Doing business

Indonesia

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Setting up a company | FDI in figures | Why you should choose to invest | Procedures relative to foreign investment | Finding assistance for further information

Setting up a company

Types of companies and capital (max/min)	Number of partners/shareholders and liability
A Perseroan Terbatas is a Private Limited Company. Minimum IDR 50 million	Minimum 2 shareholders. Liability is limited to the amount contributed.
Public Corporation Minimum IDR 50 million	Minimum 2 shareholders. Liability is limited to the amount contributed.
A Partnership No minimum	Minimum 2 shareholders. Unlimited Liability

Business setup procedures

Setting up a company	Indonesia	East Asia & Pacific
Procedures (number)	9.0	7.8
Time (days)	47.0	39.0

Source: Doing Business.

For further information: Consult Doing Business Website, to know about procedures to start a Business in Indonesia.
ICL Directory
The competent organization: To create a Perseroan Terbatas (PT), the competent organization is the Bureau for the coordination of investments ((BKPM). To create a Representative Office, the competent organization may be, according to the sector of activity, the Ministry of Commerce, the Ministry of Finance, the Ministry of Public Works, or the Bureau for the coordination of investments.

FDI in figures

Foreign Direct Investment	2008	2009	2010
FDI inward flow (millions USD)	9,318	4,877	13,304
FDI stock (millions USD)	67,964.0	108,223.0	121,526.7
Performance Index*, ranking on 141 economies	109	119	-
Potential Index**, ranking on 141 economies	85	-	-
Number of Greenfield investments***	132	117	-
FDI inwards (in % of GFCF****)	6.6	8.4	-
FDI stock (in % of GDP)	13.3	13.5	-

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest Indonesia

Strong points

Indonesia has almost 230 million inhabitants, which represents an enormous market. Additionally, the country has abundant natural resources (timber, fish, oil, natural gas, metals) and enourmous biodiversity.

Weak points

The main hindrance to investment lies in the high cost of illegal deductions, which can be as much as 60%. For the procedures of starting a company - the number of formalities to carry out, time limits for starting up, registration rules and the threshold of the initial capital - a World Bank study has shown that Indonesia is less efficient than other Asian countries. Legal unpredictability is often denounced and several levels of justice are said to be ineffective and corrupted. The tax and customs authorities are still viewed, in the business circles, as generally being corrupted and arbitrary.

Government measures to motivate or restrict FDI

Incentives to investment are accessible to all investors, national and foreign. More specifically, these are reductions of duties on imports and equipment goods and additional incentives for export investors and investments made in certain regions.

In 2006, the government launched a program for the improvement of the investment climate: bill on investment, drawing up of a new negative list applicable on investments, drastic reduction of the time required for the creation of a company, acceleration of the re-examination process of local regulations likely to harm the enterprising spirit, as well as rationalization of customs procedures and improvement of customs regulations. A privatization program mainly concerning key sectors such as transport and finance and which was initiated in 1998, is regularly updated.

Bilateral investment conventions signed by Indonesia

Indonesia has signed bilateral agreements for the protection of investments with 57 countries, listed here.

Procedures relative to foreign investment

Freedom of establishment: Not guaranteed
Acquisition of holdings: A majority holding interest in the capital of an Indonesian company is legal, except in certain sectors of activity.
Obligation to declare: The agency for the promotion of foreign investment in the country allows you to obtain information about the necessary authorizations for setting up business in Indonesia.
Competent organization for the declaration: Agency for the control of food and drugs (BPOM)
Bureau for the coordination of investments (BKPM)
Requests for specific authorizations: A list of sectors which are closed or partially open under certain conditions to foreign investment is available in the Indonesia's Investment Law.

Finding assistance for further information

Investment aid agency: Board of Investment of Indonesia
Other useful resources: Indonesian Chamber of Commerce and Industry