Requirement of Paid-Up Capital for Foreign Companies in Indonesia
The Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM) has released a new regulation requirement of Paid-Up Capital for Foreign Companies in Indonesia and will take effect starting on August 2021. The Regulation, stipulates the latest guidelines and processes on the Service of Risk-Based Investment Licensing and Investment Facility.
The highlighted point for this newly regulated rule is the requirement of Paid-Up Capital for Foreign-Investment Company / PT PMA. Previously, as stipulated in Company Law of Indonesia, the minimum requirement of Paid-Up Capital is 25% of the Authorized Capital (minimum of IDR 10 billion).
Whereas starting from August 2021, the national license-issuing platform, Online Single Submission – OSS, is in transition process based on the regulations of risk-based investment license issuance. And this affects the mind of foreign business owners in Indonesia. Below is the summed up changes of this newly enforced Perka BKPM No. 4 / 2021 :
1. Investment Value (commitment to invest)
Common misconception for business owners is that the Investment Value equals to the Capital. This is to simply clarify that; Investment Value is the commitment of a foreign limited liability company for each of their selected business activities. As we know, Indonesia recognized Business Classification Code / KBLI to determine which is the most suitable license for investors. One KBLI will consist of 5 digits of numbers. Each type of business might have different classification code. So, the investment value will only be incurred upon the business classification code(s) and does not bind the Shareholders of the company to directly inject shares in the same amount of Investment Value. This investment value shall be fulfilled during the time the company is running its business.
The general rule is to commit Investment Value in the amount of IDR 10 Billion per 5 digits business classification code / KBLI. However several sectors might apply different rules :
|Trading||IDR 10 billion per the first 4 digits of KBLI|
|Food & beverage||IDR 10 billion per the first 2 digits of KBLI|
|Construction||IDR 10 billion per the first 4 digits of KBLI|
|Industry||IDR 10 billion per 5 digits of KBLI|
|Property||IDR 10 billion including land & building for one building / residential|
|IDR 10 billion excluding land & building for several buildings /|
integrated residential cluster
2. Enforced rule on Paid-Up Capital
Paid-Up Capital for Foreign Owned Company is now changed to ≥ IDR 10 Billion. But, this regulation only applies for :
- a company not yet established / established after the enforcement of this regulation
- an established company with paid-up capital less than 10 Billion IDR, but has yet to issue NIB (company registration number) and Operational License
- an established company with paid-up capital less than 10 Billion IDR, has issued NIB and has not yet issued/secured an Operational License
- an established company with paid-up capital less than 10 Billion IDR, has issued NIB and has issued Operational License but has ineffective status
- an established company with paid-up capital less than 10 Billion IDR and wanting to change, add, remove or modify its business classification code.
If the recognized company is already established with NIB and effective Operational License, the minimum of Paid-Up Capital is not required to be adjusted. Should your Company has an issue regarding this newly regulated law by the Indonesia Investment Coordinating Board, or you wish to establish a business in Indonesia, you may reach our expert to assist you on the process.
How can Double M help you?
DOUBLE M providing market entry solution services in South East Asia. Should you have any inquiry, please contact us at firstname.lastname@example.org
Leave a Reply