Important Things to Know About How to Invest in Indonesia

   

Investment is the most important economic factor for a nation. It is the building blocks on which an economy is built. Investment leads to asset creations, and asset creation leads to enhanced production, employment. It also enhances overall economic progress. However, before you start to invest, there are a few things that you need to know about how and why you should invest in Indonesia.

Why Indonesia

There are many reasons as to why Indonesia is the perfect country to invest. Looking at demographics, the percentage of the productive age group in 2025-2035 will dominate the population. Indonesia has the 4th biggest population in the world. More than 53% of the citizens live in urban areas that have modern lifestyles as well as an increase in purchasing power.

Looking at the Ease of Doing Business (EoDB), Indonesia is currently ranked 73 out of 190 countries. This rank shows that business licensing in Indonesia has become easier, thanks to the Online Single Submission Risk Based Approach (OSS-RBA).

Indonesia has abundant natural resources. The majority of exports are made up from liquid gas, petroleum, and minerals. Aside from that, Indonesia is well known for its potential biodiversity. Indonesia is a country with the second highest terrestrial biodiversity wealth in the world. When combined with marine biodiversity, Indonesia is the first in the world.

How to Invest in Indonesia

The OSS system was first developed in 2018 to be the gateway of the existing government service system in ministries/agencies and local governments. The purpose of the OSS is so that proprietors, including micro, small and medium enterprises, can start their businesses more quickly and easily.

OSS-RBA is a newer version of the OSS that differentiates licenses for businesses depending on the level of business activity risk. The level of business activity risk determines the type of business license required. Through this system, the government maps the level of risk according to the line of business or KBLI. Risk levels are divided into low risk, medium low risk, medium high risk, and high risk.

The following is the procedure for investing in Indonesia using OSS-RBA so that investing in Indonesia is even more practical and easy:

  • Register an Account at OSS
    To create an OSS account for both individual and non-individual business actors, an NIK or national identity number is required. Foreigners can replace the NIK with a passport number. Also required is an Endorsement Number or legal basis for the formation of a business entity (for non-individuals), and the Legal Entity has obtained an NPWP. Applicants must also choose whether their business is an SME or non-SME. After entering the required information, potential investors will receive an email that functions to activate the OSS account and will receive a user id and password.

  • Making Business Identification Number (NIB)
    Once an OSS account has been created, potential investors must create an NIB. The NIB functions as an identity of the business actors in carrying out various kinds of business activities and is valid while carrying out business activities. Single licensing means that NIB includes legality, Indonesian National Standard (SNI), and Halal Product Guarantee Certification (SJPH). In addition, the NIB also includes a Company Registration Certificate (TDP), Import Identification Number (API), as well as customs access for exporters and importers.

  • Licensing
    Investor with the low-risk business activities does not need any further licenses. Meanwhile, investor with the medium low and medium high-risk business activities have to make a self-declaration regarding Standard Certificate. Furthermore, investor with the high-risk business activities should obtain licenses from the system and the integrated Ministry/Institution and Regional Government. Once they fulfilled all the licenses, they may operate their business.

Important Things to Know Before Investing in Indonesia

For foreign investment, the investment must be in the form of a Limited Liability Company (PT) in Indonesia. The capital used can be in the form of foreign capital or Joint Venture with domestic investors. The minimum investment value and paid-up capital for foreign investment companies is Rp10 billion excluding land and buildings.