Frequently Asked Question

The most common questions about Central Java Investment

What are the basic things I should know first to invest in Central Java?


To establish a foreign direct investment company in Indonesia you must first decide what business sector you are going to invest based on Indonesian Classification for Business Sector (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI).

Then, you must check whether the business sector is open with requirements or closed for foreign direct investment based on the Presidential Regulation about Negative Investment List (Daftar Negatif Investasi or DNI). If the business sector which you are interested in is not regulated, and no other restrictions from related technical ministries, then it means the business sector is open for foreign direct investment with a maximum foreign ownership of 100%.

The legal entity of the Foreign Direct Investment or FDI company should be a Limited Liability Company or Ltd (Perseroan Terbatas or PT). The ‘PT’ company should be owned by a minimum of 2 shareholders. Those can be individual or corporate shareholders or a combination of both.

How much is the minimum investment for an FDI company?

The minimum investment for an FDI company is above IDR 10 billion (excluding land and building cost), while the minimum paid up and issued capital is IDR 2.5 billion. For each shareholder, at least IDR 10 million or its equivalent in USD is required.

How do I establish a company in Indonesia?

The process of company establishment in Indonesia requires Investor to issue Article of Association and legalization of the company, including taxpayer number (Nomor Pokok Wajib Pajak or NPWP), through Public Notary.

Other than setting up a company (PT. PMA), is there any other method to evaluate the Indonesian market?

Yes, a foreign investor could set up a Representative Office to study the market. Foreign Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA) is an office incorporated by an overseas company to represent itself in Indonesia.

Foreign Representative Office usually has limited functionality and generally are prohibited from directly engaging in operational activities, signing contracts, issuing official invoices, receiving payments from its clients, and directly engaging are other profit-generating activities.

The requirements and procedure to form a representative office in Indonesia is governed by the Regulation of BKPM No. 6 of 2018 regarding Guidelines and Procedures for Licensing and Facility of Investment. To obtain the license, all requirements should be submitted online at

The functionality of KPPA is limited to:

  • Manage the parent company’s corporate interests.
  • Prepare the establishment and development of its business in Indonesia.

Important Notes for KPPA:

  • KPPA can only be incorporated in the capital of Indonesian provinces (e.g. Jakarta, Bandung, Surabaya, Medan, Denpasar, etc).
  • The location of KPPA must be in the office building.

How do I open a bank account?

The regulation of the Central Bank of Indonesia requires that all banking transactions (such as capital injection, administration of loans, payment of capital equipment, raw material, etc.) of a newly established PT. PMA should be administered through a special foreign investment bank account in Indonesia. In general, the required documents to open such account are as follows:

  1. Single Business Number (Nomor Induk Berusaha or NIB), the Deed of Establishment, Company Domicile Certificate (Surat Keterangan Domisili Perusahaan or SKDP), Tax ID (NPWP).
  2. The power of attorney, specifically required for another person who needs authority to open a bank account.
  3. Resident Identity Card (Kartu Tanda Penduduk or KTP) or passport of the authorized person to open a bank account.
  4. Photo of the authorized person to open a bank account.
  5. Minimum deposit of IDR 10 million or USD 1.000.

What licenses are required to start a business?

Basically, to start a business company should obtain the following licenses:

  1. Single Business Number (NIB)
  2. Business License (Izin Usaha)
  3. Commercial/Operational License (Izin Komersial/Operasional) through Online Single Submission “OSS” website (

Are there any guidelines and procedures to get a business license in Indonesia?


Yes, There are. You can get them through OSS (Online Single Submission). An online system creates by Indonesia Government to simplify your investment registration.

All new and existing individual or business entity (Include MSMEs) and representative office can register through OSS Account.

I. Registering OSS Account

  1. Input ID number or passport of director and other data.
  2. Activating the account.
  3. The investor will receive an email of User-ID and Password.

II. Single Business Number (NIB)

  1. Log in to
  2. Fill the data as follows:
    • Data of the company
    • Capital
    • Data of company shareholders and Board of Directors
    • Business activity
    • and others
  3. NIB also serves as:
    • Certificate of Company Registration (Tanda Daftar Perusahaan or TDP)
    • Importer Identification Number (Angka Pengenal Impor or API)
    • Customs Access (Akses Kepabeanan)

III. Business License is a license to start business operations

  1. A business license is automatically issued after fulfilling the commitment statement for “LOCATION PERMIT, ENVIRONMENTAL PERMIT, and BUILDING PERMIT”
  2. The company will receive notification from OSS as their business license had been “activated” when commitments completed, including payment of invoices (if required)

IV. Location Permit (Izin Lokasi)

  • Maximum 10 days, after receiving location permit, the investor should start to fulfill the commitment to get ‘technical recommendation’ from Regional Land Office 
  • Maximum 10 days, Regional Land Office (Badan Pertanahan Nasional or BPN) should deliver the technical recommendation to Regency/Municipality Office 
  • Maximum 2 days after receiving a technical recommendation from Regional Land Office, Mayor or Regent should approve or reject the technical recommendation

V. Environmental Permit (Izin Lingkungan)

An environmental permit is given to investors for conducting business and/or activity which requires an environmental protection plan (Analisis Mengenai Dampak Lingkungan or AMDAL, Upaya Pengelolaan Lingkungan Hidup - Upaya Pemantauan Lingkungan Hidup or UKL-UPL):

  • Applying for Environmental Permit through OSS
  • OSS system will issue Environmental Permit
  • Duration of UKL-UPL completion: 15 days
  • Duration of AMDAL completion: 115 days

VI. Building Construction Permit (Izin Mendirikan Bangunan or IMB)

Building Construction Permit is issued by the local government (Regency/City) to the company in order to build new, alter, expand, decrease, and/or foster building:

  • Applying for Building Construction Permit through OSS
  • OSS system will issue Building Construction Permit

Maximum 30 days after receiving a building permit from OSS, investors should start to fulfill its commitment to regional government or if the project required AMDAL, the fulfillment of commitment of ‘IMB’ is 30 days after the completion of AMDAL.

VII. Commercial/Operational License

The license is required when the company is ready for starting commercial/ operational stage:

  1. OSS system will issue the operational/commercial license as required by companies
  2. The companies should complete its commitment to get license/ non-license, such as Good Manufacturing Practice or GMP, Circulation Permit (Izin Edar), Indonesian National Standard (Standar Nasional Indonesia or SNI), Product Registration (Pendaftaran Produk), or SNI related to their business
  3. OSS system activates Commercial/Operational License once completed

VIII. Payment

The investor should make payment of non-tax state revenue (Penerimaan Negara Bukan Pajak or PNBP), retribution or regional levies as required and send payment receipt to OSS System:

  1. The company will receive email and notification from the OSS system on the list of obtained license
  2. The company make a payment to the institutions (if required)
  3. The Company then upload the receipt of payment to the OSS system

IX. Expansion of Business Licenses and Data Renewal

  1. The company has to fulfill all the requirements, such as Location Permit, Environmental Permit, Building Construction Permit and etc in each location
  2. The company has to update their expansion project information into OSS system

Is there any fiscal facility offered by the government for foreign investor?

Yes. Indonesian Government provides investment incentives as follows:

Import Duties as regulated in the Regulation of BKPM No. 6 of 2018 based on the Regulation of Minister of Finance No. 176/PMK.011/2009 of 2009 as amended by No. 188/PMK.010/2015 of 2015.

All investment projects of FDI as well as Domestic Direct Investment or DDI (Penanaman Modal Dalam Negeri or PMDN) projects which are issued by the Online Single Submission (OSS) system, will be granted the exemption of Import Duty so that the final tariffs become 0%. This facility applicable on:

  1. The importation of capital goods namely machinery, equipment, and auxiliary equipment for an import period of 2 years started from the date of stipulation decisions on import duty relief.
  2. The importation of goods and materials or raw materials regardless of their types and composition, which are used as materials or components to produce finished goods or to produce services for the purpose of 2 years full production (accumulated production time).
  3. The importation to the extant of machines, goods, and materials which:
    • Are not produced in Indonesia
    • Are produced in Indonesia but they don’t meet the required specifications
    • Are produced in Indonesia but the quantity is not sufficient for the need of the industry

According to the Regulation of Minister of Finance No. 66/PMK.010/2015, the exemption of import duty will also be granted to the importation of capital goods of electricity for an import period of 2 years and can be extended by a maximum 1 year. This facility is not applicable for transmission, distribution, supporting services and repairing equipment.

As stated in the Regulation of Minister of Finance No. 259/PMK.04/2016, the importation of goods in term of Contract of Work or CoW (Kontrak Karya or KK) or Coal Mining Business Work Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara or PKP2B) will be granted the exemption and/or relief from import duty based on the owned contract.

The application can be requested by attaching a recommendation letter from Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources of the Republic of Indonesia.

Tax Facilities (Tax Allowance) as regulated in the Regulation of BKPM No. 6 of 2018:

Based on the latest Government Regulation No. 18 of 2015 as amended by No. 9 of 2016, pertaining to Income Tax facilities for investment in certain business sectors and/or in certain locations, the domestic and foreign investors will be granted tax allowances in certain sector and/or area.

Facilities provided by the Government Regulation No. 18 of 2015 as amended by No. 9 of 2016 are:

  1. Reduction of net income by 30% of the total investment in the form of tangible fixed assets.
  2. Accelerated depreciation on tangible assets and amortization on intangible assets.
  3. The imposition of income tax on dividends paid to any non-resident taxpayer.
  4. Compensation for losses that are later than 5 years but not more than 10 years, for:
    • A company located in the industrial area and/or bonded zone
    • A company operating in construction development for infrastructure sector
    • A company that use domestic raw materials at least 70%
    • A company that is absorbing 500-1,000 of domestic workforces
    • A company that is conducting research and development (R&D)
    • A company that is doing a reinvestment
    • A company that exports at least 30% of sales or export.

For detailed information on the list of business sectors that are eligible for tax allowance, please refer to the Attachment I & II of Government Regulation No. 9 of 2016. There are 71 business sectors listed in Attachment I and 74 business sectors listed in Attachment II.

Procedure on the Application for Tax Allowance

Below is the framework on the application procedures:

  1. Corporate Taxpayer (company) will need to submit application of tax allowance incentives directly by attaching its supporting documents.
  2. Once the application assessment is completed, BKPM will arrange for a ‘Clarification Meeting’ between the company and representative from Directorate General of Tax. The meeting is held for the purpose of:
    • Company presentation on the project and business plan intended to receive the tax allowance facility
    • Inquiries by the technical ministry(s), if needed, to provide further clarification in regards to the presentation and/or application.
  3. In the case that clarification and document are completed, BKPM will issue ‘Receipt of Application’ and schedule for a ‘Trilateral Meeting’.
  4. Trilateral Meeting is held for final discussion in regards to the tax allowance application, to be proposed by BKPM to Ministry of Finance of the Republic of Indonesia (with Directorate General of Tax). The Trilateral Meeting will be headed by BKPM officials and attended by representatives from BKPM, Ministry of Finance of the Republic of Indonesia, and Directorate General of Tax.
  5. The Trilateral Meeting produce an agreement that is recorded in meeting minutes and decision from the Chairman of BKPM pertaining to one of the following outcomes:
    • Approval on the tax allowance application to be submitted to Ministry of Finance of the Republic of Indonesia

    • Rejection of the tax allowance application

    • Pending decision on the tax allowance application

  6. In the case of a pending decision on the tax allowance, BKPM will arrange for the ‘Extension Trilateral Meeting’. At the end of this meeting, the decision will need to be issued pertaining to:
    • Approval on the tax allowance application

    • Rejection of the tax allowance application

  7. The outcome of Trilateral Meeting and the arrangement for Extension Trilateral Meeting will need to be issued 15 days from the Clarification Meeting.
  8. In the case of approval on the tax allowance application, Chairman of BKPM will issue ‘Recommendation Letter’ on the grant of tax allowance to Ministry of Finance of the Republic of Indonesia, latest 3 working days since the Trilateral Meeting or Extension Trilateral Meeting.

The following procedures are the simplified framework on tax allowance application procedure. The full and complete detail of it is available in the Regulations of BKPM No. 6 of 2018.

What about a tax holiday for foreign investors?

According to the Regulation of the Ministry of Finance No. 35/PMK. 010/2018 and the Regulation of the Chairman of BKPM No. 5 of 2018 the applicant or company should meet the following criteria:

  1. The Pioneer Industry:
    • Upstream metal base industry (iron steel and not steel) with or without derivatives, which are integrated.

    • Refining industry and/or refining oil and gas with or without derivatives, which are integrated.

    • The petroleum-based petrochemical industry, natural gas or coal with or without derivatives, which are integrated.

    • Inorganic basic chemical industry with or without derivatives, which are integrated.

    • Basic organic chemical industry originating from agricultural, plantation or forestry products with or without derivatives, which are integrated.

    • Pharmaceutical raw material industry with or without derivatives, which are integrated.

    • Manufacture of semiconductors and other major computer components such as semiconductor wafers, backlights for Liquid Crystal Display (LCD), electrical drivers, or Liquid Crystal Display (LCD) that are integrated with the computer manufacturing industry.

    • The industry for the manufacture of major communication equipment components such as semiconductor wafers, backlights for Liquid Crystal Display (LCD), electrical drivers, or Liquid Crystal Display (LCD) that are integrated with the manufacturing industry of mobile phones (smartphones).

    • The industry of making major components of medical devices that are integrated with the industry of manufacturing irradiation, electromedical or electrotherapy equipment.

    • Industrial manufacture of major industrial machinery components such as electric motors or internal combustion motors that are integrated with the machinery manufacturing industry.

    • Industry for making major engine components such as pistons, cylinder heads, or cylinder blocks that are integrated with the manufacture of four-wheeled or more motorized vehicles.

    • The manufacture of robotic components integrated with manufacturing machinery manufacturing industries.

    • Industrial manufacture of main components of ships integrated with the shipbuilding industry.

    • The industry for manufacturing major aircrafts components such as engines, propellers, rotors, or structural components integrated with the aircraft manufacturing industry.

    • Industry for the manufacture of major train components such as engines or transmissions integrated with the railroad manufacturing industry.

    • The power plant machinery industry, including the waste power plant machinery industry.

    • Economic infrastructure.

  2. New investment
  3. Having a value of the new investment plan of at least IDR 500.000.000.000,00 (five hundred billion rupiahs).
  4. Fulfill the provisions of the amount of the ratio between debt and capital as referred to in the Regulation of the Minister of Finance concerning determining the amount of the ratio between debt and company capital for the purposes of calculating Income Tax.
  5. Having not yet been issued a decision regarding the granting of notification or concerning the refusal to reduce the Corporate Income Tax by the Minister of Finance.
  6. Status as an Indonesian legal entity.

As regulated in the Ministry of Finance No.35/PMK.010/2018 of 2018 and the Regulation of BKPM No.5 of 2018, reduction in Corporate Income Tax (Tax Holiday) is given at 100% (one hundred percent) of the amount of the Corporate Income Tax owed. The period of the reduction is provided with the following conditions:

  • 5 (five) tax years for new investments with a value of investment plan of at least IDR 500,000,000,000.00 (five hundred billion rupiahs) and a maximum of less than IDR 1,000,000,000,000.00 (one trillion rupiahs).
  • 7 (seven) tax years for new investments with an investment plan value of at least IDR 1,000,000,000,000.00 (one trillion rupiahs) and a maximum of less than IDR 5,000,000,000,000.00 (five trillion rupiahs).
  • 10 (ten) tax years for new investments with an investment plan value of at least IDR 5,000,000,000,000.00 (five trillion rupiahs) and maximum of less than IDR 15,000,000,000,000.00 (fifteen trillion rupiahs).
  • 15 (fifteen) tax years for new investments with an investment plan value of at least IDR 15,000,000,000,000.00 (fifteen trillion rupiahs) and no more than IDR 30,000,000,000,000.00 (thirty trillion rupiahs).
  • 20 (twenty) tax years for new investments with the value of the investment plan at least IDR 30,000,000,000,000.00 (thirty trillion rupiahs).


  1. BKPM will publish In Advance Confirmation which is a notification letter to investors regarding the fulfillment of the requirements of the pioneer industry to obtain a corporate income tax deduction facility for the investors who applied for it
  2. List of business fields (Indonesia Standard Industrial Classification-KBLI) of the pioneer 

Besides fiscal facilities, is there any other facility provided?


Starting in 2016, the government accelerates the customs clearance process for imported capital goods, aiming at speeding up a project under construction. Capital goods no longer need screening at the ports. So, it will cut the processing time from five days to only 30 minutes.


Since September 2015, the Indonesian government has been issuing several economic policy packages, among others, to improve the investment climate. We set a minimum wage formula so investors can predict the annual increase of wage, considering inflation and economic growth.


We support business to reduce their production costs, by cutting the price of fuel, gas, and electricity for industry. We revised the Negative Investment List (DNI) to be more open for foreign investment, specifically intended for sectors: industrial, creative economy, and tourism.