18 March, 2020
Since 1967, Indonesia has favored foreign investment as a means to realize national economic development. In that year, the Investment Law was adopted. In 2007, Law No. 25 of 2007 regarding Investment (the Investment Law) replaced the 1967 law in an effort to update and streamline capital investment.
There are various conditions to foreign direct investment in Indonesia, whether set by regulation or policy, as the government of Indonesia (GOI) has sought to balance the development of Indonesia through large-scale foreign investment and the needs of micro, small and medium-scale businesses and cooperatives.
The GOI exercises control over foreign investment through an array of methods. Such control is mainly exercised under the supervision of the Capital Investment Coordinating Board (BKPM). The registration and application for business licensing for foreign direct investment must now be submitted through a new system introduced in mid-2018 – the online single submission (OSS) system operated by the OSS Institution.
The OSS system was established by Government Regulation No. 24 of 2018 (GR24/2018). GR 24/2018 provides that the OSS Institution is a non-ministerial institution that implements government affairs in the sector of capital investment coordination. At present, the OSS Institution is under the auspices of the BKPM.
Most foreign investment licensing is now conducted through the OSS. However, based on article 4(2) of BKPM Regulation 6/2018, there are some business sectors and activities the licensing of which is still administered by the BKPM.
For the full article, please click here. This article was first published in Lexology Getting the Deal Through – Foreign Investment Review 2020 (Published: February 2020).
