hese are 100 per
cent Indonesian-owned, able to
take advantage of taxation facilities, and subject
to the MOLHR and the Capital Investment Coordinating Board (Badan Koordinasi
Penanaman Modal or BKPM) company regulatory regimes.
3. PMA companies (Penanaman Modal Asing), these
are wholly
foreign-owned or may be
established as a joint venture and partly owned by foreigners and Indonesians.
A former limitation of 30 years on business licenses for PMA companies has
recently been abolished and a business license is generally perpetual, subject
to the PMA company continuing to operate its business, able to
take advantage of taxation facilities, and subject
to the MOLHR and BKPM company regulatory regimes.
BKPM must approve most foreign investments in Indonesian
companies. Where the PMA is 100 per cent foreign-owned, previous foreign
investment rules required divestment of an unspecified percentage of shares to
Indonesian interests within 15 years (as a rule of thumb, 5 per cent was
considered acceptable).
The Foreign Investment Law No. 25 of 2007 (Undang Undang
Penanaman Modal Asing) abolishes the divestment requirement. However, it has
not yet been settled as to whether this applies only to newly incorporated
companies or extends to companies which were incorporated under the previous
regime.
PMA companies are permitted to establish subsidiaries.
However, the parent PMA company cannot merely act as a “holding company” and
must conduct a business in its own name.
PMA and PMDN companies are subject to regulation by both the
MOLHR and the BKPM and industry-specific company regulatory regimes. As such,
the PMA company, as distinct from general Indonesian companies, is subject to
different obligations and enjoys different incentives, although the stated
policy of the government is to eventually have one regulatory regime for all
companies.
The PMA company may take advantage of taxation
facilities offered to PMDN and PMA companies (this relates mainly to exemptions
from duties on import of equipment, referred to as “Master List” equipment), and must submit a report on its
business activities (Laporan Kegiatan Penanaman Modal or LKPM) to BKPM every
year.
The Foreign Investment Law contemplates that certain tax
benefits conferred upon PMA and PMDN companies will now be extended to general
Indonesian companies.
In December 2009, BKPM issued a regulation which
is intended to make BKPM a “one-stop shop” with respect to licensing of PMA
companies. In other words, BKPM will be able to issue both general and
industry-specific business licenses, rather than a PMA company being required
to approach industry-specific departments for additional licenses.