There are compliances/regulations related to restrictions to foreign stake in an Indonesian company. All duties and taxes applicable on Indonesian domestic companies are also applicable on foreign JVs and subsidiaries in the Indonesia. There are generally no restrictions or concessions for foreign JVs/ subsidiaries in Indonesia unless specified.
Indonesian FDI Policy
Indonesia has liberal policy on FDI among the emerging economies. FDI under the current framework is permitted for all categories of investors and in all sectors except:
1. Retail Trading (except single brand product retailing which is allowed).
2. Atomic Energy.
3. Lottery Business.
4. Gambling and betting.
For other sectors, there are two routes for investing in Indonesia:.
( i) Automatic Route wherein the foreign investor does not require any prior approval from the RBI or Government of Indonesia. Post Investment, certain compliances are required and after completion RBI issues a registration number for FDI.
( ii) Prior Government Approval Route which applies in the following circumstances:.
A. Activities/Items that require an Industrial License.
B. Proposals in which the foreign collaborator has an existing financial/ technical collaboration in Indonesia in the same field.
C. Proposals for acquisition of shares in an existing Indonesian company in:.
a. Financial services sector and.
b. Where Securities & Exchange Board of Indonesia (Substantial Acquisition of Share and Takeovers) Regulations, 1997 is attracted;.
D. All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.
FDI OPTIONS IN Indonesia
Trading in Indonesia B2B.
B2B trading is allowed under the Automatic Route of IDR in Indonesia, it is irrelevant whether the goods are sold to business customer, who conducts retail or to business customer conducting operations other than retail such as restaurant or a hotel. The concept of B2B sales form part of the wholesale trading and can not be termed as retail trade.