UU Penanaman Modal is a law or regulation that outlines the rules and regulations for foreign investment in Indonesia. It is also known as the Foreign Investment Law and was first introduced in 1967, with several amendments made to it since then.
What is UU Penanaman Modal?
UU Penanaman Modal is a law that regulates foreign investment in Indonesia. It was introduced to encourage foreign investors to invest in Indonesia and to promote economic growth in the country. The law outlines the requirements and procedures for foreign investors to establish companies in Indonesia, including the types of businesses that are open to foreign investment, the minimum investment required, and the percentage of foreign ownership allowed.
The Purpose of UU Penanaman Modal
The primary purpose of UU Penanaman Modal is to promote economic growth in Indonesia by attracting foreign investment. The law encourages foreign investors to invest in Indonesia by providing incentives such as tax exemptions, lower tariffs, and simplified procedures for obtaining permits. The law also aims to protect the interests of foreign investors by providing legal protection and ensuring that their investments are secure.
Provisions of UU Penanaman Modal
The provisions of UU Penanaman Modal include the following:
- Foreign investors can establish companies in Indonesia with a minimum investment of IDR 10 billion or approximately USD 700,000.
- Foreign investors can own up to 100% of the shares in a company, depending on the business sector.
- Foreign investors are allowed to repatriate their profits and capital out of Indonesia.
- Foreign investors are eligible for tax exemptions and other incentives.
Benefits of Investing in Indonesia Under UU Penanaman Modal
Investing in Indonesia under UU Penanaman Modal offers several benefits, including:
- Opportunities to invest in a rapidly growing economy with a large and youthful population.
- Access to a large and diverse market with a growing middle class.
- Favorable business environment with government support and incentives for foreign investors.
- Access to abundant natural resources and strategic geographical location.
Challenges of Investing in Indonesia Under UU Penanaman Modal
Investing in Indonesia under UU Penanaman Modal also presents several challenges, including:
- Complex and bureaucratic regulatory environment.
- Inadequate infrastructure and logistics.
- High levels of corruption.
- Cultural and language barriers.
Procedure for Establishing a Company Under UU Penanaman Modal
The procedure for establishing a company under UU Penanaman Modal includes the following steps:
- Obtain a principle license from the Investment Coordinating Board (BKPM).
- Obtain a Deed of Establishment from a notary public.
- Obtain approval from the Ministry of Law and Human Rights.
- Obtain a Taxpayer Identification Number (NPWP) from the tax office.
- Obtain a Business Registration Number (NIB) from the Online Single Submission (OSS) system.
- Obtain any necessary licenses and permits from relevant government agencies.
Types of Business Open to Foreign Investment Under UU Penanaman Modal
Under UU Penanaman Modal, foreign investors are allowed to invest in almost all sectors of the economy, with the exception of the following:
- Gambling
- Narcotics
- Firearms
- Explosives
- Pornography
- Trading of hazardous waste
Conclusion
UU Penanaman Modal is a law that regulates foreign investment in Indonesia. It provides a framework for foreign investors to invest in Indonesia and outlines the requirements and procedures for establishing companies in the country. Investing in Indonesia under UU Penanaman Modal offers several benefits, but also presents several challenges. Overall, UU Penanaman Modal provides a favorable business environment for foreign investors and is an important tool for promoting economic growth in Indonesia.
