easy investing program

Easy Investing Service Program in Indonesia

  • InCorp Editorial Team
  • 30 April 2016
  • 3 minutes reading time

This is good news for investors that target Indonesia as their potential market. The Indonesian government through its Investment Coordinating Board (BKPM) has issued two new policies that enable investor to conveniently invest in Indonesia.

The two policies are called Kemudahan Investasi Langsung (KLIK), which is literally translated as Simplicity in Direct Investment as well as the 3-hour service for the investment permit upgrade.

A Memorandum of Understanding regarding those issues was signed on February 22nd, 2016. Presidents and the regional leaders from 6 provinces and regents or mayors from 9 districts or cities sign this memorandum. As a pilot project, only 6 provinces are included in the program. including Central Java (3 industrial areas). East Java (1 industrial area), West Java (5 industrial areas) , Banten (3 industrial areas). South Sulawesi (1 industrial area), and North Sumatra (1 industrial area). Other areas are expected to join the program in the near future.

From a press release made by BKPM, the new “KLIK” program enables foreign enterprise to do the following things:

  1. Foreign company that has already had the Principle License. Either from central PTSP or local PTSP, can directly do the construction.
  2. At the same time, they can also process the Building Permit, Environmental License (UKL/UPL, AMDAL), and other licenses based on the Estate Regulation.

It means that foreign companies can save a lot of time and energy to deal with the long and confusing bureaucracy in Indonesia.

The main reason to issue the two programs are to attract more investors in specific areas to Indonesia and give them opportunity to immediately construct their plant(s) or factories right after getting the principle license. The new policies will be beneficial for both the country and the investors. The vast areas in the program coverage make it possible for investors to expand across Indonesia, whereas the investments themselves will provide countless job opportunities for the local people.

Future Impact for easy investing program

The government predicts that the new program will increase Indonesia’s competitiveness. So that Indonesia can meet its investment target that reaches IDR 594.8 trillion in 2016. Foreign investors had dealt with confusing and long bureaucratic processes while attempting to construct something for their businesses. Now, they can do several processes at once and shorten the chains.

Another great advantage is all foreign investors can enjoy the benefit of these two programs since there is no limitation in the minimum requirements for investment values and number of labors.

If you need further information on this issue, feel free to contact Cekindo. Our experts will assist you to deal with all the documents needed to establish a foreign company in Indonesia legally

Verified by

Hotdo Nauli

Senior Legal & Delivery Manager at InCorp Indonesia

Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). 

Frequently Asked Questions

    A nominee arrangement is an arrangement that uses another person’s name as a subject. In Indonesia, it is prohibited. This restriction aims to prevent situations where a company is owned by one party but beneficially owned by another. According to the law, any nominee agreement between a local party and a foreign investor is deemed null and void.

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.
    • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

    According to Presidential Regulation No. 10/2021 and the amended version, all businesses are open for domestic and foreign investment with these limitations and classifications:

    • Eight businesses are closed to foreign investment and may be operated by the central government.
    • Designated business sectors or joint ventures with cooperatives (koperasi) and micro, small, and medium enterprises
    • Open businesses are subject to specific conditions, such as those that are exclusively available to 100% local investors, those with restricted foreign shareholding, and investments requiring special licenses

    Certain sectors are closed to foreign investment, including narcotics cultivation, gambling, and environmental conservation activities.

    In Indonesia, employment arrangements are categorized into temporary employment agreements (PKWT) and permanent employment agreements (PKWTT). Temporary contracts are for short-term, seasonal, or experimental work, while permanent contracts are for continuous employment.

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The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.