Capital Investments Procedure Amended (again) by BKPM
The Head of the Indonesian Investment Coordinating Board (“BKPM”) recently issued Regulation No. 12 of 2013 (“Perka 12/2013”) to amend its recently issued Head of BKPM Regulation No. 5 of 2013 on Direct Investment Permits and Non-Permits (“Perka 5/2013”). In general, Perka 12/2013 made changes to provisions relating to: 1. Share ownership by Venture Capital Companies (Perusahaan Modal Ventura- “PMV”); 2. Time extensions to complete an investment project; 3. Multi Sector Industry Investment Companies; 4. Controlling shareholders of publicly listed foreign direct investment (“FDI”) companies; 5. Foreign Trade Representative Offices; and 6. Import duty concessions for importing machinery. One of the new provision that need to be highlighted is the share ownership of PMV, where PMVs are now allowed to be shareholders in large scale Foreign Direct Investment (“FDI”) and Domestic Direct Investment (“DDI”) Companies. Perka 12/2013 provides that capital participation by a PMV in a large scale FDI or DDI Company, regardless of whether funds are sourced from Indonesian or foreign entities, will be considered as national capital participation. Previously, PMVs were prohibited from becoming a large scale (skala besar) shareholder in a DDI and FDI companies. Also, previously PMV investment in a DDI or FDI company is by nature temporary and may only last for 10 years at the longest, without the possibility of an extension. Perka 12/2013 on the other hand, includes a provision to allow a PMV to extend its participation for an additional five years after the expiration of the initial 10 year period. Please contact us to find out more about the above regulation.
