UNDERGRADUATE THESIS
This undergraduate thesis is submitted as one of the requirements to obtain the degree of Bachelor of Laws at the Faculty of Law
Universitas Muhammadiyah Yogyakarta
Name : Shofia Chairunnisa Student Number : 20120610220 Faculty : Laws
Major : International Program for Law and Sharia Field of Study : Trade Law
FACULTY OF LAW
UNDERGRADUATE THESIS
This undergraduate thesis is submitted as one of the requirements to obtain the degree of Bachelor of Laws at the Faculty of Law
Universitas Muhammadiyah Yogyakarta
Name : Shofia Chairunnisa Student Number : 20120610220 Faculty : Laws
Major : International Program for Law and Sharia Field of Study : Trade Law
FACULTY OF LAW
to Paradise.”
(Reported by IbnMajah and others, fulfilling the conditions of Imam al Bukhari and Imam Muslim)
“Your story may not have such a happy beginning, but that does not make you who you are. It is the test of your story, who you choose to be.”
(Soothsayer)
Smart impresses me, strength of character impresses me. But most of all, I am impressed by kindness. Kindness, I think, comes from learning hard lessons well,
from falling and picking yourself up. It comes from surviving failure and loss. It implies an understanding of the human condition, forgives its many flaws and
quirks. When I see that in someone, it fills me with admiration. (Generasi Pencerah)
Writing is one way to get to know yourself and to practice transforming your dreams into clear, worded, goals.
(Maudy Ayunda)
Everyday a deer awakens knowing it must outrun the fastest lion or be hunted to death. Everyday a lion awakens knowing it must outrun the slowest deer or starve
to death. In this lifetime, it doesn’t matter whether you are a deer or a lion when the sun rises, you should be running at your best.
(Anonymous)
My Lord, Allah AWT Prophet Muhammad SAW
Families:
My Father: Imam Achyat My Mother: Ala Shofiyati My Brother: Wildan Nurohman
My Sister: Rif’atir Rizqiyah
All Lecturers, IPOLianS and My Best Partner
most gracious, the almighty, who has given his blessing and guidance with which finally, I could accomplish my undergraduate thesis under the title “The Procedure for Establising a Foreign Investment Company in Indonesia (a Study about Investment Provisions in The ASEAN Economic Community/AEC Era)”.
My sincere thanks are addressed to both advisors, Bapak Dr. H. Mukti Fajar, S.H., M.Hum. and Hj. Fadia Fitriyanti, S.H., M.Hum., M.Kn. who guided me with patient, wisdom, and compassion, and also allow me to express my deepest gratitude to Bapak M. Endrio Susila, S.H., MCL., Bapak Iwan Satriawan, S.H., MCL., Bapak Yordan Gunawan, S.H., Int. MBA., Bapak Nasrullah, S.Ag., S.H., MCL., and all lectures at the Faculty of Law UMY who inspired me to reach my future. Million appreciations are also given to all staff at the Faculty of Law for their assistance during my four-year study at Universitas Muhammadiyah Yogyakarta.
Thanks all my beloved partner in crime and my highest gratitude to IPOLianS for their support, motivation, love and inspiration to finish my undergraduate thesis. Finally, my beloved parents Bapak Imam Achyat, Ibu Ala Shofiyati, my brother Wildan Nurohman and my sister Rif’atir Rizqiyah thank you for your unlimited love and support.
Author
ABSTRACT………... i
APPROVAL PAGE……….. ii
ENDORSEMENT PAGE………. iii
DECLARATION PAGE……….. iv
MOTTO PAGE………. v
DEDICATION PAGE……….. vi
FOREWARD………. vii
TABLE OF CONTENTS………. viii
LIST OF STATUTES………... xi
LIST OF ABBREVIATIONS………..………. xii
CHAPTER I – INTRODUCTION A. Background………... 1
B. Research Question……….. 8
C. Objective of Research……… 8
CHAPTER II – LITERATURE REVIEW
A. ASEAN Economic Community (AEC)………. 10
B. The General Review of the ASEAN Comprehensive Investment
Agreement (ACIA)………….……… 15
C. Overview of Investment………. 18
D. The General Review of the Foreign Investment in Indonesia…….... 21
E. The requirements of establishing the foreign investment company.. 24
F. Deed of Establishment of the Limited Liability Company for
Foreign Investment……… 25
G. The History of Regulation from Investment Coordinating Board… 26
H. The principle of One Stop Service on the Investment………. 28
I. The General Review of Domestic Investment in Indonesia………… 30
J. The General Review of the Joint Venture……..……….. 32
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B. Sources of Data……….. 36
C. Method of Research Data Collections……….. 37
D. Techniques of Research Data Collections……… 38
CHAPTER IV – FINDING AND ANALYSIS
A. The Investment Principles according to the ASEAN Comprehensive Investment Agreement (ACIA)………. 39 B. Procedures for establishing a Limited Liability Company for
Foreign Investment Company (PT PMA) in Indonesia………. 45 CHAPTER V – CONCLUSION AND RECOMMENDATION
A. Conclusion……….. 53
B. Recommendation………... 54
BIBLIOGRAPHY
1. Law No. 25 of 2007 on Investment
2. Presidential Regulation No 39 of 2014 On List of Business Fields Closed to Investment and Business Fields Open, with Condition, to Investment
3. Regulation of the Head No. 5 of 2013 on the Investment Coordinating Board
4. Law No. 40 of 2007 on Limited Liability Companies 5. Presidential Decree No. 27 of 2009 on One-Stop Services 6. Regulation of the Minister of the Interior Number 27 of 2009 7. Presidential Regulation No. 97 of 2014 on Organization of
Integrated One Stop Service (New Regulation)
ACIA ASEAN Comprehensive Investment Agreement
AEC ASEAN Economic Community
AFAS ASEAN Framework Agreement on Services
AFTA ASEAN Free Trade Agreement
AIC ASEAN Industrial Complementation
AIGA ASEAN Investment Guarantee Agreement
AIJV ASEAN Industrial Joint Ventures
AIP ASEAN Industrial Projects
ASW ASEAN Single Window
ATIGA ASEAN Trade in Goods Agreement
PKP Pengusaha Kena Pajak (taxable entrepreneur confirmation)
BKPM Badan Koordinasi Penanaman Modal (Investment
Coordinating Board)
xiii
CMIM Chiang Mai Initiative Multilateralization
DNI Daftar Negatif Investasi
IAI Initiative for ASEAN Integration
ISDS Investor–State Dispute Settlement
MNCs Multi National Corporations
MNEs Small Medium Enterprises and Multinational Enterprises
MOLHR Ministry of Law and Human Rights
NPWP Nomor Pokok Wajib Pajak (Tax Identification Number)
NSWI National Single Windows for Investment
PMA Penanaman Modal Asing (Foreign Investment)
PT Perseroan Terbatas (Limited Liability Company)
TDP Tanda Daftar Perusahaan (Company Registration Certificate)
Investment. Seeing the problems faced by Indonesia as ASEAN member countries involved in the ASEAN Economic Community, the researcher tried to examine about the investment provisions of the convention according to the ASEAN Comprehensive Investment Agreement and procedures for establishing a foreign investment in ASEAN Economic Community era in Indonesia. The four pillars of this legal basis has been agreed in the form of: ASEAN Trade in Goods Agreement (ATIGA) which regulates the flow of goods which are free, the ASEAN Framework Agreement on Services (AFAS) which regulates the flow of services that are free, the ASEAN Comprehensive Investment Agreement (ACIA) regulating the flow of investment, as well as the Chiang Mai Initiative Multilateralization (CMIM) regulating capital flows more freely. This research used normative legal research with statute approach. The aims of the research are to study how is the best way for foreign investor to invest their money in Indonesia in facing AEC. The investment provisions according to the ASEAN Comprehensive Investment Agreement is to establish a regime of free investment, open, transparent and integrated for domestic and international investors across the ASEAN region, and benefits ASEAN Comprehensive Investment Agreement including the liberalization of investment, non-discrimination, transparency, investor protection and investor state dispute resolution. The government shall revise of the requirement of foreign investor in the Investment Act by considering ASEAN Comprehensive on Investment Agreement.
Keyword: Procedure, Foreign Investment, ASEAN Economic Community, ASEAN Comprehensive Investment Agreement.
A. Background
The vision of the ASEAN Economic Community (AEC) is the manifestation of the economic integration, as adopted in the ASEAN Vision 2020 which is to transform ASEAN into a region with free trade in goods, services, investment, skilled labor and free flow of capital1. Acceleration of the establishment of ASEAN community from 2020 to 2015 was agreed upon by the ASEAN Head of States at the 12th ASEAN Summit. ASEAN Community in 2015 is divided into three pillars: the ASEAN Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community2.
ASEAN has agreed to follow the regional economic integration. Its implementation refers to the ASEAN Economic Community Blueprint that includes four main pillars, namely: (1) ASEAN as a single market and production base that is supported by elements of the free flow of goods,
1
Wahyuningsih, 8 December 2014,“Peran Pemuda Indonesia Dalam Menghadapi ASEAN Economic Community (AEC) Atau Masyarakat Ekonomi ASEAN (MEA)”, Linkar Studi Pendidikan Universitas Sebeleas Maret.
2
Wawasan ASEAN 2020, Wikipedia, available at https://id.wikipedia.org/wiki/Wawasan_2020_ASEAN Accessed on October 25th, 2015 at 6.31 a.m.
services, investment, energy educated labor and freer flow of capital; (2) ASEAN as a region with high economic competitiveness which has the elements of competition rules, consumer protection, intellectual wealth rights, infrastructure development, taxation and e-commerce; (3) ASEAN as a region with equitable economic development which has the elements of the development of small and medium enterprises, and the initiative for ASEAN integration CMLV countries (Cambodia, Myanmar, Laos, and Vietnam); and (4) ASEAN as a region that is fully integrated by the global economy which has the elements of a coherent approach in economic relations outside of the region, and it increases the participation in global production networks3.
The four pillars of this legal basis has been agreed in the form of: ASEAN Trade in Goods Agreement (ATIGA) which regulates the flow of goods which is free, the ASEAN Framework Agreement on Services (AFAS) which regulates the flow of services that is free, the ASEAN Comprehensive Investment Agreement (ACIA) regulating the flow of investment, as well as the Chiang Mai Initiative Multilateralization (CMIM) regulating capital flows more freely.
The existence of the legal basis in the field of investment ASEAN namely ASEAN Comprehensive Investment Agreement gives benefits for the
3
Ministry of Finance, “Laporan Dampak ASEAN Economic Community Terhadap Sektor Industri Dan Jasa, Serta Tenaga Kerja Di Indonesia”, July 3rd, 2015, available at
investment environment and business sector. ASEAN Comprehensive Investment Agreement provides investment protection guarantee. It makes the investors ensure to invest their investment to the ASEAN region. Its business gives the investors some benefits i.e. the obligation of non-discrimination treatment, full protection and security, and cooperation from the government regarding on the investment facility for the investors from ASEAN member countries. However, to realize these benefits, the provisions in the ASEAN Comprehensive Investment Agreement have to be understood and implemented by government institutions particularly as the regulator and the business sector in the ASEAN Member Countries. The implementation of ASEAN Comprehensive Investment Agreement is effective depended on the willingness and commitment of Member States to carry out the structural reforms and regulations in accordance with the provisions of ASEAN Comprehensive Investment Agreement. Moreover, the regulatory reforms that support the simplification of procedures, licensing and other regulatory requirements will produce a favorable investment environment.
obstacles in trades are decreasing, international financial traffic that increasingly free, and out flows of capital and investment in each country. The impact of the passing of this era of globalization will pose a tough competition between the countries. Only a country that has the ability to compete will be able to survive4. It requires the economic development, considering the cooperation of ASEAN countries in the industrial sector mainly developed on the basis of three forms, namely: ASEAN Industrial Projects (AIP), ASEAN Industrial Complementation (AIC), and ASEAN Industrial Joint Ventures (AIJV). Besides, efforts are also proposed to increase the flow of technology, skills and investment to ASEAN countries and the exchange of information on policies and planning national industry among ASEAN countries.
Indonesia is a country which has a wealth of natural resources, cultural diversity, and the largest population in Southeast Asia. It is the economic capital of the nation that should become the welfare of its people. One of the problems that must be resolved by Indonesia is investment. Indonesia needs capital to grow the national economy. Although the investment rules have been discussed in Law No 25 of 2007 on Investment, but the government's efforts in improving the flow of investment in Indonesia has experienced some of the differences between the Negative Investment List 2014 with the
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Negative List 2010, among others related to the policy about the ownership of foreign capital increases, decreases, as well as the presence of the addition of new areas of business that have not been regulated in the Negative Investment List 20105.
The Negative Investment List 2014 sets policies on business sectors closed for investment and business fields are open with some conditions. The conditions are divided into three groups, namely: (1) line of business reserved for micro, small, medium, and cooperatives; (2) line of business as required by the partnership; business field required capital ownership, specific location, (3) and special licensing6. As affirmed by Hatta Rajasa, the government has four reasons for revising the Negative Investment List. Four reasons are to maintain economic growth and the anticipated impact of the global crisis through investment, simplifying the investment, adjust the existing law and the harmonization and simplification of business fields7.
The challenges of national economic growth need approval from ASEAN Comprehensive Investment Agreement. How ready and open a country to accept the liberalization of trade without barriers will disturb the
5
Renintha Karina, 2015, Bidang Usaha Tertutup (Daftar Negatif Investasi), Jakarta: Gramedia Pustaka Utama.
6
Deby Selina Panjaitan, 2016, “Pemerintah Menerbitkan Daftar Negatif Investasi Terbaru”, Hukum Penanaman Modal.
7
Hukum Online.com, “Revisi Daftar Negatif Investasi Beberapa bidang usaha yang dibatasi untuk kepemilikan asing serta pembatasan pemilikan asing yang sebelumnya dibuka dalam DNI
menjadi tertutup”, December 24th, 2013, available at
rate of the economy. The chance of becoming housework for Indonesia is to prepare the changes or improvements which hamper the domestic economy in attracting investment and improve national economic growth.
The system which is used in the National Single Windows for Investment (NSWI) has become the government's agenda for the registration and establishment of business fields. However, large variations between regions licensing, involvement of various technical institutions, and the lack of integrated information, as well as validation still remains an obstacle. With the existence of such a program is expected to ease of getting information and accelerating the process of licensing investment8.
It is inevitable that economic growth always creates inequality society, the symptoms that inhibit even become difficult to make the economy grow and lead to de-industrialization. Though the symptom of inequality is the result of fear for rejecting the changes cannot be avoided. With the investments that move the economic wheel, every country has a chance to improve their national economies. Deputy Minister of Planning/Deputy Head of Bappenas, Dr. Lukita Dinarsyah Tuwo stated that; to become the country with the largest state economies 7th in the world, the Indonesian government needs to do a variety of important breakthroughs in order to accelerate the
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economic growth in Indonesia9. Strategic geographical location makes Indonesia as a country that should be taken into account by the world and the national interests of other countries to engage or collaborate with Indonesia. With these opportunities, Indonesia previously still focusing on the output of commodity should be the Indonesian industry engaged in the production output or finished goods with international standards of quality that are ready to compete with other countries through the ASEAN Economic Community as an effort to realize the welfare of the people of Indonesia and the ASEAN community as a whole.
By the formation of the ASEAN Economic Community, ASEAN will enter the final stage of economic integration. In 1961, the theory of economic integration was first published stating that there are five stages, namely the integration of preferential trading arrangements, free trade area, customs union, common market, and economic union. At this time, ASEAN has been implementing the ASEAN Free Trade Agreement (AFTA) since 1991 which has aims to eliminate trade barriers such as tariffs among members of ASEAN, and implement the ASEAN Single Window (ASW) of 2013 which aims to integrate the systems of Customs and Excise throughout the ASEAN region. By the implementation of the ASEAN Economic Community in 2015
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then basically ASEAN will implement a common market and economic union at the same time10.
Seeing the problems faced by Indonesia as a member of the ASEAN countries and involved in the ASEAN Economic Community, the researcher tries to examine the investment provisions of the convention according to the ASEAN Comprehensive Investment Agreement and procedures for establishing a foreign investment in ASEAN Economic Community era in Indonesia.
B. Research Questions
1. How are the investment principles according to the ASEAN Comprehensive Investment Agreement (ACIA)?
2. How are the procedures for establishing of foreign investment company in ASEAN Economic Community era in Indonesia?
C. Objectives of Research
1. To find out the investment principles according to the ASEAN Comprehensive Investment Agreement (ACIA).
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2. To find out the procedures for establishing of foreign investment company in ASEAN Economic Community era in Indonesia.
D. Benefits of Research The benefits of research are: 1. Theoretical Benefit
This research will provide the understanding of foreign investment, in such legal concerning investment in Indonesia, ASEAN, ASEAN Comprehensive Investment Agreement, ASEAN Economic Community. This research will open the view of the foreign investment in Indonesia.
2. Practical Benefit
This research will describe some understanding of concepts that the researcher studied to develop the field of research, particularly in the areas of investment in Indonesia from procedures of foreign investment, with the regulations and legal in accordance with the issues that examined by the researcher.
A. ASEAN Economic Community (AEC)
ASEAN Economic Community is an International agreement that is based on the principle of market liberalization. Indonesia and nine other ASEAN member States have agreed agreement ASEAN Economic Community.
The ASEAN Economic Community aims to create a single market and production base characterized by free flow of goods, services, investment, skilled labor and capital movement of goods more freely. It is a program in economics that emphasizes on the single market open according to ASEAN Economic Community blueprint that contains 4 main frameworks, namely1: 1. Towards a single market and production base (current free trade for the
goods, services, investment, skilled labor and capital);
2. Towards the creation of regional economy with high competitiveness (regional competition policy, Intellectual Property Rights action plan, infrastructure development, Information and Communication Technologies, energy cooperation, taxation, and the development of Small Medium Enterprises);
1
Ministry of Trade, 2015, Buku Menuju ASEAN Economic Community, Jakarta, p. 9.
3. Towards a region with equitable economic development (region of equitable economic development) through Small Medium Enterprises development and programs of the Initiative for ASEAN Integration (IAI); and
4. Towards the full integration of the global economy (a coherent approach in the external economic relations and to encourage participation in the global supply network).2
Five core principles of the ASEAN single market and production base comprise:
1. Free flow of goods 2. Free flow of services 3. Free flow of investment 4. Free flow of capital 5. Free flow of skilled labor
From those principles, this thesis focuses on free flow of investment. ASEAN are near with the investment, and below is the explanation on free flow investment. Free flow of Investment ASEAN is committed to build an investment field to attract business. It creates the ASEAN Comprehensive Investment Agreement (ACIA), which includes a commitment to liberalize
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and protect cross-border investment operations, together with best practices for the treatment of investors and foreign investment.3
The ASEAN Comprehensive Investment Agreement which will build on the existing ASEAN Investment Area (AIA) agreement and ASEAN Investment Guarantee Agreement (AIGA) cover the following pillars:4
1. Investment Protection
This pillar provides enhanced protection to all investors and their investment to be covered under the comprehensive agreement. The action to strengthen among others the following provisions, while there were some ways on the investor-state dispute settlement mechanism:
a. Transfer and repatriation of capital, profits, dividends, etc; b. Transparent coverage on the expropriation and compensation; c. Full protection and security; and
d. Treatment of compensation for losses resulting from strife.
3
ASEAN up Empowering business in Southeast Asia, Benefits of the ASEAN Economic Community-AEC, available at http://aseanup.com/benefits-asean-economic-community-aec/. Accessed on March 13, 2016 at 6.17 a.m.
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2. Facilitation and Cooperation
Fasilitation and cooperation provided by AIA is more transparent, consistent and predictable investment rules, regulations, policies and procedures. The actions:
a. Harmonise, where possible, investment police to achive industrial complementation and economic integration;
b. Streamline and simplify procedures for investment applications and approvals;
c. Promote dissemination of investment information: rules, regulations, policies and procedures, including through one-stop investment centre or investment promotion board;
d. Strengthen databases on all forms of investments covering goods and services to facilitate policy formulation;
e. Strengthen coordination among government ministries and agencies concerned;
f. Consultation with ASEAN private sectors to facilitate investment; and g. Identify and work towards areas of complementation ASEAN-wide as
3. Promotion and Awareness
Promote ASEAN as an integrated investment area and production network. The actions:
a. Create the necessary environment to promote all forms of investment and new growth areas into ASEAN;
b. Promote intra-ASEAN investments, particularly investments from ASEAN-6 to CMLV countries (Cambodia, Myanmar, Laos, and Vietnam);
c. Promote the growth and development of Small Medium Enterprises and Multinasional Enterprises (MNEs);
d. Promote industrial complementation and production networks among Multi National Corporations (MNCs) in ASEAN;
e. Promote joint investment missions that focus on regional clusters and production networks;
f. Extend the benefits of ASEAN industrial cooperation initiatives in addition to the ASEAN Industrial Cooperation Scheme to encourage regional clusters and production networks; and
4. Liberalisation
Progressive liberalisation of ASEAN Member Countrie’s investment regime is to achieve free and open investment by 2015. The actions:
a. Extend non-discriminatory treatment, including national treatment and most-favoured nation treatment, to investors in ASEAN with limited exceptions, minimize and where possible, eliminate such exceptions; b. Reduce and where possible, eliminate restrictions to entry for
investments in the Priority Integration Sectors covering goods; and c. Reduce and where possible, eliminate restrictive investment measures
and other impediments, including performance requirements.
B. The General Review of the ASEAN Comprehensive Investment Agreement (ACIA)
The ASEAN Comprehensive Investment Agreement is ASEAN’s instrument aimed at ensuring the free flow of investments within ASEAN in support of the goals of an integrated ASEAN Economic Community.
ASEAN Comprehensive Investment Agreement, that cross-border investment has a positive role to play in all ten ASEAN Member States and that investors should be encouraged to maintain and expand their investments throughout the region. This is the background to ASEAN Comprehensive Investment Agreement and goes a long way towards explaining why it offers potentially significant advantages to ASEAN investors doing business across the region.
The ASEAN Comprehensive Investment Agreement facilitates the progressive liberalisation of investment in 5 main sectors: manufacturing, agriculture, fishery, forestry, mining and quarrying, and related services. In other words, the liberalisation of investment under ASEAN Comprehensive Investment Agreement comprehensively considers primary, secondary, and tertiary sectors. ASEAN investors further benefit from the forward-looking provisions of ASEAN Comprehensive Investment Agreement, including in regard to transparency disciplines and the promotion of ASEAN as an integrated investment destination.
In addition, ASEAN Comprehensive Investment Agreement offers a series of guarantees to ASEAN investors that host country investment regulation will be fair and non-discriminatory. The ASEAN Comprehensive Investment Agreement offers wider coverage than previous investment instruments within ASEAN. The substantive protection and guarantees offered under the agreement are clearer than those found in previous ASEAN investment instruments.
The ASEAN Comprehensive Investment Agreement responds to the concerns of foreign businesses over the potentially capricious nature of host country regulatory changes and seeks to provide rights of recourse that are efficient, transparent and legally binding. The collective commitment of ASEAN Member States to a rules-based system of dispute settlement is a significant improvement over the previous approach where business people had to rely on diplomatic protection from their home country governments. The provision of Investor–State Dispute Settlement (ISDS) depoliticises potential conflicts between individual investors and host states, allowing the former to prosecute alleged treaty breaches and defend their property rights without soliciting the support of their Governments.
addressing major investment disputes and is accordingly the subject of some of ASEAN Comprehensive Investment Agreements most detailed rules.
C. Overview of Investment
The government of Indonesia recognizes that foreign capital investment has a major role in economic development. However, foreign capital investment is realized to be complementary means for the acceleration of economic development of the country.5 Law No. 1 of 1967 on Foreign Investment is the legal basis for the investor to invest their money at the time, and this law was amended by Law No. 11 of 1970 on Foreign Investment.
Law No. 25 Article 1 (1) of 2007 on Investment was enacted to revise the previous regulation related to the investment. By definition, the world “Investment” means any form of investing activity by both domestic and foreign investors to do business in the territory of the state of the Republic of Indonesia.
From the definition above, there are two types of investments according to Law No. 25 Article 1 (2) of 2007 on Investment; on the one hand, “Domestic Investment” means an investing activity which is done in the territory of the state of the Republic of Indonesia by a domestic investor or by using domestic capital. According to Law No. 25 Article 1 (3) of 2007 on
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Investment, on the other hand, “Foreign Investment” means an investing activity done in the territory of the state of the Republic of Indonesia by a foreign investor both by the use of all of the foreign capital and by engagement in a joint venture with a domestic investor.
Actually, all business sectors are open for investment. Therefore, the government determines the requirement and the details sectors based on priorities for the investment. Those kind of policies are related to the objectives of investment. Among the objectives of investment are:
1. Increasing national economic growth; 2. Creating job opportunity;
3. Improving sustainable economic development;
4. Improving the competitiveness of national business sphere;
5. Increasing the capacity and the capability of the national technology; 6. Encouraging people economic development;
7. Processing economic potential into the real economic strength by using fund coming from both domestic and foreign countries;
8. Improving the prosperity of the community.
The Law No. 25 of 2007 Articles 14, 15 and 16 on Investment regulate the rights, obligations, and liabilities that have to be conducted by the investor. Law No. 25 Article 14 of 2007 on Investment states that every investor shall be entitled to obtain:
2. Open information about business fields it is running; 3. Service; and
4. Various forms of the facility according to the rules of law.
The Law No. 25 Article 15 of 2007 on Investment mentions that every investor is also required to:
1. Apply the principle of good company management; 2. Implement the company’s social liability;
3. Make a report on investment activity and submit it to the Investment Coordinating Board;
4. Respect the cultural tradition of communities around the location of investment business activity;
5. Comply with all of the rules of law.
In addition, Law No. 25 Article 16 of 2007 on Investment regulated that every investor shall be liable to:
1. Secure capital originating from any sources, not in violation of the rulesof law;
2. Bear and settle any obligations and losses if such investor halt or leave or abandon its business activity unilaterally in accordance with the rules of law;
3. Create a healthy competitive business climate, refrain from monopoly practice, and any other matters that inflict damage to the state;
5. Provide safety, health, convenience, and prosperity of workers; and 6. Comply with all of the rules of law.
Those kinds of regulations were enacted by the government to give the legal certainty for the investor and also protect the national interest of Indonesia. The Law No. 25 of 2007 on Investment is the legal basis and also the norm that has to comply by the investor as the parties who take a part in Indonesian business sectors.
D. The General Review of The Foreign Investment in Indonesia
Foreign investment in Indonesia is generally governed by Law No. 25 of 2007 on Investment and a broad range of implementing legislation, including Presidential Regulation No. 39 of 2014 and Regulation of the Head No. 5 of 2013 on the Investment Coordination Board, which was amended by Head No. 12 of 2013 on the Investment Coordination Board. In addition, Law No. 40 of 2007 on Limited Liability Companies and sectoral legislation has an important impact on foreign investment.
conditions, to investment introduces a Negative List that sets out the lines of business that are closed to foreign investors (including lines of business that are reserved for Small Medium Enterprises/UKM), and lines of business that are open to foreign investors under certain conditions. Such conditions can be in the form of, inter alia, local partnership requirements, limitations as to permitted locations and special licence requirements. The Negative List also opens up certain business fields or increases the foreign shareholding limits in such fields for investors from ASEAN Member States.
Foreign investment must in principle be made through a limited liability company established under Indonesian law and domiciled within the territory of Indonesia.6 A limited liability company that is (partly) owned by a foreign investor should have the status of a foreign investment company. In principle this also applies to the subsidiaries of the company. Foreign investors who make an investment through a foreign investment company may subscribe for shares at the time the company is established, purchase shares in the company, or follow an alternative method in accordance with prevailing laws and regulations.
The government agency that handles investment, including foreign investment and related licensing matters, is the investment coordinating
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board. Other government agencies that may play a role in handling foreign investment matters include the Ministry of Law and Human Rights (MOLHR) and the Ministry of Trade.
Foreign investors wishing to establish a foreign investment company in Indonesia are required to obtain a principle licence from the investment coordinating board. This principle licence serves as an investment permit that authorises the foreign investor to establish the company.
Indonesian law does not create a formal procedure for an applicant for a licence or approval that does not agree with a decision by the relevant government authority to apply for administrative review. However, a foreign investor may submit a complaint to the investment coordinating board regarding government services relating to foreign investment. Furthermore, it is possible for an individual or a legal entity to submit a claim to the administrative courts, which has the authority to review government institutions' written decisions with legal effects that are individual, concrete and final.7 There are two grounds for review: contravention of laws and regulations or that of general principles of proper administration. Written principles are the principles of legal certainty, proportionality, disciplined state management, transparency, professionalism and accountability. The administrative courts also apply unwritten principles, such as misuse of power
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and arbitrariness. In practice, it may be hard for a foreign investor to win a case.
E. The requirements of establishing the foreign investment company
Generally, the following licenses/documents are required for the establishment of a limited liability company for foreign investment company in Indonesia:
1. Principle License & Business License from investment coordinating board, estimated time 7 days.
2. Deed of Establishment (containing the Articles of Association) legalized by a Public Notary, estimated time 1 to 2 days.
3. Legalization of the legal entity status of the limited liability company for foreign investment company by the Ministry of Law and Human Rights, estimated time 10 days.
4. Domicile Letter from the local district authority, estimated time 3 days. 5. Tax Identification Number (NPWP) and taxable entrepreneur confirmation
(PKP) from the tax office, estimated time 3 days.
6. Company Registration Certificate (TDP) from the agency for integrated licensing services (BPPT), estimated time 14 days.
Note: the licenses/documents listed above involve the general guideline for the establishment of a limited liability company for foreign investment company. However, additional licenses and/or documents can be required in specific sectors. Therefore legal advice should be sought before engaging in investment activity.
F. Deed of Establishment of the Limited Liability Company for Foreign Investment Company
In order to set up a limited liability company for foreign investment company in Indonesia, the shareholders must present a deed of establishment which needs to be legalized by a public notary. The deed of establishment contains, besides the Articles of Association, the following additional information:
1. Regarding the Founders:
a. In case the shareholder is an individual, the name, date of birth, place of birth, current residence information and citizenship.
b. In case the shareholder is a legal entity, the domicile of the legal entity, including the full address, the date and number of legalization of the ministry.
2. Regarding Board of Directors and Board of Commissioners.
Directors and Board of Commissioners who are first appointed through the deed of establishment.
3. Regarding the Shareholders (other than the founders).
The names, the number of shares and their issued and paid up nominal value.
G. The History of Regulation from Investment Coordinating Board
In order to follow the Law No. 25 of 2007 on Investment and Presidential Decree No. 27 of 2009 on One-Stop Services in the Field of Investment, improvements have to be made both internally and for the benefit of the implementation of the licensing service in the region, among others, by making changes to its guidance application procedures of capital investment, control the implementation of planting capital, reorganize standard licensing procedures of investment, build and Information Service System and Investment Electronic Licensing. New policies that have been published are: 1. Regulation of the Head No. 11 of 2009 on the Investment Coordinating
Board regarding Implementation Procedures, Guidance and Reported from Investment Coordinating Board;
3. Regulation of the Head No. 13 of 2009 on the Investment Coordinating Board regarding Guidelines and Procedures for Investment Implementation Control;
4. Regulation of the Head No. 14 of 2009 on the Investment Coordinating Board regarding Information Service System and Investment Electronic Licensing.
These regulations become effective and become the basis of investment activity in the central and regional. The enactment of regulations on the licensing service then all kinds of permissions that during conducted in Investment Coordinating Board will change, both in type and form of consent, Standard Operating Procedure and this will change the order of licensing services in the field of investment. Likewise, the use of system services electronically using National Single Window for investment is expected to be greater certainty speed, easy for investors to apply. Due to the electronic service system of the letter of approval issued in the Central and Regional have the same format nationally.
Implementation, used in the context of supervision, coaching, guidance on the implementation of the investments made by the business world.
Broadly speaking, the basics of service Presidential Decree No. 27 of 2009 on One-Stop Services, which will be the basis for the licensing service includes several elements. The emphasis is different from the regulatory processes and procedures previously. The elements include:
1. Easy, simple petition settlement process flows are easily understood since the requirements are simple;
2. Hurry, time is shortened for petition in the resolution process;
3. Right, it refers to the conformity of products with the provisions of laws and regulations;
4. Accurate, facilitation of imports of machinery, goods and materials is in accordance with the needs of production; and
5. Transparent and accountable, the settlement request process flows are clear and accountable.
H. The principle of One Stop Service on the Investment
Licensing is any form of approval for Investment issued by the Government and the local government that has the authority under the provisions of the legislation.8
Non licensing is any form of convenience services, fiscal facilities, and information on the investment, in accordance with the provisions of the legislation.9
One stop service aims to gain the ease of service, fiscal facilities, and information regarding the Investment, by accelerating, simplifying services and alleviating or eliminating the cost of obtaining a license and non Licensing.
To improve the Integrated One Stop Service and shorten its process, on 15 September 2014 the President issued Regulation No. 97 of 2014 on Organization of Integrated One Stop Service (New Regulation), which has been in effect since the date it was registered on 18 September 2014. Unlike the 2009 Integrated One Stop Service (PTSP), the scope of 2014 Integrated One Stop Service is not only restricted to licenses and non-licenses in the field of capital investment, but also covers all licenses and non-licenses which
8
Regulation of the Minister of the Interior Number 27 of 2009, Chapter I Article 1 Paragraph 9
become the authority of the Central Government and the Regional Government10
I. The General Review of Domestic Investment in Indonesia
Domestic Investment is an investment activity to business in the territory of the Republic of Indonesia by a domestic investor by using domestic capital. Definition of a domestic investor is an individual in Indonesian citizens, Indonesian business entities, the Republic of Indonesia, or any region investment in the territory of the Republic of Indonesia. Indonesian business entity intended here can form a limited Liability Company.
According to Law No. 25 Article 5 (1) of 2007 on Investment, domestic investment that can be done in the form of business entity is a legal entity. It is not a legal entity, or individual, in accordance with the provisions of the legislation. Law No. 25 article 5 (3) of 2007 on Investment further explains that domestic investors and foreigners investing in the form Limited Liability Company can be done by doing the following:
1. Taking shares in the establishment of a limited liability company; 2. Purchasing shares; and
10
3. Performing other means in accordance with the provisions of the legislation.
Legalization and Licensing from domestic investment under Law No. 25 (4) of 2007 on Investment, corporate investors, including domestic, that will conduct business activities must obtain a permit in accordance with the provisions of the legislation of the agencies that have authority. Licenses as mentioned previously can be obtained through the one stop service. Single service counter is intended to assist investors in obtaining the ease of services, fiscal facilities, and information on the investment; it is about domestic investment and foreign direct investment.
1. Pursuant to Law No. 25 article 18 (2) of 2007 on Investment explained that the investment facility can be given to investors who:
a. Expand its business; and b. Make new investment.
2. Law No. 25 article 18 (4) of 2007 on Investment describes the shape of the facilities provided by the government to investors, including domestic, can be:
a. Net income tax deduction up to certain level of investment made within certain period;
c. Import duty holiday or reduction for raw materials or support materials for production within certain period and with certain conditions;
d. Value added tax holiday or postponement for imported capital goods or machinery or equipment domestically unavailable for production within certain period;
e. Accelerated depreciation or amortisation; and
f. Property Tax reduction, especially for certain business fields in certain region, area, or zone.
J. The General Review of The Joint Venture There are three variations of direct investment:
1. An overseas company that is 100% owned by domestic companies and operates as a representative for the company in the country.
2. An overseas company owned 100% by the citizens of investors, but it was formed to work abroad.
3. The joint ownership over companies abroad between citizens and foreign national investor which the investment is made. It is often referred to as joint ventures.
In the book Anderson's Business Law and The Legal Environment written by David P. Twomey stated “Joint venture is relationship in which two or more persons combine their labor or property for single business undertaking and share profits and losses equally or as otherwise agreed.”11
From the above understanding, we can see that the joint venture is a framework agreement between the two parties (the company) or more that have the same goal. This agreement usually leads to the formation of a joint venture company. With this joint venture scheme, the parties get several benefits such as:
1. Reducing the need for capital and other resources for their needs of sharing element;
2. Transferring technology between the parties; 3. Minimizing business risks; and
4. Allowing developing the business to a global scale.
In its development, the joint venture is often associated with the ability of national capital that has been able to conduct business cooperation with foreign investors through the form of Foreign Direct Investment in Indonesia. Even in his Hartono Sunaryati Transnational Issues in Some Foreign Investment in Indonesia proposed joint venture restrictions as any joint venture between Indonesia's capital and foreign capital, whether it is a joint effort between the private sector and the private sector, government and the
11
private sector, or the government and the government. Also do not distinguish whether the joint venture is considered as foreign investment or domestic investment.12
12
CHAPTER III
RESEARCH METHODS
A. Type Of Research
The type of this research is a Normative Legal Research. Normative legal Research is a research which uses the law as foundation of norm. This means that this research is based on the library research focusing on reading and analyzing of the primary and secondary materials.1 In this research, the author describes the case, seek, and process a variety of data from the document study (libraries) to generate a report of research findings.
According to Jacob and Mersky, normative legal research is seeking to find those authorities in the primary sources of the law that are applicable to a particular situation. The search is always first for mandatory primary sources, that are constitutional or statutory provision of the legislature, and court decision of the jurisdiction involved. If these cannot be located, the search then focuses on locating persuasive primary authorities that comprise decisions from courts of other common law jurisdiction. When the legal
35
1
Johnny Ibrahim, 2006, Teori dan Metodologi Penelitian Hukum Normatif, Second Edition, Malang: Bayu Media, p. 46
search process on primary authorities cannot be found, the searcher will seek for secondary authorities.2
In relation to the normative legal research the researcher used several approaches, namely, the Statute Approach and Case Approach. A normative legal research should use certainly statute approach because in this approach the researcher e examined various rules of law as well as its central theme a focus of research.3 Case Approach aims to study the application of norms or rules of law committed in the practice of law.4
B. Sources of Data
The data used in this research were secondary data. The secondary data consisted of primary legal material, secondary legal material, and tertiary legal material. The detail data would be explained as follows:
1. Primary legal material consists of regulations as follows; a. Blueprint for the ASEAN;
b. The ASEAN Comprehensive agreement on investment; c. Law Number 25 of 2007 concerning on the investment; d. The principle of One Stop Service on the Investment;
2
Ibid, p. 45 3
Ibid, p. 302 4
e. The various laws related to the procedure for establishing a investment in Indonesia etc.
2. Secondary legal materials consist of several documents related to the primer legal materials as follows:
a. Books;
b. Scientific Journals;
c. Others Legal Documents related to the issue; d. Trusted site internets; and
e. Others non-legal documents related to this research. 3. Tertiary Legal Material, as follows:
a. Black’s Law Dictionary; and b. Indonesian Dictionary.
C. Method of Research Data Collections
D. Techniques of Research Data Collections
Techniques of analysis is basically descriptive qualitative.5 The Analysis began by classifying the data and the same information by subject and subsequently made an interpretation to give meaning to each subject and their relationship to one another. Then, the researcher conducted the analysis or interpretation of all aspects of an issue of concern inductively so as to give full picture of the results.6
The research was analyzed based on Indonesian Investment Law. Juridical thinking means that it would be connected to the principles of law and others related regulations.
5
Descriptive qualitative means, an approach or a search to explore and understand a central phenomenon and seek a deep understanding of a phenomenon, facts and reality. Facts, realities, problems and phenomenon can only be understood when researchers search for it in depth, and not just limited hanay on the surface. See book, Dr. J.R. Raco, M.E., M.Sc., 2010, Metode Penelitian Kualitatif, Jenis, Karakteristik, dan Keunggulannya, Grasindo, p. 7
6
A. The Investment Principles according to the ASEAN Comprehensive Investment Agreement (ACIA)
The overall objective of the ASEAN Comprehensive Investment Agreement (ACIA) is to establish a regime of free investment, open, transparent and integrated for domestic and international investors across the ASEAN region, and benefits ASEAN Comprehensive Investment Agreement (ACIA) including the liberalization of investment, non-discrimination, transparency, investor protection and investor state dispute resolution.
1. Investment Liberalization
ASEAN Comprehensive Investment Agreement (ACIA) in the face of the liberalization of cross-border investments in five sectors: manufacturing, agriculture, fisheries, forestry, mining and quarrying, and services related to each sector. Each ASEAN member countries submitted a list of reservations for these sectors, and anything not on the list is subject to national policy, liberalization and opens to ASEAN investors. Each member state is then responsible for reducing or eliminating their
reservation list in accordance with the three phases of the ASEAN Economic Community Blueprint Strategic Schedule. The ASEAN countries are also committed to enhance cooperation in areas including:
a. Investment policy convergence;
b. The procedure for application and approval of investment;
c. Exchange information related investments, rules, regulations, policies and procedures;
d. Improved coordination among government ministries and agencies; and
e. High level of consultation with stakeholders to facilitate private sector investment.
To help promote the ASEAN region as an integrated investment area that has favorable conditions for domestic and international investment, all member countries agreed through the ASEAN Comprehensive Investment Agreement (ACIA):
a. Create an environment that is needed to promote all forms of investment and new growth areas in ASEAN;
c. Maintain the growth and development of Small and Medium Enterprises; and
d. Promoting a joint investment initiative focusing on regional groups and production networks.
2. non-discrimination
the ability of investors to control investment. ASEAN Comprehensive Investment Agreement (ACIA) ensures no performance requirements and cannot impose conditions like minimum contents of local, export requirements, or trade balancing requirements.
3. Transparency
Another guiding principle of the ASEAN Comprehensive Investment Agreement (ACIA) is to increase the transparency and predictability of investment rules, regulations and procedures conducive to increased investment. These include:
a. Harmonizing investment policies that lead to a convergence of investment policy;
b. Making efficient and simplified procedures for investment applications and approvals; and
c. Conducting dissemination of information about the rules, regulations, policies and procedures affect investors and their investment in ASEAN.
a. Notifying other ASEAN member countries while imposing restrictions on the transfer of funds;
b. Informing the Board of ASEAN Comprehensive Investment Agreement (ACIA) when introducing new legislation or any change in existing laws, regulations or administrative guidelines which significantly affects investment or commitment of ASEAN member countries; and
c. Making publicly available all relevant laws, regulations and administrative guidelines of general application relating to or affecting investment.
4. Protection of Investors
follow its rules and regulations. For any legal action, ASEAN investors have the right to legal representation and the right to appeal.
ASEAN member countries will also take steps reasonably necessary for the protection and security of the investment at any time, including in any riot or insurrection. Agreement on investment losses as a result of armed conflict, civil conflict, or emergency, non-discriminatory compensation or restitution is required by the ASEAN Comprehensive Investment Agreement (ACIA). This agreement also protects investors against unauthorized takeover, and if the member does not take over the investment, adequate compensation is required. Insurance rights to recover well protected and member states should provide input, while living and working permits for investors, executives, managers and board members of ASEAN investors. However, this authority is subject to all immigration and labor laws and relevant policies.
The overall objective of the ASEAN Comprehensive Investment Agreement (ACIA) is to establish a regime of free investment, open, transparent and integrated for domestic and international investors across the ASEAN region, and benefits ASEAN Comprehensive Investment Agreement (ACIA) including the liberalization of investment, non-discrimination, transparency, investor protection and investor-State Dispute resolution.
B. Procedures for establishing a Limited Liability Company for Foreign Investment Company (PT PMA) in Indonesia
To establish the limited liability company, the main requirement is that all shareholders are Indonesian citizens. In the event of any foreign element either in a part or as a whole, the limited liability company must be in the form of limited liability companyon Foreign Investment. A limited liability company in its development of new investors entering the foreign status (either individual or an entity), the liability company must change their status to liability company foreign investment.
should be done by a limited liability company on foreign investment. It is because there are some fields of certain businesses that are still closed to be done by a limited liability company on foreign investment, and must be done by a limited liability company whose shareholders wholly citizen/legal entity Indonesia. If indeed such areas open to be done by a limited liability company on foreign investment, of course, we need to know also whether such area requires maximum ownership percentage of the number of foreign shareholders. It can be seen from the Negative List of Investment.
We have learned the Negative List of Investment and know with certainty about whether or not such area carried out by a limited liability company on foreign investment. In general, the requirements to apply for principles that permit the establishment of a limited liability company on foreign investment in the Investment Coordinating Board are as follows:
1. The Permission Submission principle to start a new business in the context of the establishment of limited liability company on foreign investment through Investment Coordinating Board:
a. Name of company;
b. Regency/City as a business domicile;
c. The amount of capital required to carry out such business;
2. Filing the petition must fill an online application form at this link: https://online-spipise.bkpm.go.id/
3. Preparing documents as follows:
a. For the Founder/Foreign Shareholders (foreign individuals or foreign legal entity):
1) The Company's Articles in Indonesian or English all its amendments, approval or reporting/notification; and
2) Copy of valid passport of individual shareholders
b. For the founder of which is a citizen or legal entity Indonesia: 1) For the limited liability company must complete:
(a) The Company's articles following all its amendments, approval or reporting/notification; and
(b) Licensing standard company: Taxpayer Registration Number/Trade Business License/Company Registration Certificate.
2) For the individual citizen: personal ID card and Taxpayer Registration Number.
c. The supporting documents required to complete the requirements are as follows:
1) Flowchart production process and raw materials required for the industrial process; and
d. The original power of attorney (in the case represented by the founder/others);
e. For special business fields that require additional permission from the particular agency, the application must also be accompanied by documents such as:
1) Completeness of other data required by the relevant Ministry (if any) and expressed in "Technical guidance's book on investment implementation"; and
2) For certain sectors, for example the mining sector perform extraction activities, the energy sector, oil palm plantations and fisheries, requires a letter of recommendation from the relevant technical ministry.
f. In the business sector is needed in terms of cooperation or partnership with local authorities, the required supporting data are in the form of:
1) Cooperation agreement (could be a Joint Venture, the Joint Operation, MOU, etc.) between small entrepreneurs and businessmen medium/large states-side parties, the system of cooperation, rights and obligations; and
Note: For requirements e points 1) and 2) must be coordinated in advance between Investment Coordinating Board institution/Ministry concerned.
After the file is completed, a new license can be processed at the Investment Coordinating Board. According to the rules, since the document declared complete, the approval of the Head of Investment Coordinating Board can be obtained on period of 12 working days. However, to obtain assurance that the application file is declared complete, need to undergo a process of correction repeatedly. Thus, it is better if before the files included, do any consultation with the existing Investment Coordinating Board officials.
Permission Investment Coordinating Board principle must be followed up with the implementation of practical actions which must be supported by charging Investment Activity Report that must be filled online and reported regularly every 3 months. After a limited liability company on Foreign Investment significantly conducts its activities continuously, which is evidenced by charging its Investment Activity Report, then 12 months after the license granted, Liability Company on Investment Coordinating Board may submit Permanent Business Permit. It’s where applicable, as well as the trade business license (original) on a regular limited liability company.
a. After Permit from Investment Coordinating Board out, then it can start to process the incorporation of a limited liability company on Foreign Investment (note, the name of liability company can be used/approved by the Minister).
b. A copy of the deed to be completed within a maximum period of two weeks of work since the signing of the deed.
5. Handling Domicile and Taxpayer Registration Number on behalf of Limited Liability Company concerned Taxpayer Registration Number created for limited liability companyon Foreign Investment should be a special Taxpayer Registration Numberof Limited Liability Company on Investment Coordinating Board time to approximately 10 working days.
Note: At this time, it might as well take care of Letters Taxable Entrepreneur. The time is up to 12 working days because there is a survey of the local Tax Office business location.
6. Opening an account in the name of the Company and depositing the share capital in the form of cash to the treasury of the Company. The proof of payment is submitted to the Notary for completeness validation request to the Justice Department Republic of Indonesia.
Law No. 40 of 2007 mentions 14 working days since obtaining No objection from Ministers. However, with already more sophisticated online system, the time can be just 1 day only. The approval of the Minister also includes the registration in the Company Register as mandated by the Act.
8. Once out attestation of the Ministry of Justice, Company Registration could be administered within a period of approximately 14 working days. 9. Once this is done, the maintenance of the State Gazette of his stay can be
conducted, and the time is 3 months.
After all the procedures passed, it must be followed by business type. When it is an industry, it must take care of Location Permit, Law disorder, Industrial Business Licence.
In the event that the company will enter the factory machines, because the status of liability company Foreign Investment, then no subsidy or tax relief duty on such machines. But for that, they must take care Permit LimitedLiability Company again at Investment Coordinating Board, namely: Masterlist and Import Meanwhile Identification Number.
Registration Letter Producers or Letter Importer Registration. In the port later limited liability company on Foreign Investment must also take care of getting notification and imported goods.
So in general, after the articles of association of Limited Liability Company on Investment Coordinating Board approval of the Minister, the Limited Liability Company on Investment Coordinating Board can begin administering licensing related to the business of Limited Liability Companyon Foreign Investment referred to in the Investment Coordinating Board, among others:
1. Facility import duties for machinery 2. Facility import tax
3. Recommendations for the exemption of Income Tax 4. Import Identification Number – Producers
5. Import Identification Number – General 6. Manpower Utilization Plan
7. Recommendations visa to work visa 8. Permits Employing Foreign worker
CHAPTER V
CONCLUSION AND RECOMMENDATION
A. Conclusion
1. The investment provisions according to the ASEAN Comprehensive Investment Agreement is to establish a regime of free investment Liberalisation, Protection, Promotion and Facilitation for domestic and international investors across the ASEAN region, and benefits ASEAN Comprehensive Investment Agreement including the liberalization of investment, non-discrimination, transparency, investor protection and investor state dispute resolution.
2. The procedures of establishment of foreign investment has through some phases, such as:
a. Submission Permission principle to start a new business in the context of the establishment
b. Filling online application
c. Complete supporting documents, such as; Flowchart production process and raw materials and Description/explanation for the process of business continuity
d. Original power of attorney (in the case represented by the founder/others)
e. For a special business fields that require additional permission from the particular agency,
After the file is complete, a new license can be processed at the Investment Coordinating Board.
B. Recommendation
PENANAMAN MODAL
DENGAN RAHMAT TUHAN YANG MAHA ESA
PRESIDEN REPUBLIK INDONESIA,
Menimbang : a. bahwa untuk mewujudkan masyarakat adil dan makmur berdasarkan Pancasila dan Undang-Undang Dasar Negara Republik Indonesia Tahun 1945 perlu dilaksanakan pembangunan ekonomi nasional yang berkelanjutan dengan berlandaskan demokrasi ekonomi untuk mencapai tujuan bernegara;
b. bahwa sesuai dengan amanat yang tercantum dalam Ketetapan Majelis Permusyawaratan Rakyat Republik Indonesia Nomor XVI/MPR/1998 tentang Politik Ekonomi dalam rangka Demokrasi Ekonomi, kebijakan penanaman modal selayaknya selalu mendasari ekonomi kerakyatan yang melibatkan pengembangan bagi usaha mikro, kecil, menengah, dan koperasi;
c. bahwa untuk mempercepat pembangunan ekonomi nasional dan mewujudkan kedaulatan politik dan ekonomi Indonesia diperlukan peningkatan penanaman modal untuk mengolah potensi ekonomi menjadi kekuatan ekonomi riil dengan menggunakan modal yang berasal, baik dari dalam negeri maupun dari luar negeri;
d. bahwa dalam menghadapi perubahan perekonomian global dan keikutsertaan Indonesia dalam berbagai kerja sama internasional perlu diciptakan iklim penanaman modal yang kondusif, promotif, memberikan kepastian hukum, keadilan, dan efisien dengan tetap memperhatikan kepentingan ekonomi nasional;
dan Tambahan Undang-Undang Nomor 1 Tahun 1967 tentang Penanaman Modal Asing dan Undang-Undang Nomor 6 Tahun 1968 tentang Penanaman Modal Dalam Negeri sebagaimana telah diubah dengan Undang-Undang Nomor 12 Tahun 1970 tentang Perubahan dan Tambahan Undang-Undang Nomor 6 Tahun 1968 tentang Penanaman Modal Dalam Negeri perlu diganti karena tidak sesuai lagi dengan kebutuhan percepatan perkembangan perekonomian dan pembangunan hukum nasional, khususnya di bidang penanaman modal;
f. bahwa berdasarkan pertimbangan sebagaimana dimaksud dalam huruf a, huruf b, huruf c, huruf d, dan huruf e perlu membentuk Undang-Undang tentang Penanaman Modal.
Mengingat : Pasal 4 ayat (1), Pasal 5 ayat (1), Pasal 18 ayat (1), ayat (2), dan ayat (5), Pasal 20, serta Pasal 33 Undang-Undang Dasar Negara Republik Indonesia Tahun 1945;
Dengan Persetujuan Bersama
DEWAN PERWAKILAN RAKYAT REPUBLIK INDONESIA dan
PRESIDEN REPUBLIK INDONESIA
MEMUTUSKAN :
Menetapkan : UNDANG-UNDANG TENTANG PENANAMAN MODAL.
BAB I
KETENTUAN UMUM
Pasal 1
Dalam Undang-Undang ini yang dimaksud dengan:
1. Penanaman modal adalah segala bentuk kegiatan menanam modal, baik oleh penanam modal dalam negeri maupun penanam modal asing untuk melakukan usaha di wilayah negara Republik Indonesia.
modal dalam negeri dengan menggunakan modal dalam negeri.
3. Penanaman modal asing adalah kegiatan menanam modal untuk melakukan usaha di wilayah negara Republik Indonesia yang dilakukan oleh penanam modal asing, baik yang menggunakan modal asing sepenuhnya maupun yang berpatungan dengan penanam modal dalam negeri.
4. Penanam modal adalah perseorangan atau badan usaha yang melakukan penanaman modal yang dapat berupa penanam modal dalam negeri dan penanam modal asing.
5. Penanam modal dalam negeri adalah perseorangan warga negara Indonesia, badan usaha Indonesia, negara Republik Indonesia, atau daerah yang melakukan penanaman modal di wilayah negara Republik Indonesia.
6. Penanam modal asing adalah perseorangan warga negara asing, badan usaha asing, dan/atau pemerintah asing yang melakukan penanaman modal di wilayah negara Republik Indonesia.
7. Modal adalah aset dalam bentuk uang atau bentuk lain yang bukan ua
