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Republic of Indonesia recognizes
that foreign capital investment has a major role to play in
the continuing development of the economy, however foreign
capital investment is realized to be a complimentary means
for the acceleration of economic development of the country.
Foreign capital investment in
Indonesia is governed by the foreign investment
law Number 1 of 1967, as amended by Law Number 11 of
1970.the law was enacted to encourage foreign investment
participation in Indonesia economy,
Especially in Industrial sector. The
law provides various assurances to foreign investors
including the right to:
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1- |
Transfer dividends which are paid out after tax profits
and are attributable to foreign owned shares. |
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2- |
Transfer funds to pay costs relating to the employment of
foreign personnel in Indonesia. |
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3- |
Permit loan interest payable and make loan
principal repayment. |
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4- |
Repatriate capital arising from the sale of
equity to Indonesian citizens. |
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5- |
Transfer compensation received in the event of
nationalization. |
Beside the above assurances,
the law also provides for tax incentives and
grants full authority and freedom to determine the
management of the Joint
venture company.
Investment and operation of foreign
companies is to be exercised in Joint ventures
with an Indonesian partner for the logistic support to the
investor , with the approval of the government according to
the foreign capital investment law.
There are many sectors closed to
capital investment. contained in the presidential
decree of June 10, 1990 no. 54 of 1993. Foreign capital
investment can be realized by forming
A business license for 30 years is
given by the state minister for the mobilizations of
investment funds. According to the BOT system, The
investment is for a period of 30 years and we have an
agreement for another additional 20 years were the
Indonesian partner share profit will be subjected to new
agreements.
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The fallowing facilities to
foreign investors could be summarized: |
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1- |
Various tax facilities are given |
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2- |
The foreign investment company is allowed to employ
the management according to their choice |
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3- |
Employment of foreign nationals is allowed where no
qualified Indonesian are available |
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4- |
Free import duties on basic materials needed for the
project |
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5- |
Loss-carry forwards |
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6- |
International arbitration in case of compensation is
to be paid as a result of nationalization |
There are many other facilities offered to the foreign
investment capital in Indonesia.
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PT.Felima
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