INDONESIA BRIEF Geography The world's largest archipelago, Indonesia achieved independence from the Netherlands in 1949. Current issues include: implementing IMF-mandated reforms of the banking sector, effecting a transition to a popularly-elected government after four decades of authoritarianism, addressing charges of cronyism and corruption, holding the military accountable for human rights violations, and resolving growing separatist pressures in Aceh and Irian Jaya. On 30 August 1999 a provincial referendum for independence was overwhelmingly approved by the people of Timor Timur. Concurrence followed by Indonesia's national legislature, and the name East Timor was provisionally adopted. Climate Because of Indonesia's location near the equator and its island geography, the climate along coastal areas is hot and humid year-round. The average daily temperature range of Jakarta is 21° to 33°C (69° to 92°F) and varies little from winter to summer. Temperatures in upland areas tend to be cooler. Indonesia has two monsoon seasons: a wet season from November to March and a dry season from June to October. Between monsoons, the weather is more moderate. The northern parts of the country have only slight differences in precipitation during the wet and dry seasons. Natural Resources Volcanic ash creates rich soil that is ideal for growing crops, but large areas of Indonesia cannot be cultivated because of swamps, soil erosion, or steep slopes. Tropical forests cover 55 percent of the land, although this proportion has been shrinking due to deforestation. Trees of the Dipterocarp family, such as the meranti, are a valuable forest resource. Also important are ramin, sandalwood, ebony, and teak. Teak in particular is grown in plantation forests. The government has established many national parks to conserve the natural vegetation and native wildlife. Indonesia claims that little or no commercial development is permitted in about half its forests. The more important national parks include Gunung Leuser (in northwestern Sumatra), Kerinci Seblat (in central Sumatra), Bukit Barisan Selatan (in southern Sumatra), Ujung Kulon (in western Java), Tanjung Puting (in central Kalimantan), and Komodo Island (between Sumbawa and Flores). Indonesia has significant deposits of oil and natural gas, most of which are concentrated along the eastern coast of Sumatra and in and around Kalimantan. Indonesia produces more than 80 percent of Southeast Asia's oil and more than 35 percent of the world's liquefied gas. Tin on Belitung and Bangka islands, bauxite on Bintan Island, copper in Papua, nickel on Sulawesi, and coal on Sumatra are Indonesia's major mineral resources. Small amounts of silver, gold, diamonds, and rubies are also found. Large parts of Indonesia, especially in Kalimantan and Papua, have not been intensively explored for minerals. The seas surrounding Indonesia yield abundant saltwater fish, pearls, shells, and agar (a substance extracted from seaweed).
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INDONESIA BRIEF
Geography The world's largest archipelago, Indonesia achieved independence from the Netherlands in 1949. Current issues include: implementing IMF-mandated reforms of the banking sector, effecting a transition to a popularly-elected government after four decades of authoritarianism, addressing charges of cronyism and corruption, holding the military accountable for human rights violations, and resolving growing separatist pressures in Aceh and Irian Jaya. On 30 August 1999 a provincial referendum for independence was overwhelmingly approved by the people of Timor Timur. Concurrence followed by Indonesia's national legislature, and the name East Timor was provisionally adopted.
Climate Because of Indonesia's location near the equator and its island geography, the climate along coastal areas is hot and humid year-round. The average daily temperature range of Jakarta is 21° to 33°C (69° to 92°F) and varies little from winter to summer. Temperatures in upland areas tend to be cooler. Indonesia has two monsoon seasons: a wet season from November to March and a dry season from June to October. Between monsoons, the weather is more moderate. The northern parts of the country have only slight differences in precipitation during the wet and dry seasons.
Natural Resources Volcanic ash creates rich soil that is ideal for growing crops, but large areas of Indonesia cannot be cultivated because of swamps, soil erosion, or steep slopes. Tropical forests cover 55 percent of the land, although this proportion has been shrinking due to deforestation. Trees of the Dipterocarp family, such as the meranti, are a valuable forest resource. Also important are ramin, sandalwood, ebony, and teak. Teak in particular is grown in plantation forests. The government has established many national parks to conserve the natural vegetation and native wildlife. Indonesia claims that little or no commercial development is permitted in about half its forests. The more important national parks include Gunung Leuser (in northwestern Sumatra), Kerinci Seblat (in central Sumatra), Bukit Barisan Selatan (in southern Sumatra), Ujung Kulon (in western Java), Tanjung Puting (in central Kalimantan), and Komodo Island (between Sumbawa and Flores). Indonesia has significant deposits of oil and natural gas, most of which are concentrated along the eastern coast of Sumatra and in and around Kalimantan. Indonesia produces more than 80 percent of Southeast Asia's oil and more than 35 percent of the world's liquefied gas. Tin on Belitung and Bangka islands, bauxite on Bintan Island, copper in Papua, nickel on Sulawesi, and coal on Sumatra are Indonesia's major mineral resources. Small amounts of silver, gold, diamonds, and rubies are also found. Large parts of Indonesia, especially in Kalimantan and Papua, have not been intensively explored for minerals. The seas surrounding Indonesia yield abundant saltwater fish, pearls, shells, and agar (a substance extracted from seaweed).
Demography Indonesia's estimated population in 2002 was 232,073,071, giving it an average population density of 122 persons per sq km (316 per sq mi). With an estimated population of 114,733,500 in 1995, Java contains well over half of Indonesia's people. The next most populous islands are Sumatra, with an estimated 40,830,400 people; Sulawesi, with 13,732,500; and Kalimantan, with 10,470,800. The remaining islands have much smaller populations, including 2,895,600 on Bali.
Ethnics The Javanese, who live mainly in central and eastern Java, are the largest ethnic group, constituting 45 percent of Indonesia's population. On the western end of Java are the Sundanese, who make up 14 percent of the population and are the second largest group. Other significant ethnic groups include the Madurese, who hail from Madura, off the northeast coast of Java, and make up 8 percent of the population; and the ethnic Malay, who are dispersed throughout several areas, and make up 7 percent of the population. Among the ethnic groups on Sumatra are the Bataks, who cluster around Lake Toba; the Minangkabau, from the western highlands; the Acehnese, from the far north; and the Lampungese, who live in the south. On Sulawesi, the Minahasans live in the north, the Bugis and Makassarese cluster around the coasts in the south, and the Toraja inhabit much of the interior. Kalimantan is populated by more than 200 groups; most of these are tribes of the Dayak ethnic group in the interior or are ethnic Malay living on the coast. The people of Papua are of Melanesian descent, as are some residents from smaller eastern islands. Several million Indonesians of Chinese descent are concentrated in urban areas. Smaller numbers of Indians, Arabs, and Europeans are scattered around the archipelago.
Language About 300 languages and dialects are spoken in Indonesia, but Bahasa Indonesia is the official and most widely spoken tongue. Bahasa Indonesia (official, modified form of Malay), English, Dutch, local dialects - the most widely spoken of which is Javanese
Religions Muslim 88%, Protestant 5%, Roman Catholic 3%, Hindu 2%, Buddhist 1%, other 1% (1998)
Government Republic of Indonesia got its independence on 17 August 1945 from the Dutch. However, Indonesia still use legal system based on Roman-Dutch law, substantially modified by indigenous concepts and by new criminal procedures code; has not accepted compulsory ICJ jurisdiction.
International organization participation APEC, Asia Pacific Economic Cooperation, established in November 1989, is an informal grouping of Asia Pacific countries that provides a forum for Ministerial level discussion of a broad range of economic issues. ARF,
ADB, Asian Development Bank. The ADB helps finance economic development in developing countries in the Asian and Pacific area through the provision of loans on near-market terms, with its Ordinary Capital Resources (OCR), and on concessional terms, through the Asian Development Fund ASEAN, Association of Southeast Asian Nations was established in 1967 to promote political, economic, and social cooperation among its six member countries: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Brunei. ASEAN headquarters are in Jakarta, Indonesia. CCC, CP, Colombo Plan ESCAP, Economic and Sdocial Council for Asia and Pacific FAO, United Nations Food and Agriculture Organization G-15, Group of Fifteen, established in 1990, consists of relatively prosperous or large developing countries. The G-15 discusses the benefits of mutual cooperation in improving their international economic positions. Members include: Algeria, Argentina, Brazil, Egypt, India, Indonesia, Jamaica, Malaysia (a very active member), Mexico, Nigeria, Peru, Senegal, Venezuela, Yugoslavia, and Zimbabwe. G-19 G-77, Group of Seventy-Seven - A grouping of developing countries which received its name in connection with 77 countries issuing a joint statement in Geneva, Switzerland in 1964. The G-77's primary focus is serving as a caucus for articulating members' collective interests primarily in areas of promoting economic cooperation among developing countries and in negotiations on economic matters with developing countries. G-77 membership has increased since 1964 to over 125 countries. IAEA, International Atomic Energy Agency - The IAEA, a specialized agency of the UN, is the primary international organization that enforces a system of safeguards to ensure that non-nuclear weapons states do not divert shipments of sensitive nuclear-related equipment from peaceful applications to the production of nuclear weapons. Before a supplier state of nuclear materials or equipment may approve an export to a non-nuclear weapons NPT (Nuclear non-Proliferation Treaty) signatory state, it must receive assurances that the recipient will place the material under IAEA safeguards. Subsequent to shipment, the recipient state must allow IAEA officials to verify the legitimate end use of the exported materials or equipment. IAEA, established in July 1957, gives advice and technical assistance to developing countries on nuclear power development, nuclear safety, radioactive waste management, and related efforts. Safeguards are the technical means applied by the IAEA to verify that nuclear equipment or materials are used exclusively for peaceful purposes. IAEA headquarters are in Vienna, Austria. IBRD, International Bank for Reconstruction and Development - The International Bank for Reconstruction and Development, a part of the World Bank, was established in December 1945 to help countries reconstruct their economies after World War II. IBRD assists developing member countries by lending to government agencies and by guaranteeing private loans for such projects as agricultural modernization or infrastructural development. Bank headquarters are in Washington, D.C. See: World Bank. ICAO, International Civil Aviation Organization - The ICAO is an United Nations specialized agency which promotes international cooperation in civil aviation. The ICAO
Council adopts standards and recommended practices concerning air nagivation, prevention of unlawful interference, and facilitation of border-crossing procedures for international civil aviation. Operating since 1947, ICAO includes almost all U.N. members. Headquarters are in Montreal, Canada. ICC, International Chamber of Commerce ICFTU, International Confederation of Free Trade Unions ICRM, IDA, International Development Association IDB, Islamic Development Bank IFAD, International Fund for Agricultural Development IFC, International Finance Corporation IFRCS, IHO, ILO, International Labor Organization IMF, International Monetary Fund (IMF) - This is an international financial institution that was created in 1946 after the 1944 Bretton Woods Conference. The purpose of the fund is to assist in the expansion of stable world trade while continuing to monitor exchange rate policies of member countries. As needed, the member countries are able to acquire financial resources to aid their adjustment policies. IMO, Interpol, International Police Organisation IOC, International Olympic Committee IOM (observer), International Organization for Migration - The IOM assists countries in meeting individual needs arising from immigration and emigration. The Organization was established in 1951; headquarters are in Geneva, Switzerland. ISO, International Standards Organization - The ISO, established in 1947, is a worldwide federation of national bodies, representing approximately 90 member countries. The scope of the International Standards Organization covers standardization in all fields except electrical and electronic engineering standards, which are the responsibility of the IEC, International Electrotechnical Commission. Together, the ISO and IEC form the specialized system for worldwide standardization -- the world's largest nongovernmental system for voluntary industrial and technical collaboration at the international level. The result of ISO technical work is published in the form of International Standards. There are, for example, ISO standards for the quality grading of steel; for testing the strength of woven textiles; for storage of citrus fruits; for magnetic codes on credit cards; for automobile safety belts; and for ensuring the quality and performance of such diverse products as surgical implants, ski bindings, wire ropes, and photographic lenses. See: International Accreditation Forum. ITU, International Telecommunications Union MONUC, NAM, Non-Aligned Movement - The NAM is an alliance of third world states which aims to promote the political and economic interests of developing countries. The name orignated in a declaration of neutrality issued at the Conference of Non-Aligned Countries in Belgrade, Yugoslavia in September 1961. NAM interests have included ending colonialism/neo-colonialism, supporting the integrity of independent countries and seeking a new international economic order.
OIC, Organization of the Islamic Conference - The OIC, established in May 1971, promotes cooperation in cultural, economics, scientific and social areas among Islamic nations. Headquarters are located in Jeddah, Saudi Arabia. About half the ICO members are also members of the Organization of African Unity. OIC members include: Afghanistan, Algeria, Bahrain, Bangladesh, Benin, Brunei, Burkina Faso, Cameroon, Chad, Comoros, Cyprus, Djibouti, Egypt, Gabon, the Gambia, Guinea, Guinea-Bissau, Indonesia, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Malaysia, Maldives, Mali, Mauritania, Morocco, Niger, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Syria, Tunisia, Turkey, Uganda, the United Arab Emirates, and Yemen. OPCW OPEC, Organization of Petroleum Exporting Countries - An association of the world's oil-producing countries, formed in 1960, with headquarters in Vienna, Austria. The chief purpose of OPEC is to coordinate the petroleum policies of its members: Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. See: Organization of Arab Petroleum Exporting Countries. UN, United Nations UNAMSIL, UNCTAD, United Nations Conference on Trade and Development UNESCO, United Nations Educational, Scientific and Cultural, Organization UNIDO, United Nations Industrial Development Organization UNIKOM, UNMIBH, UNMOP, UNMOT, UNOMIG, UPU, WCL, World Confederation of Labor - The WCL represents the cultural, economic, political, and social interests of millions of workers in Africa, the Americas, Asia, Europe, and the Middle East. The Confederation was founded in 1920 as th International Federation of Christian Trade Unions (IFCTU .. not to be confused with ICFTU, the International Confederation of Free Trade Unions); headquarters are in Brussels, Belgium. WCO, World Customs Organization WFTU WHO, World Health Organization - The WHO (French: Organisation Mondiale de la Sante, OMS) is a specialized agency of the United Nations which sets standards for the quality control of drugs, vaccines, and other substances affecting health. WHO was established in July 1946; headquarters are in Geneva, Switzerland. See: Codex Alimentarius Commission. WIPO, World Intellectual Property Organization - WIPO (French: Organisation Mondiale de la Propriete Intellectuelle, OMPI) promotes protection of intellectual property around the world through cooperation among states, and administers various "Unions," each founded on a multilateral treaty and dealing with the legal and administrative aspects of intellectual property. The Organization was established in 1967
(came into force in 1970), and became a specialized agency of the United Nations in December 1974; headquarters are in Geneva, Switzerland. WMO, World Meteorological Organization - Originally established under another name in 1875, the WMO was reconstituted and renamed in 1951. The WMO facilitates worldwide cooperation in establishing a network for meteorological, hydrological, and geophysical observations, for exchanging meteorological and related information, and for promoting standardization in meteorological measurements. Organization headquarters are in Geneva, Switzerland. WtoO, World Tourism Organization - The WTO, associated with the United Nations, is an intergovernmental technical body dealing with all aspects of tourism. The Organization promotes and develops tourism as a means of contributing to economic development, international understanding, peace, and prosperity. The WTO provides a world clearing house for the collection, analysis, and dissemination of technical tourism information and it offers national tourism administrations and organizations a means for multilateral approaches to international discussions and negotiations on tourism policy and practice. The Organization was established in November 1974; headquarters are in Madrid, Spain. WTO World Trade Organization - Provisions to establish the WTO were reached in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The WTO is scheduled to be established no later than 1997 as an international organization of comparable stature to the World Bank and the International Monetary Fund. The Organization is expected to facilitate implementation of trade agreements reached in the Uruguay Round by bringing them under one institutional umbrella, requiring full participation of all countries in one new trading system, and providing a permanent forum to discuss new issues facing the international trading system. The WTO system will be available only to countries which: (a) are contracting parties to the GATT, (b) agree to adhere to all of the Uruguay Round agreements, and (c) submit schedules of market access commitments for industrial goods, agricultural goods, and services.
2004 Country Facts A. Country Data Population in 2002 231 million Population growth rate 1.54% per year (avg. 1990-2002) Religions Islam, Protestant, Catholic, Hindu, Buddhism Government System Emerging Democracy Work-week Monday-Friday
B. Domestic Economy
Descriptions Year 2001 2002 2003 2004 GDP ($ billions) 144.8 172.9 179.12 Real GDP growth (%) 3.4 3.7 3.9 GDP per capita($) 609.4 811 830 Government spending as % of GDP 7.83 8.2 8.4
CPI (%) 12.55 10 5 Unemployment(%)* 6.4 9 9 Foreign Exchange Reserves($ billion) 29.4 31.6 32.6 Average Exchange Rate for $1.00** 10,500 9,316 8,500-9,000 Debt Service Ratio (Debt service/exports,%) 45.3 52.5 45.5 U.S.economic aid ($ millions) 230 200 184
C. Trade (USD billions)
Descriptions 2001 2002 2003 2004 Total Exports 56.3 57.9 58.7 non-oil/gas 43.7 45.2 46.6 oil/gas 12.6 12.7 12.1 Total Imports 31 34.8 35.2 Notes: * Indonesia does not have reliable unemployment data, because of the large informal workforce. Sources: Indonesian Central Bureau of Statistics, Bank Indonesia, Ministry of Finance.
INDONESIAN PUBLIC HOLIDAY 2005 (* the date changed due to Government Decree)
Indonesian Holiday 2005 Date New Year's Day January 1 Idul Adha January 21 Chinese New Year February 9 Islamic New Year 1426 H February 10* Saka New Year 1926 March 11 Good Friday March 25 Maulid of Prophet Mohammad April 22 Ascension of Christ May 5 Waisak Day May 24 Independence Day August 17 Ascension of Mohammad September 2 Idul Fitri November 3-4 Christmas Day December 25
Business Customs When scheduling a visit to Indonesia, one should avoid coming during July and August since school, summer and national holidays fall during these months. Business visitors should check the local holiday schedule before traveling to Indonesia. Also a business visitor should avoid arranging business meetings in Indonesia 2 weeks prior to and 2 weeks following the Idul Fitri holiday. The same is true for the Chinese New Year holiday. Many decision-makers will be away during this period. For your business contacts, please keep the following in mind: Indonesians like to avoid confrontation and disharmony. One should not lose one's temper or show emotion. One should also pay particular attention to certain gestures that Indonesians consider offensive
and discourteous. · First, do not use the left hand in receiving or eating. Although hand shaking is common practice, physical contact is usually avoided, especially with Muslim women. Smiling, bowing, or nodding is considered more gracious. · Second, under no circumstances should one touch or extend any part of the body over an Indonesian's head; the head is considered the most sacred body part. · Third, never allow the bottoms of your feet/shoes to be visible by others. Indonesians do not conduct business contractions or make decisions in the same direct fashion as Americans. Therefore, U.S. business people should be prepared to spend a good deal of time with clients before settling the business transaction. Patience is the key. The word "no" is rarely used. Exchanging small gifts is common practice for business or social visits. During such occasions, tea or coffee is almost always served and should be accepted. It should not be drunk, however, until the host invites you to do so. Most importantly, Indonesians do business with "friends", people whom they know, so developing a rapport is crucial. While quality and price are important, they are secondary to the personal interaction of the business partners.
BUSINESS HOURS Commerce 08:00-17:00 Mondays to Fridays* 08:00-13:00 Saturdays (some may take Saturday off)
Government 08:00-16:30 Mondays to Fridays* *Moslems are released for prayers every Friday from 1200-1300 Banks: 09:00-15:00 Mondays to Fridays* Shops: 09:00-22:00 Mondays to Saturdays When making a business trip, do not expect to schedule meetings for Friday afternoons or Saturdays.
Visas and Travel Documents Entrance and Residence Requirements: Tourists and business visitors from the United States may obtain a 60-day short visit pass (visa) upon arrival. All visitors must have at least 6 months validity left in their passports and a round-trip or onward ticket. To extend this pass a trip outside the country is usually required. Visitors departing Indonesia should reserve enough funds to pay the Rp. 100,000 airport departure tax. A 6-month to 1-year temporary residence visa may be obtained from the Embassy of the Republic of Indonesia, for either single or multiple entries. When requesting residence visas, one should allow sufficient time to meet whatever requirements may be imposed (e.g. sponsorship letters). Note that all residents must pay a Rp. 1 million fiscal tax at the airport every time they leave the country. Employment is not allowed without a work permit from the Ministry of Manpower. In addition, foreign and domestic investors must submit an employment plan to the Capital Investment Coordinating Board (BKPM) to obtain approval for expatriate employee work
permits. Permits are issued only for positions that cannot be filled by Indonesian nationals. Business travelers interested in engaging in such activities as concluding extensive commercial transactions or performing professional or technical services should obtain a regular business visa, either single or multiple entry, from an Indonesian embassy or consulate. Temporary resident visas are valid for six months to one year and are issued exclusively to experts required for national development. A Non-citizen is not allowed to work in Indonesia unless they have a work permit issued by the Ministry of Manpower. In addition, foreign and domestic investors must submit a manpower employment plan to BKPM to obtain approval for expatriate employee work permits. Work permits are issued only for positions that cannot be filled by Indonesian nationals. The government issues a list of professions by sectors that are open to expatriate personnel.
Clothing The normal business attire is a business suit or white shirt, tie and slacks for men, and a business suit or dress for women. The traditional batik shirt is also commonly worn in the office and is now considered proper business attire. Business cards are commonly used.
Transportation Transportation: In Jakarta, taxis are inexpensive and widely available except during morning and evening rush hours and Saturday nights during the peak social season, when they become scarce. In Jakarta, make certain the taximeter is turned on. In other cities, it may be common for drivers to negotiate a price rather than use the meter. However, one should also exercise extreme caution while using taxis. The number of patrons reporting thefts and assaults in taxis has increased in recent months, and has prompted many expatriates to use only the most reputable taxi companies, opting to summon taxis by telephone rather than flagging them down on the street. In Jakarta, the Blue Bird family of taxis (and the sister Silver and Golden Bird luxury taxis) are considered to be the safest and most reliable and they can be summoned by telephone (794-1234). Business travelers may wish to hire a private car which can be arranged through their hotel prior to arrival. Rates for this exceed $100 per day. Alternatively, arrangements can also be made with a taxi driver. Taxi and private limo drivers may not speak much English or be particularly knowledgeable about the city, and visitors are occasionally taken on roundabout routes. Allow plenty of time between meetings to accommodate Jakarta traffic jams; one half hour between locations in the central city is recommended. Train and air services are usually used for domestic travel. Domestic flights are the most convenient way to travel to most in-country destinations, with the exception of the highly recommended train from Jakarta to Bandung. For inter-city train service, book a first-class (Eksekutif) seat if available, which can be done by travel agents or at the train station one week in advance. Ferry services for people and vehicles link the major islands and many of the smaller islands.
Language The national language of Bahasa Indonesia is spoken all over Indonesia, in addition to local dialects/languages. English is widely spoken and understood in Jakarta by most business people, although much less so in other cities. Most of the better hotels have
English-speaking staff, as do the shopping centers that cater to expatriates. International telephone operators also speak English. However, the level of English can vary. Indonesian firms hoping to conduct business with foreigners generally try to employ some English speakers.
Travel Advisory As the capital, the largest as well as the most important city of Indonesia, Jakarta is no different than any other metropolitan cities in the world. Please use your common sense when you walk around the city. Pickpockets and beggars are common in the city. Please consult U.S. Embassy for the latest travel warnings at
Money and Curency As with most developing countries, in major cities you will find most established organizations will accept the well known credit cards (MasterCard, Visa, American Express etc.). However you will find many establishments and taxis which accept only cash, the Indonesian Rupiah. Therefore it is best to take a mixture of all three types of currency with you: Credit Cards (MasterCard, Visa, American Express, etc.), American Dollars (to be exchanged for Indonesian Rupiah on arrival) and Travelers Checks An exchange machine and bank counters are located near the baggage carousel in the arrivals hall at the international airport.
Telecommunication Telephone services vary between areas in Jakarta. The quality of service depend largely on the local telephone exchange's capacity to handle traffic. Phone service is good along the main business thoroughfares and the newer residential areas, which are served by fiber optic trunk lines. In the older residential areas service is less reliable, extra phone lines can be costly, and obtaining them can be time consuming. International direct dial (IDD) lines are available and will allow connection to an AT&T, Sprint or MCI operator, but rates are considerably higher than calling from the United States. Cellular services are readily available but the quality of service varies. Internet is widely used now.
Climate As Indonesia is very near the equator, temperatures run roughly the same all year round: 88-92 degrees Fahrenheit. From October to March, Indonesia enters the "Rainy Season" with each day encountering some form of rain shower, moderate to very heavy. If travelling to Indonesia during this time, be sure to bring or purchase an umbrella. From April to September, Indonesia is in what as known as the "Dry Season". Most days during this period are sunny and breezy, although some showers occasionally take place. Business meetings usually take place in air-conditioned offices. Therefore, the business traveler will want to take light-weight suits for business meetings.
GEOGRAPHY T
he Republic of Indonesia is the largest archipelago country in the world, comprising 17,508 islands stretching along 5,120 kilometers from east to west, and 1,760 kilometers from north to south. The islands scatter over more than one tenth of the equator between Southeast Asia and Australia, covering a land area of around 2 million square kilometers and territorial waters nearly four time of that size. a. Main islands · Java, Bali, Sumatera, Kalimantan, Sulawesi, and Papua. · There are two large groupings of smaller islands: Maluku and Nusa Tenggara. b. Main cities · Jakarta, the capital city of the Republic of Indonesia located on the north west coast Java, is the government and an economic center of Indonesia. · Surabaya, Indonesia's second largest city located in East Java, is a leading industrial center and port. · Bandung in West Java, is the third largest city about 180 kilometers southeast of Jakarta. · Other important cities are Semarang, Yogyakarta, Padang, Medan, Palembang, Makassar, Banjarmasin, Bandar Lampung and Manado.
Demography and Human Resources According to the Population Census 2000, the total population of Indonesia is 203,456,005. The distribution of population, however, is not even. The island of Java with less than 7 percent of total land area is the home of almost 60 percent of the total population, while the island of Papua that covers almost 21 percent of total land area is inhabited by only 1 percent of the total population. Population growth during the period of 1990-2000 is 1.35 percent/year.
The Archipelago The archipelago of Indonesia comprises about 18.000 large and small islands, of which only about 6,000 are inhabited. Five main islands and 30 smaller island groups are home to the majority of the population. The main islands are Sumatera (425,606 km2), Kalimantan (539,460 km2), Sulawesi (174,219 km2), Irian Jaya (421,981 km2), and Java (129,187 km2) which is home to about 70% of the country’s population. The archipelago lies on tropical zone of Southeast Asia. The equator passes through the islands of Sumatera, Kalimantan, Sulawesi, and Halmahera. Geographically, the archipelago is situated between 06o08’ north latitude to 11o15’ south latitude and 94o45’ to 141o05’ east longitude; between two continents: Asia and Australia; between two oceans: Indian and Pacific; and on the traditional trading crossroads. Stretching along the equator of about 8,000 km long, it is the same width to the North American Mainland, or Australia Continent, or West European Continent. Total territorial area is 9.8 million km2, a large part of which (7.9 million km2 or 81%) is sea, while the rest (1.9 million km2 or 19%) is terrestrial land. Total coastline length of all islands is 54,716 km. Having such figures, Indonesia is recognized as the greatest maritime country in the world.
Physiography and Geomorphology The archipelago of Indonesia is situated on the matching point of the two world greatest
volcanic ranges, the Mediterranean from the west and Circum Pacific from the northeast, by which the volcanic pattern, physiography, and geomorphology of the archipelago are strongly influenced. There are about 400 mounts, most of which are volcanoes - either active or inactive ones - forming a bow of mountain ranges along the array of islands on the southern archipelago stretching from Sumatera, Krakatau on the Straits of Sunda, Java, Bali, Lombok, Sumbawa, and Flores. Kalimantan is the only island where volcano does not exist; instead, dense tropical rainforest naturally developed on the middle-range and peat-swamp ecosystems on the lowland. The highest summit of the archipelago is Mount Jayawijaya, about 5,000 m above sea level, where snow can be permanently found. Facing the Indian Ocean, most of the coastlines of these islands are steep cliffs with very limited sand dunes. On the other hand, the inner northward coastlines are relatively flat, with substantially rapid coast expansion due to excessive sedimentation. On this type of coastline, mangrove forest communities exist, and brackish-water fish culture takes place on relatively developed areas.
Administrative Divisions The capital of the Republic of Indonesia is Jakarta, the biggest and most densely populated city in the country, located on Java Island. Administratively, Indonesia is divided into 32 provinces, led by a Governor. Of all provinces, there are three special provincial territories, i.e.: Nangroe Aceh Darussalam, Daerah Istimewa Yogyakarta (DI Yogyakarta - Yogyakarta Special Territory), and Daerah Khusus Ibukota Jakarta (DKI Jakarta - Jakarta Metropolitan Special Territory). Each province is divided into some kabupaten (regency), kota (city) or kotamadya (big city). A kabupaten or regency commonly covers a capital town and surrounding area as well as a great area of hinterlands; it is led by a Bupati. Whereas, a kota or kotamadya or city covers a big city, including its sub-urban areas; it is led by a Walikota (City Mayor). Kabupaten and kota have the same level of governmental hierarchy. Within a kabupaten or kota there are some kecamatan (districts), led by a Camat. Each kecamatan is divided into some desa / kelurahan (villages). Desa is village within a kabupaten, and it is led by a Kepala Desa (Village Chief); while kelurahan is village within a kota or kotamadya, and it is led by a Lurah. Village (desa and kelurahan) is the lowest level of governmental organization structure. Within a village there are some voluntary social organizations called Rukun Kampung (RK - Hamlets within a desa) or Rukun Warga (RW - Hamlets within a kelurahan), each is led by a volutary social leader called Ketua RK or Ketua RW. Within each RK or RW, there are also some Rukun Tetangga (RT - Neighborhood). Led by a Ketua RT, each RT covers some neighboring households.
CLIMATE Climate and Weather Characteristics The archipelago of Indonesia belongs to the Austral-Asiatic tropical zone. Climatic and weather condition of the archipelago is characterized by an equatorial double rainy season. Its variation is caused by the equatorial circulation and the meredional circulation. Displacement of the meredional circulation is closely related to the north-south relative
movement of the sun and its position at a certain period with regard to the earth and the continents of Asia and Australia. These factors contribute to the displacement and intensity of the Inter-Tropical Convergence Zone being an equatorial trough of low pressure. This characterizes the weather of Indonesia; while the prevalence of the west monsoon and the east monsoon (wet and dry seasons) are characterizing the climate of Indonesia.
Monsoon and Rainfall When relative position of the sun is on the north hemisphere from mid-March to mid-September, relatively dry winds blow over the archipelago from the southeast - the arid continent of Australia; and east monsoon characterizing dry season takes place on a large part of the archipelago. The dry season is generally prevailing from May to September. On the other hand, when relative position of the sun is on the south hemisphere from mid-September to mid-March, wet winds blow over the archipelago from the northeast - the humid continent of Asia; then west monsoon characterizing wet season takes place in most parts of the archipelago. The wet season is generally prevailing from December to March. However, these patterns do not always rigidly take place since a large part of the archipelago is covered by sea and diurnal differences are not significant, which makes precipitation be possible anytime. Sunshine is abundant, but rainfall - either heavy or light storms - can also drop in the dry season period. Rain even falls nearly all the year round on the islands where equator passes through, and this had resulted in dense natural tropical rainforest on the islands of Sumatera, Kalimantan, Sulawesi, and also in Irian Jaya.
Humidity and Temperature Being within the humid equatorial zone, Indonesia has a high degree of air relative humidity with an average minimum of 60%. A minimum of 20% was observed in Jakarta in 1972. On the average, the mean annual air relative humidity ranges around 80% - 90%. The annual mean air temperature in Indonesia is around 33oC. As for the higher mountainous region, the monthly mean air temperature ranges approximately 25oC - 28oC. The mean maximum temperature can reach 33oC, whereas the mean minimum air temperature is 21oC.
Wind and Storm The average wind velocity is generally less than 15 knots per hour. Strong wind may be blowing occasionally in any parts of Indonesia that is usually closely related to tropical storms. Wind velocities of 45 knots per hour were reported from Rembiga in January 1976, from Surabaya in January 1973, and from Ujungpandang in January 1974. Nevertheless, the tropical storms are rare in Indonesia as it is anticipated that these would not develop in land areas within the latitude of less than 70o. Despite this anticipation, however, reports of tropical storms were recorded at Banda area in April 1778, at the islands of Rote and Timor in April 1843, and the giant ones at Timor in 1918 and on the island of Flores in 1973 and 1993.
Today's Weather Forecasts Weather forecasts for some big cities in Indonesia are provided. Thanks to the Weathernews Inc., the daily and weekly weather forecast data are automatically updated. You may also view the satellite imagery presenting current weather conditions of Central Asia and Pacific Rim, where Indonesian Archipelago lies.
Indonesia's Standard Time As of 1 January 1988, the Indonesia’s three time zones have been changed as shown on the map, which is briefly described as follows: 1. WIB (Waktu Indonesia Barat - Western Indonesia Standard Time), equals to GMT plus 7 hours (meridian 105o East), covering all provinces in Sumatera and Java, and the provinces of West and Central Kalimantan. 2. WITA (Waktu Indonesia Tengah - Central Indonesia Standard Time), equals to GMT plus 8 hours (meridian 120o East), covering the provinces of East and South Kalimantan, all provinces in Sulawesi, the provinces of Bali, West and East Nusa Tenggara, and Timor Timur. 3. WIT (Waktu Indonesia Timur - Eastern Indonesia Standard Time), equals to GMT plus 9 hours (meridian 135o East), covering the provinces of Maluku and Irian Jaya. The capital city of Indonesia, Jakarta, is situated on the island of Java, belonging to the WIB (GMT +7 hours). It is 6,695 nautical miles from London, 10,123 nautical miles from New York, 4,610 nautical miles from Vladiwostok, 3,437 nautical miles from Sydney, 2,992 nautical miles from Beijing, and 3,610 nautical miles from Tokyo.
INVESTMENT Investment policy in Indonesia is opened widely to foreign investment access. This, among others, is indicated by only a small number of sectors are restricted, the availability of fiscal incentives to attract foreign investors, no limitation on the value of investment, the possibility for foreign investors to wholly own their investment in almost all sectors and simplified investment approval process. The Indonesian Government realizes that investment is one of the most important factors in driving economic growth and, thus, tries hard to improve investment procedures in the future in order to stimulate a more favorable investment climate. In this section you will find information about investment in Indonesia, which consists of the following topics: · Investment Policy Statement, a statement that sets forth newly adopted and current policies of the Indonesia Government for promoting and facilitating private sector investment in Indonesia in accommodating the ever changing development in global as well as domestic economy. · Direct Investment, defines the types of direct investment in Indonesia. · Approval, License and their Procedures, describes the application procedures for approvals and licenses needed in order to implement investors' interest to invest in Indonesia. · Investment Sector Restrictions, specifies a small number of sectors of business that are still regulated in Indonesia.
· Investment Incentives, describes a series of incentives offered by the Government of Indonesia in order to attract foreign as well as domestic investors to invest in Indonesia. · Special Locations for Investment, explains some location options for investors in the real sector to carry out their activities.
Investment Coordinating Board (Badan Koordinasi Penanaman Modal - BKPM) Jalan Jenderal Gatot Subroto No. 44 Jakarta 12190 Indonesia Phone : (62-21) 525-2008, 525-2649, 525-4981 Facsimile : (62-21) 525-4945 Email : [email protected] P.O. Box 3186 Jakarta
Approvals, Licenses and Their Procedures This section explains approval, license and permits and their application procedures that are to be completed before an investor can implement his/her intention to invest in Indonesia. The sector of business of interest to the investor should not conflict with the restrictions stated by the Government of Indonesia. Therefore, it is suggested that an investor should first consult the investment sector restrictions before making his/her decision to invest. Approvals and/or licenses are grouped into the following categories: a. Approvals in investment stage: 1. Approval of Domestic Investment; 2. Approval of Foreign Investment. 3. Approval for Investment in Bonded Zones and Integrated Economic Development Zones. b. Approvals, Licenses, Decrees and Permits in implementation stage: 1. Permanent Business License; 2. Letter of Approval of Customs Facilities for Capital Goods; 3. Letter of Approval of Customs Facilities for Basic/Auxiliary Materials; 4. Limited Importer’s Identification Number Decree; 5. Plan for Employment of Foreign Personnel Decree; 6. TA.01 Recommendation; 7. Expatriate Work Permit Decree; 8. Other Approvals, Licenses, Decrees and Permits Not Issued by BKPM or BKPMD: § Approval of the articles of association of a limited liability company; § Tax-payer registration number and taxable entrepreneur confirmation number; § Location permit; § Building construction permit; § Land title; § Nuisance act permit. c. Approvals and Letters on Changes in Investment Plan: 1. Approval for Expansion of Investments; 2. Approval for the Modification of Project Location; 3. Approval for the Modification of Lines of Business and Production;
4. Approval for the Modification of the Use of Expatriates; 5. Approval for the Modification in Investment and Sources of Financing; 6. Approval for the Modification of Share Ownership of PMA Companies; 7. Approval for the Modification in Status of PMA Companies into PMDN Companies; 8. Approval for the Modification in Status of PMDN or Non-PMA/PMDN Companies into PMA Companies; 9. Approval for Extension of PMDN or PMA Project Completion Periods; 10. Approval for Merger; 11. Letter of Modification in Names of Companies; 12. Letter of Modification in Forms/Patterns of Partnership and/or Business Partners Especially for Business Lines Requiring Partnership with Small-Scale Business,. d. Miscellaneous: 1. Approval for Domestic Investment in Non-Oil/Gas Mining; 2. Approval for Foreign Investment in Non-Oil/Gas Mining; 3. License for the Establishment of Regional Representative Office of Foreign Companies; 4. Approval for the Establishment of Capital Participation Based Companies.
Laws and Regulations Decree of the State Minister for Investments/Head of the Investment Coordinating Board No. 38/SK/1999 concerning the Guideline and Procedure for Filing Applications for Investments set up in the Framework of Domestic Capital Investments and Foreign Capital Investments.
Application Forms 1. Model I?PMDN: Application for New Investment under Domestic Investment Agreements. 2. Model I?PMA: Application for New Investment under Foreign Investment Agreements. 3. Form KPWPA: Application for the Establishment of a Regional Representative Office in Indonesia. 4. Application for the Establishment of Capital Participation Based Company. 5. Form IUT: Apllication for Fixed Business License in the Framework of PMDN/PMA. 6. Statement of Commoncement of Production (Especially for Companies Located in Industrial Estate). 7. Model II/PMDN: Application for Investment Expansion under Domestic Investment Agreements. 8. Model II/PMDN: Application for Investment Expansion under Foreign Investment Agreements. 9. Model III: Application for the Amandment of Provision in Approval of Investment. 10. Model III A: Application for Approval of Change in Status. 11. Model III B: Change in Status of PMDN or Non-PMA/PMDN Company into PMA Compnay. 12. Model III C: Application for the Extension of Completion Period of PMDN and PMA Projects. 13. Model III D: Application for Merger of Companies.
14. Model IV A: Application for Approval of the Main List Capital Goods/Change in Capital Goods. 15. Model IV B: Application for the Approval of the Main List of Raw Materials/Auxiliary Materials/Supporting Materials. 16. Form APIT: Application for Approval of Limited Importer Identification Number. 17. Form RPTK: Application for Approval of Foreign Personnel Employment Plan. 18. Form PPt 2: Application for a License to Employ Foreign Personnel in the Framework of PMDN/PMA.
Approval for Foreign Investment
How to Apply Applications for new investment under PMA arrangements can be filed by: a. foreign citizens and/or foreign statutory bodies and/or PMA companies; b. foreign citizens and/or foreign statutory bodies and/or PMA companies along with Indonesian citizens and/or Indonesian statutory bodies. Applications for new investment as well as the alteration projects under PMA arrangements shall be filed to the Head of BKPM Applications for new investments under PMA arrangements shall be filed by using Model I/PMA form. Applications for alterations of investment projects under PMDN arrangements shall be filed using other model forms.
Approval of Applications Approval of applications for new investment as well as the alteration projects under PMA arrangements shall be issued in the form of letter of approval of foreign investments (Surat Persetujuan Penanaman Modal Asing, SP-PMA) and in the form of letter approval for alterations/extension of foreign investments (Surat Persetujuan Perubahan/Perluasan Penanaman Modal Asing, SP Perubahan/Perluasan-PMA). SP-PMA shall be issued by the Head of BKPM and shall be issued not later than 10 (ten) working days starting from the receipt of correct and complete applications. Local Permits shall be issued by; a. Governors/Heads of Provincial Regions (in this case Chairmen of local Investment Bodies) when the applications were filed to the Chairmen of local Investment Bodies for the Extension of Working Permits of the foreigners working in the regions within the province. Notice that the Chairmen of local Investment Bodies are staffs of Governors/Heads of Provincial Regions. Approvals issued by Governors/Heads of Provincial Regions are, in principle, approvals issued by Chairmen of local Investment Bodies for the Governors/Heads of Provincial Regions. For simplicity, approvals issued by Chairmen of local Investment Bodies, hereafter, refer to approvals issued by Chairmen of local Investment Bodies for the Governors/Heads of Provincial Regions. b. Regents/City Majors or Heads of Regencies/Cities in Regions (in this case Chairmen of local Investment Bodies of regencies/cities) when the applications were filed to the Chairmen of local Investment Bodies of regencies/cities for the Sites/Locations, Land Title/Usage of Land, Building Permit and the Environmental permit.
Notice that the Chairmen of local Investment Bodies of Regencies/Cities are staffs of Regents/City Majors or Heads of Investment Bodies of Regions/Cities. Approvals issued by Regencies/Cities in Regions are, in principle, approvals issued by Chairmen of local Investment Bodies for the Regents/City Majors of Regencies/Cities. For simplicity, approvals issued by Chairmen of local Investment Bodies, hereafter, refer to approvals issued by Chairmen of local Investment Bodies for the Regents / City Majors or Heads of Regions.
Other Provisions PMA companies with SP-PMA shall file applications for investment implementation licenses required for the realization of their investments. SP-PMA shall be automatically cancelled if no realization of projects taken place in the form of concrete activities for 3 (three) years starting from the date of its issuance. Concrete activities consist of administrative and physical ones. Concrete administrative activities shall be those for the following licensing: a. the location license or building lease agreement (especially for PMA companies in services sector) or regional mining license or mining concession (especially for PMA companies in the field mining); and b. bank accounts in the names of PMA companies (especially for new PMA companies); and c. customs approval letter for capital goods; and/or d. limited importer's identification number; and/or e. decision on the plan for employment of foreign personnel (especially for PMA companies using expatriates); and/or f. building construction permit; and/or g. Nuisance Act permit; and/or h. deed of the establishment of companies already validated by the Minister of Justice for capital participation based companies). Concrete physical activities shall be those already conducted: a. for industries: there are main activities in the form of land clearance covering at least 25 percent of the areas contained in SP-PMA; or b. for services and capital participation (holding): there are main activities in the form of land clearance covering at least 25 percent of the areas contained in SP-PMA, or office/building space.
APPROVAL FOR INVESTMENTS IN BONDED ZONES AND IN INTEGRATED ECONOMIC DEVELOPMENT ZONES
What is a Bonded Zone? Bonded Zone (Kawasan Berikat, KB) is a building, site or area with certain borders within which industrial activities take place, including: a. processing of goods and materials; b. designing activities; c. production engineering; d. sorting;
e. initial and final inspections; f. packaging of goods and materials derived from imports and from other ports in Indonesia whose products are mainly for export.
What is an Integrated Economic Development Zone? Integrated Economic Development Zone (Kawasan Pengembangan Ekonomi Terpadu, KAPET) is a geographical region with certain borders fulfilling requirements which: a. has the potential for rapid growth; and/or b. has leading sectors capable of boosting the economic growth of surrounding areas; and/or c. needs investment in surrounding areas; and/or d. needs investments in large amounts for its development.
How to Apply Applications for new investments as well as alterations of investment projects under PMA or PMDN arrangements located in KB shall be filed to the Chairman of BKPM.
Approval of Applications Approval of applications for new investment as well as the alteration projects under PMA or PMDN arrangements shall be issued in the form of letter of approval of foreign investments (Surat Persetujuan Penanaman Modal Asing, SP-PMA or Surat Persetujuan Penanaman Modal Dalam Negeri, SP-PMDN) and in the form of letter approval for alterations/extension of foreign investments (Surat Persetujuan Perubahan/Perluasan Penanaman Modal Asing, SP Perubahan/Perluasan-PMA) or in the form of letter approval for alterations/extension of foreign investments (Surat Persetujuan Perubahan/Perluasan Penanaman Modal Dalam Negeri, SP Perubahan/Perluasan-PMDN). SP-PMA and SP-PMDN shall be issued by the Head of BKPM and shall be issued not later than 10 (ten) working days starting from the receipt of correct and complete applications.
Other Provisions Applications for implementation licenses of projects located in KB/KAPET shall be filed to PKB/PB-KAPET. Then the PKB/PB-KAPET should proceeds the such applications to the Local Authorities. Approval of the applications for implementation licenses of projects located in KB/KAPET shall be issued by the local Authorities.
PERMANENT BUSINESS LICENSE
What is Permanent Business License? Permanent business license (Izin Usaha Tetap, IUT) is the license that shall be possessed by companies for the realization of commercial production of goods as well as services as the implementation of SP-PMDN or SP-PMA already obtained by the companies.
How to Apply Applications for IUT shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for IUT shall be filed by using Form IUT (Application for Permanent Business License in the Framework of PMDN/PMA).
Approval of Applications Approval of applications for IUT shall be issued in the form of decisions on IUT (Surat Keputusan IUT, SK-IUT). SK-IUT shall be issued by Head of BKPM or Chairmen of local BKPMD on behalf of Minister in charge of relevant business. SK-IUT shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications.
Validity Period IUT shall be valid for: a. 30 (thirty) years starting from the realization of commercial production for PMA companies; b. as long as the companies are engaged in operation/production for PMDN companies. PMA companies could renew their IUT validity periods by filing application for IUT renewal for their business activities. Applications for IUT renewal shall be filed before the expiration of the companies’ IUT to Head of BKPM or Chairmen of local BKPMD by using Form IUT. The renewed IUT are valid for 30 (thirty) years starting from the expiration of the relevant IUT. In addition, PMA companies undertaking business expansion shall be granted IUT validity extension of 30 (thirty) years starting from the realization of commercial operation/production of their expansion projects.
Other Provisions For industrial companies located in industrial estates: a. SP-PMDN or SP-PMA shall be valid as the license for commercial production. b. When the companies are already engaged in commercial production they shall submit Commencement of Production Statement which is a statement on the preparedness for production to Head of BKPM or Chairmen of local BKPMD. Upon reviewing the statement, Head of BKPM or Chairmen of local BKPMD shall directly issue IUT.
LETTER OFAPPROVAL OF CUSTOMS FACILITIES FOR CAPITAL GOODS
HOW TO APPLY Applications for approval of the import of capital goods with facilities for PMDN and PMDN companies shall be filed to:
a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for approval of the import of capital goods shall be filed by using Model IV.A.
Approval of Applications Approval of applications for the import of capital goods with facilities shall be issued in the form of letter of approval (Surat Persetujuan, SP) of customs facilities for capital goods with the master lists of capital goods attached. SP of customs facilities for capital goods shall be issued by the Head of BKPM or the Chairmen of local BKPMD on behalf of the Minister of Finance. SP of customs facilities for capital goods shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications.
Validity Period The validity period of SP of customs facilities for capital goods shall conform to the period of project completion.
Other Provisions Applications for change in approval of the import of capital goods already possessed shall be filed to the Head of BKPM or Chairmen of local BKPMD. Their approval shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications. In the event that the capital goods already imported are to be exported, the relevant companies shall file application for re-export of capital goods to the Head of BKPM or Chairmen of local BKPMD.
LETTER OF APPROVAL OF CUSTOM FACILITIES FOR BASIC/AUXILIARY MATERIALS
How to Apply Applications for approval of the import of basic/auxiliary materials with facilities for PMDN and PMA companies shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for approval of the import of basic/auxiliary materials shall be filed by using Model IV.B.
Approval of Applications Approval for applications for the import of basic/auxiliary materials with facilities shall be issued in the form of letter of approval (Surat Persetujuan, SP) of customs facilities for basic/auxiliary materials with the master lists of basic/auxiliary materials attached. SP of customs facilities for basic/auxiliary materials shall be issued by Head of BKPM or Chairmen of local BKPMD on behalf of the Minister of Finance. SP of customs facilities for basic/auxiliary materials shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications.
Validity Period The validity period of SP of customs facilities for basic/auxiliary materials is as follows: a. PMDN and PMA companies without IUT shall be granted basic/auxiliary materials import facilities for the need of 1 (one) year’s production for an import period of 1 (one) year; b. PMDN and PMA companies with IUT shall be granted basic/auxiliary materials import facilities for the need of 2 (two) years’ production for an import period of 2 (two) years.
LIMITED IMPORTER’S IDENTIFICATION NUMBER DECREE
What is Limited Importer’s Identification Number? Limited importer’s identification number (Angka Pengenal Importir Terbatas, APIT) is the identification number serving as the license to import capital goods and basic/auxiliary materials to be used by relevant PMDN or PMA companies in the process of production of the approved investment projects.
How to Apply Application for APIT shall be submitted to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for APIT shall be submitted by using APIT Form.
Approval for Applications Approval of the application for APIT shall be issued by in the form of APIT decrees (SK-APIT). SK-APIT shall be issued by Head of BKPM or Chairmen of local BKPMD on behalf of the Minister of Industry and Trade. SK-APIT shall be issued not later than 5 (five) working days after the receipt of correct and complete applications.
Validity Period APIT shall be valid for the entire territory of Indonesia starting from the date of stipulation as long as the companies concerned are still engaged in production activities.
Other Provisions PMDN and PMA companies in the trading services business intending to import for goods for trading purposes shall have their APIT effective also as the General Importer’s Identification Number (Angka Pengenal Importir Umum, APIU). In the event that there are changes in names, addresses and boards of executive directors or those signing import documents, the relevant companies shall file applications for the modification of APIT to Head of BKPM or Chairmen of local BKPMD.
PLAN FOR EMPLOYMENT OF FOREIGN PERSONNEL DECREE
What is Plan For Employment of Foreign Personnel? Plan for employment of foreign personnel (Rencana Penggunaan Tenaga Kerja Asing Pendatang, RPTKA) is a plan regarding the number, functions and employment periods of foreign personnel needed by PMDN or PMA companies to implement their investment projects.
How to Apply Applications for RPTKA shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for RPTKA shall be filed by using Form RPTKA.
Approval of Applications Approval of application for RPTKA shall be issued in the form of RPTKA decrees (SK-RPTKA). SK-RPTKA decrees shall be issued by Head of BKPM or Chairmen of local BKPMD on behalf of the Minister of Manpower. SK-RPTKA decrees shall be issued not later than 4 (four) working days after the receipt of correct and complete applications.
TA.01 RECOMMENDATION
What is TA.01 Recommendation? Expatriates of PMA and PMDN companies as well as regional representative offices of foreign companies who are ready to leave for Indonesia are required to possess visas for
limited stay (Visa Tinggal Terbatas, VITAS). To obtain VITAS, companies shall file for TA.01 recommendations.
How to Apply Application for TA.01 recommendation shall be filed to: a. Head of BKPM for companies whose SK-RPTK is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SK-RPTKA is issued by Chairmen of local BKPMD. Application for TA.01 recommendation shall be field by using Form PPt.2.
Approval of Applications Approval of applications for TA.01 recommendation shall be issued in the form of TA.01 recommendation. TA.01 recommendation shall be issued by Director of Licensing and Facilities or Chairmen of local BKPMD to the Director General of Immigration. TA.01 recommendation shall be issued not later than 4 (four) days after the receipt of correct and complete applications.
Other Provisions Based on TA.01 recommendations, the Directorate General of Immigration shall notify representative offices of the Republic of Indonesia to issue VITAS to the relevant expatriates. After the arrivals of expatriates, the relevant companies shall file applications for the issue of Limited Stay Permit Cards (Kartu Izin Tinggal Terbatas, KITAS) to local immigration offices. KITAS application shall be submitted using the KITAS application form and enclosing evidences of embarkation cards. Notes · TA.01 recommendation is issued to the Director General of Immigration not to the applicant. · BKPM and BKPMD do not issue VITAS as well as KITAS.
EXPATRIATE WORK PERMIT DECREE
What is Expatriate Work Permit? Expatriates work permit (Izin Kerja Tenaga Warga Negara Asing Pendatang, IKTA) is a permit for PMDN or PMA companies to employ a number of expatriates in certain functions for certain periods of time. Expatriates with KITAS who are going to work in Indonesia shall apply for IKTA.
How to Apply Application for IKTA shall be filed by the expatriates’ sponsor which in this case is the relevant PMDN or PMA companies. Application for IKTA shall be filed to: a. Chairmen of local BKPMD;
b. Head of BKPM in the event where the expatriates work in 2 (two) or more provinces. Application for IKTA shall be filed by using Form Ppt.2.
Approval of Applications Approval of application for IKTA shall be issued in the form of IKTA decrees (Surat Keputusan IKTA, SK-IKTA) and legitimization book. SK-IKTA and legitimization book shall issued by Head of BKPM or Chairmen of local BKPMD for Head of BKPM on behalf of the Minister of Manpower. SK-IKTA and legitimization book shall be issued not later than 4 (four) days after the receipt of correct and complete applications.
Other Provisions Applications for the extension of IKTA shall be filed to Chairmen of local BKPMD using Form Ppt.2 within 30 (thirty) days of its expiration date. Upon the approval of applications for the extension of IKTA, the Chairmen of local BKPMD shall issue recommendation for the handling of KITAS extension to the local immigration office. Pending the extension of KITAS, the Chairmen of local BKPMD shall issue provisional IKTA certificates effective for 2 (months). Both recommendation and provisional IKTA shall be issued not later than 4 (four) working days after the receipt of correct and complete applications. PMDN or PMA companies shall submit approval on KITAS extension to Chairmen on local BKPMD. Extension on SK-IKTA shall be issued by Chairmen of local BKPMD for Head of BKPM on behalf of Minister of Manpower not later than 4 (four) working days after the receipt of correct and complete applications. In the event of any change in the use of expatriates whose posts are transferred as well as changes in sponsors or locations, relevant PMDN and PMA companies shall file applications to Head of BKPM or Chairmen of local BKPMD. Expatriates other than executive directors and board members already working in Indonesia for 3 (three) consecutive years shall leave the territory of Indonesia with the status of exit permit only (EPO). If, however, the expatriates are still needed by relevant companies, sponsor companies shall enter new procedure for TA.01 recommendation on the basis on the valid RPTKA along with copies of EPO papers.
OTHER APPROVALS, LICENSES, DECREES AND PERMITS NOT ISSUED BY BKPM OR BKPMD
Approval of the Articles of Association of a Limited Liability Company As stipulated by Foreign Investment Law, PMA companies shall take the form of a Limited Liability Company (Perseroan Terbatas, PT) and subject to Corporate Law. Articles of association of PT shall be registered by the founder of PMA companies or their proxies to the Directorate General of Civil Affairs of the Ministry of Justice and Human Rights. For further information please contact: Directorate General of Civil Affairs of the Ministry of Justice and Human Rights.
TAX-PAYER REGISTRATION NUMBER AND TAXABLE ENTREPRENEUR CONFIRMATION NUMBER According to Value Added Tax Laws, PMDN and PMA companies are subject to report their business activities to the Directorate General of Taxation in its respected operational area. Application for registration for tax-payer registration number (Nomor Pendaftaran Wajib Pajak, NPWP) and for taxable entrepreneur confirmation number (Nomor Pengukuhan Pengusaha Kena Pajak, NPPKP) shall be filed to the Directorate General of Taxation of the Ministry of Finance. For further information please contact: Directorate General of Taxation of the Ministry of Finance at http://www.pajak.go.id.
NUISANCE ACT PERMIT Nuisance act permit (Izin Undang-Undang Gangguan, Izin UUG/HO) is issued by the office of regency/municapality concerned. PMDN and PMA companies reside in industrial estate are not required to obtain this permit.
APPROVAL FOR EXPANSION OF INVESTMENTS
What is Expansion of Investments? Expansion of investments refer to the increase and/or addition of capital along with relevant facilities to increase the installed capacity of production approved and/or add the variety of goods and/or services provided.
How to Apply Applications for expansion of investments for PMDN or PMA companies with IUT shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM or for expansion of investments located in 2 (two) provinces or more; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. In the event that the lines of production being different from those of previous projects or locations of business expansion in regencies/municipalities being different from those of previous projects, companies are allowed to file applications for expansion of investments without being required to posses IUT for previous projects. Applications for expansion of investments shall be filed by using Model II/PMA for PMA companies and Model II/PMDN for PMDN companies.
Approval of Applications Approval for applications for expansion of investments shall be issued in the form of letter of approval (Surat Persetujuan, SP) for expansion of investments.
SP for expansion of investments shall be issued by Head of BKPM or Chairmen of local BKPMD on behalf of Head of BKPM. SP for expansion of investments shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications.
Other Provisions SP for expansion of investments shall be automatically cancelled if no realization of projects take place in the form of concrete activities within 3 (three) years starting from the date of its issuance.
APPROVAL FOR THE MODIFICATION OF PROJECT LOCATION
How to Apply Application for the modification of project location to other provinces shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD in new locations for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD in new locations for companies whose SP-PMA is issued by Heads of representative offices of the Republic of Indonesia. Application for the modification of project location from regencies/municipalities to regencies/municipalities in one province shall be filed to Chairmen of local BKPMD. Applications for the modification of project location shall be filed by using Model III.
Approval of Applications Approval of applications for the modification of project locations shall be issued in the form of letter of approval (Surat Persetujuan, SP) for the modification of project location. SP for the modification of project location shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification of project location shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL ROR THE MODIFICATION OF LINES OF BUSINESS AND PRODUCTION
How to Apply Applications for the modification of lines of business and production shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for the modification of lines of business and production shall be filed by using Model III.
Approval of Applications Approval of application for the modification of project locations shall be issued in the of letter of approval (Surat Persetujuan, SP) for the modification of lines of business and production. SP for the modification of lines of business and production shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification of lines of business and production shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL FOR THE MODIFICATION OF THE USE OF EXPATRIATES
How To Apply Applications for the modification of the use of expatriates shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for the modification of the use of expatriates shall be filed by using Model III.
APPROVAL FOR APPLICATIONS Approval of application for the modification of the use of expatriates shall be issued in the form of letter of approval (Surat Persetujuan, SP) for the modification of the use of expatriates. SP for the modification of the use of expatriates shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification of the use of expatriates shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL FOR THE MODIFICATION IN INVESTMENTS AND SOURCES OF FINANCING
What is Modification in Investments and Sources of Financing? The modification in investments and sources of financing refer to modifications that causing a change in the facilities obtained and/or sources of financing in the framework of improving the capital structure.
How to Apply Applications for the modification in investments and sources of financing shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM;
b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Applications for the modification in investments and sources of financing shall be filed by using Model III.
Approval for Applications Approval of application for the modification in investments and sources of financing shall be issued in the form of letter of approval (Surat Persetujuan, SP) for the modification in investments and sources of financing. SP for the modification in investments and sources of financing shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification in investments and sources of financing shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL FOR THE MODIFICATION OF SHARE OWNERSHIP OF PMA COMPANIES
How to Apply Applications for the modification of share ownership of PMA Companies shall be filed to: a. Head of BKPM for companies whose SP-PMA is issued by Head of BKPM or Heads of representative offices of the Republic of Indonesia; b. Chairmen of local BKPMD for companies whose SP-PMA is issued by Chairmen of local BKPMD or Heads of representative offices of the Republic of Indonesia. Applications for the modification of share ownership of PMA Companies shall be filed by using Model III.
Approval of Applications Approval of application for the modification of share ownership of PMA Companies shall be issued in the form of letter of approval (Surat Persetujuan, SP) for the modification of share ownership of PMA Companies. SP for the modification of share ownership of PMA Companies shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification of share ownership of PMA Companies shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL FOR THE MODIFICATION IN STATUS OF PMA COMPANIES INTO PMDN COMPANIES
How to Apply Application for the modification of status in PMA companies whose shares are totally owned by Indonesian partners into PMDN companies shall be filed to:
a. Head of BKPM for companies whose SP-PMA is issued by Head of BKPM or Heads of representative offices of the Republic of Indonesia; b. Chairmen of local BKPMD for companies whose SP-PMA is issued by Chairmen of local BKPMD or Heads of representative offices of the Republic of Indonesia. Application for the modification in status of PMA companies into PMDN companies shall be filed by using Model III.A.
Approval of Applications Approval of application for the modification in status of PMA companies into PMDN companies shall be issued in the form of letter of approval (Surat Persetujuan, SP) for the modification in status of PMA companies into PMDN companies. SP for the modification in status of PMA companies into PMDN companies shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification in status of PMA companies into PMDN companies shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL FOR THE MODIFICATION IN STATUS OF PMDN OR NON-PMA/PMDN COMPANIES INTO PMA COMPANIES
How To Apply Application for the modification in status in PMDN or non-PMA/PMDN companies already validated as statutory bodies whose shares are to bought by PMA companies or foreign statutory bodies and/or foreign citizens shall be filed to: a. Head of BKPM; b. Chairmen of local BKPMD. The purchase of shares of PMDN or non-PMA/PMDN companies shall be realized only if the business fields of the companies are not included in the negative list of investment whose corporate capital contains ownership of foreign citizens and/or foreign statutory bodies. Application for the modification in status in PMDN or non-PMA/PMDN companies into PMA companies shall be filed by using Model III.B.
Approval of Applications Approval of application for the modification in status in PMDN or non-PMA/PMDN companies into PMA companies shall be issued in the form of letter of approval (Surat Perjanjian, SP) for the modification in status in PMDN or non-PMA/PMDN companies into PMA companies. SP for the modification in status in PMDN or non-PMA/PMDN companies into PMA companies shall be issued by Head of BKPM or Chairmen of local BPKMD. SP for the modification in status in PMDN or non-PMA/PMDN companies into PMA companies shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications.
APPROVAL FOR EXTENSION OF PROJECT COMPLETION PERIOD
How to Apply PMDN and PMA companies not yet engaged in commercial production but their validity of project completion are going to expire shall file for extension of project completion periods within 2 (weeks) before expiration of the validity periods. Applications for extension of project completion period shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Application for extension of project completion period shall be filed using Model III.C.
Approval of Applications Approval of application for extension of project completion period shall be issued in the form of letter of approval (Surat Persetujuan, SP) for extension of project completion period. SP for extension of project completion period shall be issued by Head of BKPM or Chairmen of local BKPMD. SP for extension of project completion period shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
Other Provisions SP for extension of project completion period shall, at the same time, extend the period for importing machinery/equipment.
APPROVAL FOR MERGER
What is Merger? Merger is the combination of 2 (two) or more PMDN and/or PMA and/or non-PMA/PMDN companies which has been engaged in commercial production and have obtained IUT into a company. The merged company (the new company resulted from merger) will carry on all activities of the companies combined, while the merging companies (individual companies before merger) are liquidated. Companies carrying on business activities as well as those planning to merge shall posses balance sheets and profit/loss statements for the last 3 (three) accounting years. The status of merger companies would be determined based on the status of individual companies in the merged companies. 1. In the event that the companies performing business activities being PMDN companies with no foreign citizens and/or foreign statutory bodies and/or PMA companies becoming shareholders after merger, the status of the merged companies shall remain PMDN. 2. In the event that the companies performing business activities being PMDN companies
with certain foreign citizens and/or foreign statutory bodies and/or PMA companies becoming shareholders after merger, the status of the merged companies shall become PMA. The merged companies are not allowed to operate in business lines included in the negative list of investment whose corporate capital contains ownership of foreign citizens and/or foreign statutory bodies. 3. In the event that the companies performing business activities being PMA companies, the status of the merged companies shall remain PMA.
How to Apply Applications for merger shall be filed to Head of BKPM. Applications for merger shall be filed by using Model III.D.
Approval of Applications Approval of applications for merger shall be issued in the form of letter of approval (Surat Persetujuan, SP) for merger. SP for merger shall be issued by Head of BKPM. SP for merger shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications.
Other Provisions Merged companies that still have projects at the stage of development/construction with part of machinery/equipment having been imported shall file applications for expansion of the business lines at the stage of construction. Tax facilities received by each individual company in the merged company that are not yet utilized shall be canceled and cannot be further utilized by the merged company.
LETTER OF MODIFICATION IN NAMES OF COMPANIES
How to Apply Application for the modification in names of companies shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Application for the modification in names of companies shall be filed in a single copy written notification by enclosing the following: d. copies of amendment documents which mention the change in names of companies already validated by the Ministry of Justice; e. documents of consensus between relevant parties for PMA companies not yet obtaining validation from the Ministry of Justice.
Approval of Applications Approval of application for the modification in names of companies shall be issued in the
form of letter of modification in names of companies. Letter of modification in names of companies shall be issued by Head of BKPM or Chairmen of local BKPMD. Letter of modification in names of companies shall be issued not later than 4 (four) working days after the receipt of correct and complete applications.
LETTER OF MODIFICATION IN FORMS/PATTERNS OF PARTNERSHIP AND/OR BUSINESS PARTNERS ESPECIALLY FOR BUSINESS LINES REQUIRING PARTNERSHIP WITH SMALL-SCALE BUSINESSES
How to Apply Application for the modification in forms/patters of partnership and/or business partners for PMDN and PMA companies investing in business lines requiring partnership with small-scale businesses shall be filed to: a. Head of BKPM for companies whose SP-PMDN or SP-PMA is issued by Head of BKPM; b. Chairmen of local BKPMD for companies whose SP-PMDN or SP-PMA is issued by Chairmen of local BKPMD; c. Head of BKPM or Chairmen of local BKPMD for companies whose SP-PMA was issued by Heads of representative offices of the Republic of Indonesia. Application for the modification in forms/patterns of partnership and/or business partners shall be filed in a single copy written notification by enclosing the following: d. reason for the change in forms/patterns of partnership and/or business partners; e. amendments to written agreements on partnership with small-scale business containing, among others, names and addresses of relevant parties, partnership patterns to be applied, rights and obligations of relevant parties and forms of fostering of small-scale businesses; f. amendment to articles or minutes of shareholders general meetings on inclusion of new small-scale businesses as shareholders in the case of partnership taking the form of share participation; g. duty stamped statements from: i. new small-scale business partners that they have fulfilled the criteria for small-scale business; ii. old small-scale business partners that they are prepared to withdraw themselves from business partnership (especially for non share participation partnership).
Approval of Applications Approval of application for the modification in forms/patterns of partnership and/or business partners shall be issued in the form of letter for modification in forms/patterns of partnership and/or business partners. Letter for modification in forms/patterns of partnership and/or business partners shall be issued by by Head of BKPM or Chairmen of local BKPMD. Letter for modification in forms/patterns of partnership and/or business partners shall be issued not later than 4 (four) working days after the receipt of correct and complete applications.
APPROVAL FOR DOMESTIC INVESTMENT IN NON-OIL/GAS MINING SECTOR
How to Apply Applications for investment in non-oil/gas mining under PMDN arrangements for category of strategic minerals (including coal with an area of up to 1,000 hectares) and vital minerals shall be filed: 1. to Head of BKPM or Chairmen of local BKPMD; 2. by using Model I/PMDN and by enclosing mining concession (Kuasa Pertambangan, KP) issued by the Minister of Mines and Energy or the Director General of General Mining on behalf of the Minister of Mines and Energy. Applications for investment in non-oil/gas mining under PMDN arrangements for category C minerals shall be filed: 1. to Head of BKPM or Chairmen of local BKPMD; 2. by using Model I/PMDN and by enclosing regional mining license (Surat Izin Pertambangan Daerah, SIPD).
Approval OF Applications Approval of applications for investment in non-oil/gas sector under PMDN arrangements shall be issued in the form of letter of approval of domestic investments (Surat Persetujuan Penanaman Modal Dalam Negeri, SP-PMDN). SP-PMDN shall be issued by Head of BKPM or Chairmen on local BKPMD on behalf of Head of BKPM. SP-PMDN shall be issued not later than 10 (ten) days after the receipt of correct and complete applications.
Other Provisions SP-PMDN shall be automatically cancelled if no realization of projects take place in the form of concrete activities within 3 (three) years starting from the date of its issuance. Investment under PMDN arrangements in coal mining with an area of 1,000 hectares or more: a. applications for investment shall be filed by enclosing coal mining exploitation working arrangements (Perjanjian Karya Pengusahaan Pertambangan Batubara, PKP2B); b. PKP2B draft shall be prepared by the Government of Indonesia (in this case the Ministry of Mines and Energy) and prospective investors; c. on the basis of PKP2B draft, Head of BKPM shall convey his opinion to the Minister of Mines and Energy; d. the Minister of Mines and Energy on behalf of the Government of Indonesia and prospective investors shall sign PKP2B and the signed PKP2B shall be treated as SP-PMDN issued by Head of BKPM; e. investments plans for the realization of PKP2B and their facilities shall be submitted in phases to Head of BKPM by enclosing recommendations from the Directorate General of General mining.
APPROVAL FOR FOREIGN INVESTMENT IN NON-OIL/GAS MINING SECTOR
How to Apply Applications for investment in non-oil/gas mining sector under PMA arrangements shall be filed in the form of: a. working agreements; or b. coal mining exploitation working arrangements (Perjanjian Karya Pengusahaan Pertambangan Batubara, PKP2B) whose drafts are prepared by the Government of Indonesia (in this case the Ministry of Mines and Energy) and prospective investors. Working agreement or PKP2B shall be filed by the Minister of Mines and Energy to the House of Representatives of the Republic of Indonesia and Head of BKPM.
Approval of Applications The House of Representatives of the Republic of Indonesia and Head of BKPM shall convey their opinions to the President of the Republic of Indonesia. On the basis of approval of the President of the Republic of Indonesia, the Minister of Mines and Energy shall sign working agreement or PKP2B. Working agreement or PKP2B shall be treated as letter of approval of foreign invesments (Surat Persetujuan Penanaman Modal Asing, SP-PMA) issued by Head of BKPM.
Other Provisions Investments plans for the realization of working agreement or PKP2B and their facilities shall be submitted in phases to Head of BKPM by enclosing recommendations from the Directorate General of General mining.
LICENSE FOR THE ESTABLISHMENT OF A REGIONAL REPRESENTATIVE OFFICE OF FOREIGN COMPANIES
How to Apply Application for the establishment of regional representative offices (Kantor Perwakilan Wilayah Perusahaan Asing, KPWPA) shall be filed to Head of BKPM. Application for the establishment of KPWPA shall be issued by using Form KPWPA.
Approval of Applications Approval of applications for the establishment of KPWPA shall be issued in the form of license of the establishment of KPWPA. Llicense of the establishment of KPWPA shall be issued by Head of BKPM. Llicense of the establishment of KPWPA shall be issued not later than 7 (seven) working days after the receipt of correct and complete applications.
APPROVAL FOR THE ESTABLISHMENT OF CAPITAL PARTICIPATION-BASED COMPANIES
How to Apply Applications for the establishment of capital participation-based companies shall be filed by foreign statutory bodies and/or foreign citizens and/or Indonesian statutory bodies
and/or Indonesia citizens. Applications for the establishment of capital participation-based companies shall be filed to the Head of BKPM or Chairmen of local BKPMD. Applications for the establishment of capital participation based-companies shall be filed by using Form for application for the establishment of capital participation-based company. Approval of Applications Approval of applications for the establishment of capital participation-based companies shall be issued in the form of letter of approval (Surat Persetujuan, SP) for the establishment of capital participation-based companies. SP for the establishment of capital participation-based companies shall be issued by Head of BKPM or Chairmen of local BKPMD. SP for the establishment of capital participation-based companies shall be issued not later than 10 (ten) working days after the receipt of correct and complete applications. Other Provisions SP for the establishment of capital participation-based companies shall be automatically cancelled if no realization of projects take place in the form of concrete activities within 3 (three) years starting from the date of its issuance.
NEGATIVE LIST BASED ON PRESIDENTIAL DECREE 96/2000 jo.118/2000
Attachment I List of Business Fields Absolutely Closed for Investment
Agricultural Sector 1. Cultivation and processing of marijuana and the like Marine and Fishery Sector 2. Collection / utilization of sponge Industrial and Trading Sector 3. Industries producing chemicals harmful to the environment , such as penta chlorophenol, Dichloro Trichloro Ethane (DDT), dieldrin, chlordane, carbon tetra chloride, Chloro Flouro Carbon (CFC), methyl bromide, methyl chloroform, halon etc. 4. Industries producing chemicals stipulated in Schedule - 1 of the Chemical Weapon Convention (sarin, soman, tabun, mustard, levisite, ricine and saxitoxin) 5. Industries producing weapons and related components 6. Industries producing cyclamate and saccharine 7. Industries producing alcoholic drinks (liquor, wine and drinks containing malt) 8. Casino and gambling facilities Communications Sector 9. Air traffic system providers (ATS providers), ship certification and classification inspections 10. Management and operation of Radio Frequency Spectrum and Satellite Orbit Monitoring Stations
Mining and Energy Sector 11. Mining of radioactive minerals
Attachment II LIST OF BUSINESS FIELDS CLOSED TO INVESTMENT IN WITCH A PART OF THE SHARE ARE OWNED BY FOREIGN CITIZENS AND / OR FOREIGN BUSINESS ENTITIES
Forestry and Plantation Sector 1. Germ plasm cultivation 2. Concession for natural forests 3. Contractors in the field of lumbering Communication Sector 4. Taxi / bus transportation services 5. Small-scale sailing Trading Sector 6. Trading and trading supporting services; except: Large-scale retailers (malls, supermarkets, departement stores, shopping centers) , wholesale trading (distributors / wholesalers, exporters and importers), exhibition / convention service providers, quality certification service providers, market research service providers, warehousing services outside seaports, and after-sale services. Information Sector 7. Radio and television broadcasting services providers, radio and closed circuit television broadcasting services, and multimedia and printed media. 8. Motion picture production industry (film production, film technical services, export and import film business, film distrbutors and motion picture theatre operation).
Attachment III LIST OF BUSINESS FIELDS OPEN TO INVESTMENT UNDER CONDITION OF A JOINT VENTURE BETWEEN FOREIGN AND DOMESTIC CAPITAL
1. Building and operation of seaports 2. Electricity production, transmission and distribution 3. Shipping 4. Processing and provision of potable water for public use 5. Atomic power plants 6. Medical services, including the building and operation of hospitals, medical checkups, clinical laboratories, mental rehabilitation service, public health maintenance security, rent of medical equipment, assistance services for health aid and evacuation of patients under emergency conditions, hospital management services and services for testing, maintenance and repair of medical equipment 7. Telecommunications 8. Regular / non-regular commercial airliners.
Attachment IV LIST OF BUSINESS FIELDS OPEN TO INVESTMENT UNDER CERTAIN CONDITIONS
Marine and Fishery Sectors 1. Cultivation of fish in fresh waters a. Open to foreign investments for freshwater turtles, nila gift, sidat, kodok lembu, fresh water giant shrimps and thillapya sp; b. In cooperation with small-scale fishery business 2. Fishing of demersal fish (big fish, grouper and other sea fish); except ZEEI areas of the Malacca Strait and Arafura sea Industrial Sector 3. Industries producing wood pulp a. raw material obtained from imported chips or quarantee of raw material supplied from industrial timber estates (HTI) b. other than sulfonating and / or chlorination (C 12) 4. Industries producing pulp made of other cellulose fibres or other materials; other that sulfonating and chlorination (C 12) 5. Industries producing chloro alkali; other that those using mercury 6. Processing of finished / semi-finished goods made from mangrove wood, raw material coming from mangrove cultivation 7. Money printing industry; Operational licenses from BOTASUPAL - BAKIN and approval from Bank Indonesia required 8. Special printing industries (postal stamps, duty stamps, Bank Indonesia negotiable papers, passports and stamped postal matter); Operational licenses from BOTASUPAL - BAKIN required 9. Milk processing industry (powder and sweetened condensed milk); processing (not only repackaging) 10. Plywood and rotary veneer industries; only for The Irian Jaya Province (Papua) 11. Sawn timber industries a. only for the Irian Jaya province (Papua) b. outside the Irian Jaya province (Papua), only using logs from non natural forests 12. Ethyl alcohol industries. Technical grade, being only used as raw materials and auxiliary materials of other industries. 13. Industries producing raw materials for explosives (ammonium nitrate) - Only in cooperation with business entities which have secured a recommendation from the Ministry of Defense 14. Industries producing explosives and components for industrial (commercial) use a. Only in cooperation with business entities which have secured a recommendation from the Ministry of Defense. b. Only manufacturing activities, while storage and distribution are executed by companies appointed by the government. 15. Electricity planning and supervision consulting services. Open to foreign investments with the provision that: a. PLTA (Hydro power plant) with a capacity above 50 MW, b. PLTU (steam power plat) with a capacity above 55 MW,
c. PLTP (geothermal power plant) with a capacity above 55 MW, d. Main electrical relay station with a voltage above 500 KV, e. Transmission networks with a voltage above 500 KV 16. Electricity equipment construction, maintenance, installation services, development of technology supporting the supply of electricity and testing of electricity installations. Open to foreign investments with the provision that: a. Main electrical relay stations with a voltage above 500 KV, b. Transmissions networks with a voltage above 500 KV 17. Petroleum and natural gas drilling services. Open to foreign investments with the provisions that: a. only for offshore drilling, b. especially for locations outside the Eastern Indonesia Region, must cooperate with national partners operating in a similar business field. 18. Power plant businesses - Open to locations outside Java, Bali and Madura Trading Sector 19. Restaurants - Open to foreign investments with the special provision that they must be located in tourism areas / zones and / or integrated with hotels 20. Game services - Open to foreign investments with the special provision that they must be located in tourism areas / zones and / or integrated with hotels.
INFRASTRUCTURE FACILITIES
A. Electricity Installed capacity Installed capacity and the generating units of the state-owned electricity enterprise/Perusahaan Listrik Negara (PLN) as Holding and sister companies totaled 21,058.83 MW and 4,173 units , which was 15,494 MW (74%) concentrated in Java. The biggest installed capacity generating unit is steam power plants Suryalaya in West Java (600 MW). Total installed capacity comprised of Steam power plants 6,900 MW (33%), Combine cycle power plants 6,863 MW (33%), Diesel power plants 2,585 MW (12%), Hydropower plants 3,015 MW (15%), Gas turbine power plants 1,225 MW (6%), and Geothermal power plants 380 MW (2%).
Peak Load Peak load totaled 16,314 MW, while interconnection system peak load Java-Bali reached 12,581 MW. In 2002, electric power totaled 88,355 GWh, increased 4.9% compared with previous year. From this figures, 21% produced by PLN Holding, and 79% produced by the sister companies, namely PT. Indonesia Power, PT. PJB and PT. PLN Batam. Electric power percentage to primary energy are: Natural gas 25,853 GWh (29%), coal 29,330 Gwh (33%), oil 19,539GWh (22%), hydropower 10,561 GWh (10%), and 2,982 GWh (3%) comes from geothermal. PLN total production (includes purchasing from outhouse sourcing) in 2002 obtained 101,654 GWh. Electric power purchased from outhouse is 13,299 GWh (13%). From the total purchased electric power, the biggest of 4.040 GWh (30%) comes from PT. Paiton Energy Company, and 4,342 GWh (33%) from PT. Jawa Power in East Jawa.
Electric power selling Electric power selling to industrial group increased 5%, meanwhile household, business and others has respectively increased 9%, 8% and 4%. The amount of customer at the end of 2002 was 29,827,728. Basic Electricity Tariff in July – September 2003 for industry usage 2200 Va - 14 KVA is set Monthly Subscription Rp. 32,200 /kVa/month, Block I < 80 hours usage: Rp.455/kWh and Block II: > 80 hours, next usage Rp.460 /kWh. (online : www.pln.co.id).
B. Telecommunication Telecommunication services are provided by state-owned enterprises, consisting of PT.Telkom, which provides domestic telephone and telegraph services, and PT. Indosat which provides international telecommunication services. Perusahaan Perseroan (Persero PT.Telekomunikasi Indonesia Tbk. ("TELKOM) is a majority state-owned company and it is the principal provider of fixed line and cellular services in Indonesia. The company provides a wide range of telecommunication network and telecommunication services including fixed-line, mobile interconnection network, data and internet services, and other telecommunication services. Fixed-phone telecommunication services in 7 regional divisions covering all of Indonesia mainly for local and domestic long-distance services. Fixed-phone subscribers pay one time installation charges, ongoing monthly subscription charges, and usage charges for local and domestic long-distance services. Usage charges are generally uniform nationwide and based on call distance, call duration and time band. In addition, subscribers are provided with a number of value added features, which are billed on a monthly basis, such as voicemail and information services. Total number of fixed-lines in service in 2002 were, 5,965,568 for residential customers, 1,361,810 for business customers, 19,788 for social customers, and 402,869 for public telephones, includes kiosk phones. (Online: www.telkom.co.id) Another Indonesian state owned company in the field of telecommunication services is PT. Indosat (Persero) Tbk, which connects Indonesia with more than 250 countries in the world. It serves the switching and non-switching international telecommunication services. The switching telecommunication services are phones, telex, telegrams, data-packet communications, facsimiles, corporate digital networks and Inmarsat Global System. The non-switching telecommunication services are international leasing circuit, international video conference, live television transmit network and frame relay. The main Indosat service is The Direct International Connection (SLI) with the access-code 001. Indosat will transform the main activity from international operator to Full Network and Service Provider (FNSP) by adapting strategy "4 in 1", namely the development of Backbone, Fixed Line Access, Mobile and Wireless, Internet and Multimedia. PT. Excelcomindo Pratama (Excelcom) was established in November 1995. The company is a joint venture company and is the third cellular telephone operator adopting the GSM (Global System for Mobile Communications) standard. On October 1996, it officially launched its mobile phone service to Indonesia public. The company have built more than 600 BTS’s (Base Transceiver Station) predominantly distributed in Jakarta and in many of the primary business around Java, Bali and Lombok. It has also installed over 4,000 kilometers of high-grade fiber optic cable stretching from Jakarta to Surabaya as part of the strategy to be the best cellular transmission network in Indonesia.
C. Transportation Road Indonesia's road network totaled 268,030 km including 103,430 km of roads in Sumatera, 54,301 km in Java, and 5,653 km in Bali. Most cities is Java, Sumatera, Sulawesi and Bali are connected by highways or secondary roads. Nearly 90% of passenger transport and 50% of cargo transport are made by road. Trunk roads are well developed and new toll highways are being developed by private-sector investments.
Railway Railways in Indonesia have a total track length 6,482 km in Java and Sumatera. Railways are used for freight transportation and long-distance passenger services. In the Jakarta-Bogor-Tangerang-Bekasi (Jabotabek) region railways are used for commuter services.
Seaport Indonesia has 2,061 ports, among others have a container facility such as in Belawan, Batam, Tanjung Priok, Tanjung Emas, Tanjung Perak and Makassar. Other strategic ports in Indonesia are Dumai, Lhokseumawe, Pekanbaru, Panjang, Palembang, Teluk Bayur, Pontianak, Jambi, Banjarmasin, Benoa, Tenau, Sampit, Balikpapan, Samarinda, Bitung, Ambon and Sorong. The largest ports, Tanjung Priok, serves the Jakarta area and handled 1,431,753 Twenty Feet Equivalent Units (TEU's) container in 2000. Tanjung Perak Container Terminal accommodated 238,567 TEU's in 2000.
Airport Among 150 airports in Indonesia, there are international airports including Soekarno-Hatta and Halim Perdanakusuma in Jakarta, Husein Sastranegara in Bandung, Adisumarmo in Surakarta, Juanda in Surabaya, Ngurah Rai in Bali, Sultan Iskandarmuda in Banda Aceh, Polonia in Medan, Hang Nadim in Batam, Sultan Syarif Kasim II in Pakanbaru, Tabing in Padang, Kijang in Tanjung Pinang, Supadio in Pontianak, Sepinggan in Balikpapan, Hasanuddin in Makassar, Sam Ratulangi in Manado, Frans Kaisiepo in Biak, and Selaparang in Mataram. Among domestic airports are Sultan Mahmud Badaruddin II in Palembang, Adisutjipto in Yogyakarta, Syamsudin Noor in Banjarmasin, Ahmad Yani in Semarang and Pattimura in Ambon.
INDUSTRIAL ESTATE
A. Industrial Estates Industrial estates are available in almost all provinces of Indonesia. The large scale industrial estates are found in Jakarta, West Java (Bekasi, Karawang, Purwakarta), Banten (Tangerang, Serang), Central Java (Semarang, Cilacap), East Java (Surabaya, Gresik, Sidoarjo, Pasuruan, Probolinggo), North Sumatera (Medan), West Sumatera (Padang), Lampung, Riau (Batam Island, Bintan Island), South Sulawesi (Makassar) and East Kalimantan (Bontang).
B. Bonded Zones Bonded Zone means a zone with particular boundaries within which processing of goods and materials, construction designing, engineering activity, sorting, preliminary inspection, final inspection and packing of imported goods and materials from the other areas within Indonesian Custom Territory (Daerah Pabean Indonesia Lainnya/DPIL) are carried out with purpose mainly for export. On the importation of goods and/or material for the production process in Bonded Zone certain facilities can be granted such as postponement of import duties, excise free, value added tax (PPN), sales tax on luxury goods and income tax of article 22 shall not be collected Foreign Investment (PMA) as well as Domestic Investment (PMDN) Companies, Limited Companies of Non PMA/PMDN and Cooperatives with legal status are able to obtain approval as an Operator of Bonded Zone and Companies Operating in Bonded Zones. Operator of Bonded Zone (Penyelenggara Kawasan Berikat/PKB) shall be a limited company, a cooperative with legal status or a foundation which owns, controls, manages and provides facilities and infrastructure in the interest of other parties in Bonded Zone he operates on the basis of an agreement. Meanwhile, Companies Operating in Bonded Zone (Pengusaha Didalam Kawasan Berikat/PDKB) shall be limited companies or Cooperatives undertaking a processing of goods and materials in a Bonded Zone. Up to February, 2003 there are 15 Operators of Bonded Zone (PKBs) spread in Jakarta (Cakung, Marunda and Tanjung Priok operated by government), Bogor, Purwakarta, Karawang, Semarang, Pasuruan, Medan, Mojokerto, Bintan Island, Aceh, and Batam Island and 426 Companies Operating in Bonded Zone (PDKBs).
C. Banking, Insurance and Leasing Bank Indonesia (BI) as an independent state institution is fully autonomous in formulating and implementing each of its task and authority as stipulated in the new Central Bank Act, Law No. 23/1999. As a central bank, BI has a single objective of attaining and maintaining stability of the rupiah value. In the pursuit of the objective, it is supported by 3 sectors of task which are formulating and implementing monetary policy system, regulating and ensuring a smooth payment system, developing sound banking and credit systems by building and supervising banks. BI does not perform the commercial activities of banks in general, of commercial banks as well as of rural credit banks. Therefore, BI cannot serve saving and checking accounts as well as deposits from the public. In addition the public cannot directly request for credit from BI. (Online : www.bi.go.id) Relating to foreign investment, Bank Indonesia plays the following roles : a. Issuing a letter of clearance for final draft loan agreement of Foreign Direct Investment (FDI) companies. b. Monitoring the FDI accounts. c. Ensuring that the capital for FDI projects originates mostly from offshore. d. Registering all offshore loans received by FDI companies. To support business activities in Indonesia, there are foreign banks operating in Indonesia such as ABN AMRO Bank, American Express Bank, Bank of America NA, Citibank
NA, Deutsche Bank AG, JP.Morgan Chase Bank, Standard Chartered Bank, The Bangkok Bank Comp. Ltd., The Bank of Tokyo-Mitsubishi Ltd., The Hong Kong and Shanghai Banking Corp. Besides there are 5 (five) state-owned banks, namely PT. Bank Ekspor Indonesia (Persero), PT.Bank Mandiri (Persero), PT.Bank Negara Indonesia (Persero),Tbk., PT. Bank Rakyat Indonesia (Persero), and PT.Bank Tabungan Negara (Persero). In addition, there are 36 (thirty six) Devisa National Private Banks, 40 (forty) Non Devisa National Private Banks, 26 (twenty six) Region Development Banks, and 24 (twenty four) Joint Ventures Banks. Other financial institutions include 176 insurance companies both international and national, and 145 leasing companies in Indonesia.
D. Stockmarkets According to the Law concerning the Capital Market, the guidance, regulation, and day-to-day supervision of capital market is provided by the Capital Market Supervisory Agency (Badan Pengawas Pasar Modal/Bapepam). Also, it implements an orderly, fair, and efficient capital market activity and protect the interest of investor and public. The functions of Bapepam are: 1. Drafting Capital Market rules and regulations; 2. Guiding and supervising any Person granted business license, approvals, registration and other person related to Capital Market; 3. Establishing disclosure principles for Issuers and Public Companies; 4. Settlement of the objection by Person imposed sanction by Stock Exchange, Clearing Guarantee Corporation, and Central Securities Depositary; 5. Establishing Capital Market accounting standards; 6. Protecting technical implementation of Bapepam main function according to the policy required by Minister of Finance; 7. In implementing the function, Bapepam has the authority to grant licenses, approvals, effective registration to capital market participants and provide effective registration statement; 8. Up to present Bapepam has granted business licenses to 2 exchanges namely The Jakarta Stock Exchange (JSX) and The Surabaya Stock Exchange (SSX), 117 Underwriters, 207 Broke-dealers and 70 Investment Managers. (Online :www.bapepam.go.id).
E. Representative Office A foreign company may establish a representative office in Indonesia in one of province capitals. Its activity is limited to supervising and coordinating the business of its principal and branches. This office is not allowed to make any business transaction with companies or persons in Indonesia either for export or import or domestic trading. The representative office can : a. Obtain work permits for expatriate managers. b. Obtain multiple entry visas for its expatriate personnel as well as exemption from exit-tax (SKFLN). The representative office is led by one or more foreign or Indonesian citizens who are appointed by a foreign company or joint foreign companies as their representatives with
the intention of : a. Handling the company or its affiliates concerns, and or b. Preparing the establishment and development of foreign direct investment companies, in Indonesia or in other countries and Indonesia.
VISA AND IMMIGRATION REQUIREMENTS
1. Free Visa for a Short Visit and Requirements Tourists and business visitors from Chili, Morocco, The Philippines, Singapore, Hong Kong Special Administration Region (Hongkong SAR), Thailand, Vietnam, Malaysia, Brunei Darussalam, Macao Special Administration Region (Macao SAR) and Peru do not require visa for a maximum stay of 30 (thirty) days. The granting of free visa to visitors as such is limited for the purposes of holidays, inter-government relations, social-culture relations, business investigations or discussions with their business. They are not permitted to conclude any business transaction, engage in local employments, perform any professional or technical service. However, these visas are un-extendable and un-changeable to other immigration purposes. The Free Visa for a Short Visit is also applicable for visitors from certain countries which are having a bilateral and or a multilateral agreements which based on a reciprocal treatment with the government of Indonesia. 2. Visa on Arrival Visa is still required for visitors from countries which are not mentioned above. The visa is also available in the International Airports / Harbors upon arrival. 3. Multiple-Journey Business Visas Multiple-Journey Business Visa travel visa gives the bearer the right to make several entries to Indonesia within a period of 12 (twelve) months and each stay be up to 2 (two) months. For business or tourist travelers of nationalities that have obtained the 30 (thirty ) days free visa for a short visit, multiple-journey business visas are not necessary for stays within those thirty days. 4. Limited Stay Visas or Temporary Resident Visas Limited Stay Visas are valid for three months to one year and are issued exclusively to experts for the national development and to expatriates who are involved in training or other educational or scientific programs in line with the prevailing government regulations. Direct dependents can also qualify for this type of visa. 5. Re-entry Permit Non-citizens with residential status in Indonesia must have valid re-entry permits to re-enter Indonesia.
EXPATRIATES AND WORKING PERMITS In the framework of direct investment, the foreign and national shareholders are free to choose members of the supervisor and management board. The employment of foreign operational directors, managers, technicians, experts and even specialized workers by PMA as well as PMDN enterprises is allowed in Indonesia as long as Indonesian are not available or qualified to fill these positions or jobs. The Department of Manpower issues
regulation on this matter in form of a list of professional positions in every positions in every business sector which are open for the employment of expatriate personnel. However, it has relaxed this list a great deal and continues to consider further relaxations accordingly. An expatriate wishing to take up or continue employment in Indonesia must posses a work permit. Work permits are also required to be possessed by expatriates who hold the post of directors. 1. RPTKA (Expatriate Placement Plan) If an enterprise in the framework of direct investment wants to employ foreigners, the enterprise should submit an Expatriate Placement Plan (RPTKA - Rencana Penempatan Tenaga Kerja Asing) to the Investment Coordinating Board (BKPM). if the enterprise is in the framework of direct investment. In foreign investment/PMA companies, work permits for senior positions (such as Director) held by foreigners are for three years and can be renewed just before expiration. Other position slots in the RPTKA are only for one year and can be renewed annually, usually up to a fixed number of years. Based on the approval of the RPTKA (Expatriate Placement Plan) a TA-01 is issued, and then a work permit, Izin Kerja Tenaga Asing (IKTA) is issued after your arrival and the issuance of the KITAS card and have paid your annual DPKK fee. A foreigner's expertise must be proven, as government regulations limit the employment of foreigners in Indonesia to "experts" which can contribute to the national development. Due to the high unemployment rate of nationals, it must be proven that the expertise of a foreigner cannot actually be supplied by a national instead. A work permit issued for a foreigner does NOT entitle their spouse to work as well. A "dependent spouse"; must obtain their own sponsor and work permit in order to work in Indonesia. This can be done, but depends on the demand for their expertise. 2. TA01 Recommendation After the RPTKA has been approved, the TA01 recommendation has to be applied for in order to get a temporary residence visa. The original approval letter on the TA01 recommendation will be needed to apply for the VITAS or VBS (Visa Tinggal Terbatas). The RPTKA & TA01 recommendation are only necessary for foreigners working in Indonesia. 3. Vitas or VBS - Limited Stay Visa or Semi permanent Residence Visa Once the TA01 recommendation has been approved, the VITAS must be applied for, for the working spouse and his dependent family, at the Indonesian Immigration office in the intended city of residence. Upon approval, the Indonesian Immigration office will send a telex approval to the Indonesian Embassy where the foreigner and his dependent family want to pick up the approval and to get the VITAS/VBS stamped into their passports. This VBS visa stamp permits your entry into Indonesia. Within 3-7 days of your arrival in Indonesia, you and your dependent family members must go to the Immigration office to report your arrival and complete the necessary paperwork. Failure to do this within 3 days will constitute a violation of your status, a legal hassle that can only be overcome through a visit to the courts. So don't delay your initial trip to the Immigration office to report your arrival. At the immigration office, you will be called to take a full set of fingerprints and to sign various documents. 4. KITAS Card or Limited Stay Permit Card and Blue book/POA or Foreigner Registration When all the paperwork on your visa is done, you will be issued a Limited Stay Permit -
Kartu Izin Tinggal Terbatas, better known as a KITAS card. The predecessor to the KITAS was the KIM/S. People still erroneously refer to the limited stay permit as a KIM/S. With your KITAS you will also receive a blue book, Buku Mutasi. The blue book tracks changes in your immigration status. They are valuable documents and should be kept safely. The KITAS card & blue book allow you to live in Indonesia for one year and may be renewed annually, up to two extensions without having to leave the country.
EXPATRIATE COMPENSATION PACKAGES Expatriate compensation packages vary based on: 1. your tenure with the company, 2. your nationality, 3. your skills and length of experience, and 4. the critical nature of your position in Indonesia. There is no range of compensation that could be said to apply for all expats in all positions. The general trend, since the onset of the economic crisis in 1997, is for LESS benefits. Also, there is a trend amongst some companies to place single-status staff in Indonesia, with significantly lower expenses. In discussing possible relocation to Indonesia with a potential employer, or a potential assignment in Indonesia with a current employer be sure that you discuss the companies policies on the following compensation issues:
Salary Usually stated in the currency the firm budgets in on a per month or per annum basis. Applicable Indonesian taxes are commonly paid by company. If you are working for a local company, the pay basis may be 13 or 14 months per annum. Be sure to find out if the salary figure is net of Indonesian income taxes, or if your company assists expatriates employees in tax equalization issues. Due to the economic crisis, most local companies have stopped paying expatriates in foreign currency-based packages or have opted for a mixed package with an amount in a foreign currency but the remaining amount in rupiah.
Personal Income Tax The Indonesian government is now enforcing an 1984 regulation that all foreigners working in Indonesia for more than 183 days in a fiscal year must pay Indonesian individual income tax. The rate ranges from 5% of your first Rp 25 million in salary p.a. to 35% for amounts over Rp 200 million. Be sure that you are clear if your company will help you to obtain the NPWP (personal income tax number), and whether or not your salary is NET of Indonesian income taxes, or if your company will help you to file your yearly Indonesian tax return. Be sure that you are clear with the tax authorities in your home country about possible double taxation exemptions or credits against your home country personal income tax. Be aware that this tax applies on your worldwide income, not just salary earned as a result of your work in Indonesia. If your company has foreign offices, you can always file a lien against their foreign holdings until they pay your taxes, if they renege on taxes and the taxman comes for you.
Housing Company housing may be provided you simply choose from the “available” houses. This happens most often with companies in the oil and gas industry. In most companies a housing allowance is given to expatriate employees and you must find a house or apartment you like within the rent allowance approved by the company. Housing prices have been decreased rapidly since the onset of the economic crisis.
Schooling The single largest expense after salary and housing is usually education for your children. International schools in Jakarta are not cheap! Jakarta International School currently requires that each student have a four-year depreciating Certificate of Guarantee (COG), costing USD 10,000 or a one-year Non-refundable Certificate (NRC) costing USD 3,000 for those parents paying their own fees, along with the yearly tuition fees, which varies from over USD 4,500 to more than USD 12,500 depending upon the student's grade level. While other school may be less expensive, most have similar fee ranges. When discussing schooling costs with your company, specifically ask if they cover the COG in addition to tuition, bus fees and other school-required charges. If your children are still young, ask the company will cover the cost of pre-school.
Cars Companies usually provide one car per family. For company cars, the employer pays all insurance, service and repair, registration and tax costs associated with the vehicles. Gasoline, parking, tolls may be covered in full, or in part by a monthly allowance for running expenses. Some companies may prefer, instead of providing a company car, to lend the newly arrived expatriate money to buy a car or provide a car loan.
Staff Driver’s wages (including or excluding overtime) are often paid by the company. This driver may be shared by the unemployed spouse for personal needs throughout the day. Use of the driver for Saturday, Sunday & Public Holidays at personal expense. Office may cover the expense of night/day watchman or other household staff. Utilities Allowance: Could be offered in terms of a US$/rupiah allowance per month or the company may simply pay all your utility bills. Common utility bills covered in full, or in part, by the company include electricity, water, gas, telephone, hand phone, drinking water and neighborhood garbage and security services.
Home/Annual Leave Number of weeks per annum, as per company policy. Tickets for members of your family to point of hire or home town, once per annum. Ask if the company HR policy allows economy or business-class tickets. Alternately, some companies may give you a travel allowance equal to the cost of your tickets and you are free to use the amount for travel home, within Indonesia or in Asia.
Exit/Re-entry permits and fiscal tax Paid by the company. May be a limit on the number of times these will be paid by the company in a given year.
Documentation: Costs borne by the Company for all documentation, including passport renewal, Work permit (IKTA); Temporary stay permit (KITAS); Police book (STMD); Population documents (SKTT & SKPPS) for the employee and all accompanying family members. Medical: Full medical coverage (may include spouse and children). May include medical evacuation coverage for evacuation to Singapore, Australia (for eastern Indonesia) or your home country in an emergency. Most medical emergencies can be handled in Singapore. Mobilization Allowance: The company pays the cost of shipment, by sea of allowed cubic meters of personal belongings. May include a small air shipment as well. The company pays custom costs and duties at both ends. Business Club/Sports Club Membership: As per company policy.
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