which has already
The Indonesian shareholder, as a result of

divestment obligation, may resell the
shares (after obtaining the approval of
According
to
the
New
BKPM
Regulations, if the PT PMA has
performed its divestment obligation as
stipulated under its approval letter
and/or business license, the Indonesian
shareholder, as a result of the
divestment obligation, may resell the
shares (after obtaining the approval of
the Ministry of Law and Human Rights),
to
other
Indonesian/foreign
citizen/entity but still subject to then
applicable Negative List of Investment.
This is different with the old regulation
which
requires
the
Indonesian
shareholder to keep its shareholding as
long as the PT PMA is still in
operation/production.
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No.
3.
Key Changes
Investment License
performed
its
divestment
obligation in accordance
with its approval letter and/or
business license, must be
retained as long as such PT
PMA
is
still
in
operation/production.
the Ministry of Law and Human Rights) to

other Indonesian/foreign citizen/entity
but still subject to then applicable
Negative List of Investment.
A PT PMA with a divestment obligation

should benefit from this requirement
since it can fulfil the divestment
obligation by the foreign shareholders
selling their shares in the minimum
amount of IDR 10 million to Indonesians
and after that they will be able to
buyback those shares subject to the
then applicable Negative List of
Investment.
The Old BKPM Regulations

does
not
regulate
the
Investment License.

Article 30
It introduces a new license, named
Investment License (Izin Investasi) which
is defined as In-principal license owned
by a company with certain criteria.
Investment License is issued in order to
accelerate the realization of certain
investment projects, with the criteria as
follows:
a.
Minimum investment value of IDR

100 billion; and/or
b.
Minimum Indonesian manpower of

1,000 employees.
A PT PMA which has already obtained

the Investment License may start the
construction work without obtaining the
(i) building permit (Izin Mendirikan
Bangunan) and (ii) environmental
license but these licenses must be
applied during the construction work.
The Investment License will be issued
within three working hours after the
MELLI N. DARSA
Senior Partner
P. +62 21 2553 2019

Junior Partner
Direct Phone. +62 21 2553 2013
The Investment License is a new

provision, which was not regulated
under the Old BKPM Regulations. The
Investment License is actually an inprincipal license issued by BKPM in
order
to
attract
investors
into
Indonesia.
if a PT PMA meets certain requirements
as stated under the New BKPM
Regulations, i.e. (i) it has a minimum
investment value of IDR 100 billion,
and/or (ii) it has minimum Indonesian
manpower of 1,000 employees, BKPM
may issue the Investment License
within three working hours after the
complete
set
of
application
documents is received by BKPM and
the PT PMA can start the construction
work without first obtaining the building
permit and environmental license.
This would expedite the realization of
the project since timing to obtain
building permit and environmental
license is quite substantial and may
delay the construction work. We
appreciate,
however,
that
the
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No.
4.
Key Changes
Business License
The Old BKPM Regulations do

not regulate the minimum
total value of investment
realization to apply for the
Business License.
complete set of application documents

is received by BKPM.
required
thresholds
are
quite
substantial and more related to a
manufacturing business.
Head of BKPM Regulation No.15/2015

a PT PMA, which intends to apply for a
Business License, is required to realize
the minimum investment value of more
than IDR 10 billion excluding the land
and buildings, (i) for each of the same
sub-category line of business in
accordance with KBLI, within one
project location in one district/city, or
(ii) for each of the same sub-category
line of business, in accordance with
KBLI, within one district/city (for nonindustrial business).
Article 13
A company which has a valid Inprincipal License or investment license,
and will perform its production/operation
activities, is required to obtain a business
license.
A PT PMA may apply for a business
license with the total realization of
investment of more than IDR 10 billion
excluding the land and buildings:
a.
for each of the same sub-category

line of business in accordance with
KBLI, within one project location in
one district/city; or
b.
for each of the same sub-category

line of business, in accordance with
KBLI, within one district/city (for nonindustrial business).
A PT PMA already obtaining the Inprincipal license with investment value

equal to or less than IDR 10 billion
excluding the land and buildings may
only apply for a Business License if its
project realization period as stated in the
In-principal license is still valid.
5.
Expansion
License
Business

not regulate the minimum
total value of investment

Article 15
MELLI N. DARSA
Senior Partner
P. +62 21 2553 2019

Junior Partner
Direct Phone. +62 21 2553 2013
This means that BKPM now requires the

PT PMA to realize/spend more than IDR
10 billion investment before it can
apply for a Business License. In
practice, BKPM may require evidences
that the investment amount has been
spent which can be in the form of
invoices, and/or financial statements.
Further, for the PT PMA with investment
value equal to or less than IDR 10 billion
it is crucial to check whether the
project realization period is still valid
otherwise BKPM will require the
company to apply for a new Inprincipal license with an investment
value of more than IDR 10 billion.
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if a PT PMA intends to submit the
application for an expansion business
No.
Key Changes
realization to apply for an

Expansion Business License.
A company which has a valid Inprincipal Expansion Business License and

will perform its production/operation
activities is required to obtain an
Expansion Business License.
license, such PT PMA is required to

realize the minimum investment value
of more than IDR 10 billion excluding
the land and building.
Specifically for a PT PMA, the total

realization of investment value at the
time of submission of application for the
expansion business license shall be more
than IDR 10 billion excluding the land
and buildings.
A PT PMA already obtaining the Inprincipal Expansion Business License with
investment value of less than IDR 10
billion excluding the land and building
may only apply for an Expansion
Business License if its project realization
period as stated in the In-principal
Expansion Business License is still valid.
6.
Type of Sectorial
Licenses and Nonlicenses

not regulate the types of
licenses that can be issued by
BKPM

Article 38
The New BKPM Regulations stipulate that
any type of licenses previously issued by
the local government will now be issued
by BKPM or the Capital Investment and
Integrated Services Board (Badan
Penanaman Modal dan Pelayanan
Terpadu Satu Pintu).
The types of licenses that are now issued
by BKPM or the local BKPM office are:
Public Works and Public Housing, Trade,
Tourism,
Mining,
Environment
and
This means that BKPM now requires the

PT PMA to realize/spend more than IDR
10 billion investment before it can
apply for an Expansion Business
License. In practice, BKPM may require
evidences that the investment amount
has been spent which can be in the
form of invoices, and/or financial
statements.
MELLI N. DARSA
Senior Partner
P. +62 21 2553 2019

Junior Partner
Direct Phone. +62 21 2553 2013
Further, for the PT PMA with investment

value equal to or less than IDR 10 billion
it is crucial to check whether the
project realization period is still valid
otherwise BKPM will require the
company to apply for a new Inprincipal Expansion Business License
with an investment value of more than
IDR 10 billion.
This would benefit the investors since
they are no longer required to submit
applications
etc.
to
the
local
authorities as the process is now at
BKPM in Jakarta or at the local offices
of BKPM.
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No.
Key Changes
Forestry, Agriculture, Industry, Health,

Communication
and
Information
Technology, Marine and Fisheries,
Employment, and Transportation.
Contact
MELLI N. DARSA
Senior Partner
P. +62 21 2553 2019
This note is intended to give an overview only on the key changes between the Old and New BKPM Regulations. There are other
changes that would need to be considered by the investors who are planning to invest in Indonesia as per the New BKPM Regulations.
Please do not hesitate to contact us if you need a more detailed advice, or have specific questions.

Junior Partner
Direct Phone. +62 21 2553 2013
www.darsalaw.com
P. 62-21 2553 2019
F. 62-21 2553 2020

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CLIENT UPDATE:

NEW BKPM REGULATIONS

For further information please contact:

INDRA ALLEN NASUTION

Old BKPM Regulations

Head of BKPM Regulation No.

New BKPM Regulations

How Does this Affect You

However, the New BKPM Regulations

Page | 1 |New BKPM Regulation

Old BKPM Regulations

New BKPM Regulations

the total investment value is more

for each of the same subcategory line of business in

the investment value of a project

How Does this Affect You

For further information please contact:

investment value applies to (i) each of

INDRA ALLEN NASUTION

Pursuant to the New BKPM Regulations,

Page | 2 |New BKPM Regulation

Old BKPM Regulations

New BKPM Regulations

How Does this Affect You

For further information please contact:

business sectors is greater than IDR

the minimum issued and paid-up

INDRA ALLEN NASUTION

Further, this regulation also stipulates that

expansion of in-principal license;

is required to increase its paid-up capital

Head of BKPM Regulation No.

Head of BKPM Regulation No. 14 of 2015

It regulates that the divestment

The shares ownership of the

The Indonesian shareholder, as a result of

Page | 3 |New BKPM Regulation

Old BKPM Regulations

New BKPM Regulations

How Does this Affect You

the Ministry of Law and Human Rights) to

A PT PMA with a divestment obligation

The Old BKPM Regulations

Head of BKPM Regulation No. 14 of 2015

Minimum investment value of IDR

Minimum Indonesian manpower of

A PT PMA which has already obtained

For further information please contact:

INDRA ALLEN NASUTION

The Investment License is a new

Page | 4 |New BKPM Regulation

Old BKPM Regulations

The Old BKPM Regulations do

New BKPM Regulations

How Does this Affect You

complete set of application documents

Head of BKPM Regulation No.15/2015

Pursuant to the New BKPM Regulations,

for each of the same sub-category

for each of the same sub-category

A PT PMA already obtaining the Inprincipal license with investment value

The Old BKPM Regulations do

Head of BKPM Regulation No.15/2015