Indonesia is the fourth-largest country in the world with large amounts of labor and abundant natural resources. This makes Indonesia one of the most promising countries to invest. Based on the strategic investment plan of 2015-2019, the Indonesian government has set the target of investment priorities, infrastructure, agriculture, industry, water and water, tourism, special economic and industrial zones, and digital. These sectors are very open to foreign direct investment, and they will certainly consider the guidelines contained in 2016’s 2016 President no. 44 rule on lists of closed and open businesses with requirements for investment.
Under a regulation of President no. 10 of 2021 on investment, a positive list of three classifications of investment, among them priority enterprises, allocated partnerships, and umkm partnerships, and special-needs businesses. In an effort to attract more investors to play their part in building countries, governments have taken all the necessary steps to accelerate the administrative process by ensuring that permits, ease of access, transparency, and punctuality are guaranteed.
The capital-investment coordination and government have compiled a list of industry priorities. Investors who invest in priority industries deserve incentives. Such incentives include tax holidays, tax deductions for tax revenues, tax exemptions, import customs, and/or nonfiscal incentives of facilitation to business permits, implementation of business activities, provision of supporting infrastructure, and security of energy or raw materials. Such fiscal and nonfiscal incentives are intended to increase investment realization, economic growth, and job creation.
3 Investment Priority Sector
The investment priority list consists of three sectors: first, priority sector. There are special criteria for a sector to be classified in a priority sector. For example, it should be a strategic, capital-intensive, energy-oriented, research, and/or innovation project. They should also be exports oriented, including in pioneer industries (such as the metal industry, oil refinery, renewable energy, ocean transport, etc.), and use high levels of technology.
Second, the sector earmarked for cooperatives and micro, small, and medium-size enterprises (umkm). BKPM, the minister of cooperatives and small and medium enterprises, and the minister of economic affairs, should strive to keep the regulation fair, both small and large. Rupiah was expected to strengthen to IDR9,100 per dollar in the Jakarta interbank spot market on Tuesday. This partnership is an obligation for BKPM’s permission and incentives. BKPM also said BKPM could become formal with BKPM, namely BKPM. In the first semester of 2008, the company’s net profit in the first semester of 2008 fell to IDR2.1 billion from IDR1.1 billion in the same period last year.
Third, a sector with specific requirements or restrictions. Some firms have open requirements, which means foreign capital holdings and capital requirements in 100%.
Sector’s Open to Investors
There are 14 sectors open to investors on the investment priority list, while the other six remain closed. The regulations include more than 245 businesses, including crucial businesses, such as transportation, energy, distribution, construction services, media, and telecommunications.
In the first semester of 2008, Bank of Indonesia (the central bank) decided to raise its benchmark interest rate by 25 basis points to 8.25 percent. Government will set the industrial categories earmarked for cooperatives and UMKM by three criteria: First, industries that use simple technology; Second, businesses whose business activities had a complex, work complex, and cultural heritage of a peculiar and hereditary nature; Third, the venture capital of the venture (off-land and building) is no more than IDR10 billion.
There are 46 industries that have specific requirements or restrictions, as well as 30 that have a maximum border to foreign capital (e.g., transports with a maximum of 49% yield). In addition, there are 11 industries that have 100% domestic capital requirements (examples of the traditional cosmetic industry) and two that have special requirements for permits.
Indonesia’s absorption of its investment priority list will make ita priority country for emerging oil, non-oil, exports, and health tools, renewable energy, and infrastructure, with added value. The industry will have the government’s full support as well as beneficial incentives.
Opening up Space for Enhanced UMKM Capacity
With such advanced countries as Japan, partnerships with large corporations and UMKM are common. The agency-investment coordination agency (BKPM) is present as a non-minister-based government agency that performs policy coordination and enrollment services based on regulations of the law. BKPM has a mandate to encourage investment, both foreign and domestic. With regard to foreign investment, what is the minimum value of investment in Indonesia? How are foreign investment mechanisms in Indonesia?
The policy was embodied in the presidential draft on investment investment. The future beleid is a derivative of the 2020 number 11 year law on occupational copyright. This press is the first of many changes to previous beleid candidates. According to chapter 6, paragraph 4, the requirements for limited capital requirements are not valid for specific investment in the country before the issuance of state bonds, as stated in the revised 2008 state budget, unless the conditions are more favorable for the investment. Meanwhile, at the end of the year, it includes scriptures that direct investment operations by indirect investment/portfolio transactions made through the domestic capital market. Then, for investment located in a special economic region.
On the other hand, under section 7 of funding for a technology-based startup, which is not only limited to the financing, infrastructure, network of mentor, over technology, and market access, foreign investment in a particular economic area of technology-based startups can make investments that are equal or less than IDR10 billion. The rating reflected that the nominal amount of foreign investment is not in the country’s land and buildings. Because the previous candidate beleid suggests land and buildings go into count. The rupiah’s exchange rate against IDR9,300 per dollar was considered stable. The government seeks to conform the rule to the 2008 number 20 bill on UMKM.
It is hoped that the increase in public space will be greater, and that foreign and domestic investors will attract small businesses. The arrangements are also to clarify investment ease in grandfather. Regarding the changes in chapter 7 the goal affirms to investors that the value of investments invested is off-land and under construction. Dus, the capital brought by investors would be greater than previous reference.
On the other hand, the finance minister said the government could continue to evaluate the implementation of a positive investment list in order to improve investment ecosystems and development activities and toward creating work. The evaluation as intended was coordinated by the minister who coordinates government affairs in the economy.
Foreign Investment Requirements
Investors should consider a closed, open business guide with foreign requirements listed in the 2016 press no. 44. If the field of business is not on the list, then foreign holdings could be 100%. What is the minimum value of foreign investment in Indonesia? The minimum value of foreign investment in Indonesia is IDR10 billion (excluding land and building prices). The minimum amount of capital paid to the bank in Indonesia is IDR2.5 billion.
The foreign company in Indonesia must be owned by at least two shareholders. The company itself may be established through both mergers and acquisitions. Mergers are the merging of one company with another to then form a new one. While the acquisition is the takeover of companies (one company purchased by the other). Foreign investors can set up companies anywhere in Indonesia. However, the government has decided that the industry should be carried out in the industrial areas.
How do You Invest in Indonesia?
After standing, a company has to submit through oss (online single submission) to get attempt number and a commercial operational or operational permit. If the company’s operational or commercial permits are not taken care of, it will not be able to conduct business in Indonesia. This registration is done online by accessing www.oss.go.id. All businesses can apply directly to the page, except for the financial sector and esdm.
Foreign Investment Benefits for Indonesia
There is much we can gain from foreign investment in Indonesia. One is the entry of new capital to help fund underfunded sectors. The foreign investment has also made many new jobs, so the unemployment rate can be reduced. Moreover, foreign investments are usually accompanied by technological transfers. They brought new technology knowledge to Indonesia that will eventually be developed in Indonesia too. It is not likely that foreign investors will cooperate with umkm (micro, small and medium enterprises). The rupiah’s exchange rate at IDR9,300 per dollar was relatively high. At the same time, it would be hard to make a profit.
The most obvious benefit of foreign investment is to increase state revenues through taxes. In addition, creating more stable relationships within the economic sphere of two countries. With the investment climate conducive to investment and the continuing efforts of governments, Indonesia will remain a promising investment country for investors.
The rupiah’s exchange rate against IDR9,300 per dollar in the Jakarta interbank spot market on Tuesday afternoon dropped to IDR9,300 per dollar on Tuesday. One is creating jobs. The government will focus on increasing competitiveness to attract foreign direct investment or direct foreign investment from foreign direct. There are at least three benefits for Indonesia if fdi is enhanced.
First, investment in order to seek out devisa in middle or long term. Second, creating numerous and third jobs is involving small and medium-size enterprises in an overall context.