Foreign Capital Investment Law No. 1 of 1967 primarily governs Foreign Direct Investment (FDI). Business operations of FDIs and local companies are also subject to the sectoral/industrial policies required by the concerned Ministries. FDIs are granted a period of 30 years to exist after legal formation. If within the 30-year period, FDIs commit additional investment or expansion of project, another 30 years is granted for the project expansion. In effect, FDIs can continuously keep on investing/expanding.

Domestic Capital Investment Law No. 6 of 1968 governs domestic direct investment further referred to as Penanaman Modal Dalam Negeri (PMDN).

Government Regulation No. 20 of 1994 on Share Ownership governs joint venture undertaking between foreign and Indonesian partners.

Approvals, Licenses and Procedures

Tax Structures and Tax Agreements on Trade and Investments

A 10% value-added tax (VAT) is applied to imports, manufactured goods and services. There is also a sales tax on luxury goods ranging from 10 to 35%. Land and building tax are nominal, typically not more than one tenth of one percent (0.1%) of the property value.

Important Government and Regulatory Bodies

Bedan Koordinasi Penanaman Modal (BKPM) is an investment service agency responsible in implementing Indonesian government's investment mission. BKPM prepares the macro-level national plan on investment, formulates investment policies, establishes information systems and grants approvals for investments. Ultimate goal of BKPM is to provide a one-stop service to investors. BKPM services include: Investment Information, Investment Licensing and Approval and Investment Monitoring and Evaluation