Q41. I would like to know about Indonesia’s investment policy and the departments in charge of each field. The Indonesian government divides all investments made within the country into domestic investment (PMDN/Penanaman Modal Dalam Negeri) and foreign investment (PMA/Penanaman Modal).

Asing) It is divided into two types and managed differently. Domestic investment refers to investment exclusively for Koreans in which Koreans own 100% of the shares, and foreign investment is permitted only in the form of a stock company under the Indonesian Investment Act. If a foreigner holds even one share of the company, the invested company The entirety of is classified as foreign investment. Domestic investment allows investment in almost all industries, but in the case of foreign investment, investment is prohibited or has restrictions in place in a number of industries. However, through Article 22 of the “Act on Job Creation No. 11 of 2020” and the “Indonesian Presidential Decree on Opening and Permitting Conditions for Foreign Investment No. 10 of 2021,” restrictions on industries prohibited from foreign investment have been greatly eased compared to before, and Indonesia The area for foreign investment is becoming more open. Unless it is an industry that prohibits investment or allows only conditional investment, it is not difficult to change from a domestic investment company to a foreign investment company. Meanwhile, changing from a foreign investment company to a domestic investment company is allowed in all industries.

Investment affairs in Indonesia, including investment licenses under the Investment Act, are handled by the Investment Coordination Board (BKPM/Badan Koordinsai Penanaman Modal Indonesia).

In the past, foreign investment approval was divided by industry, with foreign investment approval for general industries issued by the Board of Investment Coordination (BKPM), banking by the Central Bank, general finance by the Ministry of Finance, and mining in the mining sector by the Ministry of Power and Energy. As of the 21st, after the promulgation of Executive Decree No. 24 of 2018 regarding the issuance of online integrated business licenses (OSS/Online Single Submission), 895 licenses under the jurisdiction of the central and local governments are being integrated into OSS and issued online.

However, even now, foreign investment approvals for some industries, such as the mining and banking sectors, are not included in the OSS but are issued by the relevant ministries, such as the Ministry of Mineral Resources and Mineral Resources (ESDM) or the Office of the Financial Supervisory Service (OJK), through the Board of Investment Coordination (BKPM). Included in the OSS system

In the case of industries, an invalid business license (Sertifikat Standard Yang Belum Terverifikasi) is first issued by OSS, and after the investment is made, there are legal requirements for the invalid business license to be validated by the central government or local government depending on the industry. The licensing system is operated in such a way that if the business license previously issued by OSS is submitted and prepared and submitted after meeting the requirements, the business license issued by OSS becomes valid (Sertifikat Standard Terverifikasi) after review by the central or local government.

Q42. I would like to know about the Indonesian government’s foreign investment attraction policy. If you invest more than a certain amount in leading industries, you can receive corporate tax reduction benefits. Details are as follows. Official opinion regarding availability of benefits

You must check directly with the Board of Investment Coordination (BKPM).

• outline
  
  • The Indonesian government has implemented the Minister of Finance's Ordinance (PMK Nomor 130 2020), a new regulation on Tax Holiday (corporate tax exemption policy) to encourage investment expansion, replacing the previous related regulation, the Minister of Finance's Ordinance (PMK Nomor 150 Tahun 2018).
  • The areas eligible for corporate tax reduction were expanded from 17 to 18, and from 153 business areas to 169. In addition, investment amounts of less than 500 billion rupiah (IDR) will also receive corporate tax reduction benefits.

• tax exemption
  
  • Tax exemption benefits and period

Benefit type	invest Size (Rupiah)	benefit period	After maturity
corporate tax 50% reduction	100 billion to 500 billion	5 years	25% reduction for 2 years
100% exemption from corporate tax	500 billion to 1 trillion	5 years	50% reduction for 2 years
	Articles 1 to 5	7 years
	Articles 5 to 15	10 years
	Articles 15 to 30	15 years
	30 trillion or more	20 years

Source: Decree of the Minister of Finance on Tax Holiday (PMK Nomor 130 Tahun 2020)

• In the case of special economic zones (KEK: Kawasan Ekonimi Khusus), even small investments can benefit from a 50% tax reduction.
  
  • Investment size of 200 to 100 billion rupees (IDR): 50% discount for 5 years
  • Investment size over 100 billion rupiah (IDR): exemption for 5 to up to 20 years
• Proceeded through OSS (Online Single Submission)

• Tax-free
  
  • According to the Minister of Finance's Decree (PMK Nomor 130 Tahun 2020), you can only receive corporate tax reduction benefits if you meet the following requirements:
    
    • Leading industries (18 sectors)
    • Indonesian corporation
    • New investment (four requirements exist, including not receiving corporate tax reduction rejection decision or notification)
    • New investment plan of at least 100 billion rupiah
    • Comply with the regulations regarding the company's debt and capital ratios for the purpose of calculating corporate tax prescribed by Ordinance of the Minister of Finance.
    • After the corporate tax reduction decision is made, we will do our best to realize the investment plan within one year.
  • Leading industries (18 fields)
    
    • Definition: According to the Minister of Finance's Decree (PMK Nomor 130 Tahun 2020), a leading business refers to an industry with high added value, wide external effects, introduction of new technology, and strategic value that can contribute to the national economy.

1. Metal industry (Upstream industry): steel or non-steel
2. Oil and gas refining/refining industry
3. Petrochemical industry based on oil, natural gas or coal
4. Organic basic chemical industry derived from agriculture and forestry
5. Inorganic basic chemical industry
6. Pharmaceutical raw material industry
7. Manufacture of radiation, electromedical, and electrotherapy equipment
8. Manufacture of major parts for electronic or telematics products, such as semiconductor wafers, LCD (Liquid Crystal Display) backlights, electric drivers, or displays.
9. Manufacturing of mechanical equipment or major parts of mechanical equipment
10. Manufacture of robot parts used in manufacturing industrial machinery equipment

1. Generator main parts manufacturing
2. Automobile and automobile parts manufacturing industry
3. Manufacturing industry of major ship components
4. Train major parts manufacturing industry
5. Major aircraft parts manufacturing and aerospace industry support activities
6. An industry that produces pulp, etc. based on agriculture, plantation, and forestry
7. economic infrastructure
8. Digital economy, including data processing, hosting and activities related thereto
   
   • The 169 Indonesian Standard Industrial Classification Codes (KBLI) for these industries can be found in the appendix of BKPM Regulation 1/2019.

• Permit Application and Procedure
  
  • Taxpayers check whether they are eligible for corporate tax reduction through the OSS system
  • OSS system issues notification of eligibility
  • After receiving the notification, the taxpayer is considered to have applied for corporate tax reduction by submitting the following documents to the OSS system.
  • Required Documents

1. List of fixed assets in the investment plan and documents related to debt-to-capital ratio
2. Certificate of full tax payment for all domestic shareholders
   
   • Application for corporate tax reduction must be made within one year from the time of NIB (Business Registration Number) registration for new taxpayers or issuance of a new business license.
   • The corporate tax reduction application is transmitted from the National Tax Service to the Ministry of Finance through the OSS system, and the taxpayer receives a notification of receipt by the Ministry of Finance through the OSS system.
   • The National Tax Service decides on approval within 5 business days from the date of receipt on behalf of the Ministry of Finance.

• [Reference] Investment Income Deduction (Tax Allowance, Government Regulation 78 of 2019)

In relation to income deduction benefits, the Indonesian government abolished the existing GR No.18 2015 and GR No.9 2016 and announced GR No.78 2019. The main contents are as follows.

• Income deduction of 30% of fixed asset investment amount at 5% per year for 6 years from the time of commercial production. However, all of the following requirements must be met:

• The fixed asset must not be transferred for a certain period of time.
• The fixed assets must be new assets (except in the case of complete relocation where the entire asset is transferred from another country).
• Fixed assets registered for new business license for income deduction
• Assets owned by the taxpayer, excluding leased assets

• Accelerated depreciation recognized
• If certain requirements are met, the carryforward loss deduction period can be extended up to 10 years.
• Dividend withholding tax rate for non-residents is reduced to 10% (or a lower tax rate can be applied depending on the tax agreement)
• It applies to 166 business fields, and in order to apply for this benefit, you must meet the comprehensive conceptual requirements below.
  
  • Large investment or export-oriented investment
  • High level of employment creation
  • High level use of local content
• Income deduction benefits cannot be applied in conjunction with other tax benefits, such as tax benefits for economic development zones, tax holidays, or tax benefits for labor-intensive industries.

Q43. I would like to know about the foreign investment incentive system provided by the Indonesian government and its standards.

Among the benefits available to foreigners wishing to invest in Indonesia, the tax benefits are as follows.

Tax Holiday

The Indonesian government has prepared the Minister of Finance's Decree (PMK Nomor 130 Tahun 2020) on Tax Holiday (Corporate Tax Reduction Policy) to encourage investment expansion, replacing the existing related regulation, the Minister of Finance's Decree (PMK Nomor 150 Tahun 2018). I did. The areas eligible for corporate tax reduction have been expanded from 17 to 18, and from 153 business areas to 169. In addition, you can now receive corporate tax reduction benefits even with an investment amount of less than 500 billion rupiah (IDR).

Tax exemption benefits and period

Benefit type	invest Size (Rupiah)	benefit period	After maturity
50% corporate tax reduction	100 billion to 500 billion	5 years	25% reduction for 2 years
100% exemption from corporate tax	500 billion to 1 trillion	5 years	50% reduction for 2 years
	Articles 1 to 5	7 years
	Articles 5 to 15	10 years
	Articles 15 to 30	15 years
	30 trillion or more	20 years

Source: Decree of the Minister of Finance on Tax Holiday (PMK Nomor 130 Tahun 2020)

In the case of special economic zones (KEK: Kawasan Ekonimi Khusus), even small investments can receive a 50% discount.

• Investment size of 200 to 100 billion rupiah (IDR): 50% discount for 5 years
• Investment size over 100 billion rupiah (IDR): exemption from 5 years up to 20 years

This is done through OSS (Online Single Submission).

According to the Minister of Finance's Decree (PMK Nomor 130 Tahun 2020), you must meet the following requirements to receive corporate tax reduction benefits.

• Leading industries (18 sectors)
• Indonesian corporation
• New investment (there are four requirements, including decision to refuse corporate tax reduction or not receive notification)
• New investment plan of at least 100 billion rupiah
• Comply with the regulations regarding the company's debt and capital ratios for the purpose of calculating corporate tax prescribed by Ordinance of the Minister of Finance.
• After the corporate tax reduction decision is made, we will do our best to realize the investment plan within one year.

Leading industries (18 fields)

• Definition: According to the Minister of Finance's Decree (PMK Nomor 150 Tahun 2018), a leading business refers to an industry with high added value, wide external effects, introduction of new technologies, and strategic value that can contribute to the national economy.

1. Metal industry (Upstream industry): steel or non-steel
2. Oil and gas refining/refining industry
3. Petrochemical industry based on oil, natural gas or coal

1. Organic basic chemical industry derived from agriculture and forestry
2. inorganic basic chemical industry
3. pharmaceutical raw materials industry
4. Manufacture of radiation, electromedical, and electrotherapy equipment
5. Manufacture of major parts for electronic or telematics products, such as semiconductor wafers, LCD (Liquid Crystal Display) backlights, electric drivers, or displays.
6. Manufacturing of mechanical equipment or major parts of mechanical equipment
7. Manufacture of robot parts used in manufacturing industrial machinery equipment
8. Generator main parts manufacturing
9. Automobile and automobile parts manufacturing industry
10. Manufacturing industry of major ship components
11. Train major parts manufacturing industry
12. Major aircraft parts manufacturing and aerospace industry support activities
13. An industry that produces pulp, etc. based on agriculture, plantation, and forestry
14. economic infrastructure
15. Digital economy, including data processing, hosting and activities related thereto

• The 169 Indonesian Standard Industrial Classification Codes (KBLI) for these industries can be found in the appendix of BKPM Regulation 1/2019.

• Permit Application and Procedure
  
  • Taxpayers check whether they are eligible for corporate tax reduction through the OSS system.
  • The OSS system issues a notification regarding eligibility.
  • After receiving the notification, the taxpayer is considered to have applied for corporate tax reduction by submitting the following documents to the OSS system.
  • Required Documents

1. List of fixed assets in the investment plan and documents related to debt-to-capital ratio
2. Tax payment certificate for all domestic shareholders
   
   • Applications for corporate tax reduction must be made within one year from the time of NIB (Business Registration Number) registration for new taxpayers or issuance of a new business license.
   • The corporate tax reduction application is transmitted from the National Tax Service to the Ministry of Finance through the OSS system, and the taxpayer receives a notification of receipt by the Ministry of Finance through the OSS system.
   • The Internal Revenue Service will make an approval decision within five business days of receipt on behalf of the Treasury Department.

• [Reference] Investment Income Deduction (Tax Allowance, Government Regulation 78 of 2019)

In relation to income deduction benefits, the Indonesian government abolished the existing GR No.18 2015 and GR No.9 2016 and announced GR No.78 2019, the main contents of which are as follows.

• Income deduction of 30% of fixed asset investment amount at 5% per year for 6 years from the time of commercial production. However, all of the following requirements must be met.
  
  • The fixed asset must not be transferred for a certain period of time.
  • The fixed asset must be a new asset (except in the case of complete relocation where the entire asset is transferred from another country).
  • Fixed assets registered for new business license for income deduction
  • Assets owned by the taxpayer, excluding leased assets
• Accelerated depreciation recognized
• If certain requirements are met, the carryforward loss deduction period can be extended up to 10 years.
• Dividend withholding tax rate for non-residents is reduced to 10% (or a lower tax rate can be applied depending on the tax agreement)
• It applies to 166 business fields, and in order to apply for this benefit, you must meet the comprehensive conceptual requirements below.
  
  • Large investment or export-oriented investment
  • High level of employment creation
  • High level use of local content
• Income deduction benefits cannot be applied in conjunction with other tax benefits, such as tax benefits for economic development zones, tax holidays, or tax benefits for labor-intensive industries. Companies that have received Tax Holiday approval can use and invest funds deposited in Indonesia. Regular reports must be submitted to the Department of Taxation (DGT), and the submitted reports will be reviewed by a review committee established by the Ministry of Finance. The Minister of Finance may cancel the corporate tax reduction decision if the taxpayer does not comply with obligations such as failing to meet applicable requirements, failing to implement an investment plan, or failing to submit an investment performance report.

Q44. Can I get information about major Korean companies operating in Indonesia?

As of 2022, the number of Korean companies currently registered with the Korean Association for investment in Indonesia is approximately

2,500 companies related to the textile and clothing industry and companies related to trade, wholesale, retail, and distribution.

is predominant. The number of workers employed by these Korean companies is estimated to be approximately 1 million, and they are making a significant contribution to production and exports, especially in the labor-intensive industrial sector in Indonesia. In addition, following basic industries such as resources and construction, expansion into service sectors such as IT, logistics, and distribution is also being actively made. Recently, advancement into the petrochemical, automobile, and pharmaceutical fields is being promoted. The list of major Korean companies operating in Indonesia is as follows.

Company Name	investment year	Business fields and items
Korindo Group	1969	Lumber, afforestation, papermaking, heavy industry (automotive, wind tower), etc.
miwon	1972	seasoning production
Samsung C&T	1975	palm Farm,
Daewoo International	1976	Steel, defense industry, bituminous coal, power plant
CODE	1981	oil field development project
LG Corp.	1981	Coal, palm oil
KIDECO	1982	coal and minerals
CJ Indonesia	1988	Feed/food additives, dining out, logistics, game services, etc.
LG Electronics	1990	Production and sales of home appliances
Samsung	1991	Digital product production and sales
Our bank	1992	finance
Patra SK	2006	lube base oil
KEB Hana Bank	2007	First entry in 1990 (Korea Exchange Bank), in 2007 change to me
Lotte Mart	2008	Distribution, department stores and duty-free shops
Korea Midland Power Company	2009	Power plant construction and operation business
POSCO	2010	Joint steel products with Kartatau Steel production and sales
Lotte Chemical	2010	ethylene production
win textile	2010	Fabric mill, fabric dyeing factory
Hankook Tire	2013	Tire production and sales
Hanwha Life Insurance	2013	life insurance
Our bank	2013	First launched in 1992, changed to Woori Sodara in 2013
Chong Kun Dang	2015	Anticancer drug production
Zinus	2018	mattress manufacturing

Q45. I would like to know about the location of the industrial complex operated by the Indonesian government, the benefits of moving in, and how to move in.

There are about 100 industrial complexes in Indonesia, which are mainly being developed and sold by the private sector, and there is a significant difference in land purchase costs in areas near Jakarta and in the outskirts. In the case of Korean investment companies, they mainly move into industrial complexes near Jakarta or operate as individual factories. In the case of Indonesia, even in similar locations, costs vary widely depending on road access and surrounding environment. Therefore, it is important to note that when selecting an actual factory candidate site, confirmation through a real estate agent and on-site inspection is required.

In the Karawang area, 60km east of Jakarta, an Indonesian private company is selling land in an industrial complex, and in the case of Artha Industrial Hill, where a Korean company is partially located, the sale price is 150 USD/m² (VAT) as of 2018. 10% excluded, formed on a minimum area of ​​2,500 m²). In the case of Karawang New Industry City, located nearby, the sale price as of 2018 was 140 USD/m² (excluding 10% VAT, minimum 10,000m²), but as of 2020, it is close to 200 USD/m². In contrast, the industrial complex being developed in Central and West Java, far from Jakarta, has a pre-sale price of approximately 50 USD/m².

Detailed information on industrial complexes in Indonesia can be found on the Industrial Complex Association website.

Indonesian Industrial Estates Association (Indonesian Industrial Estate Association /HKI) (hki-industrialestate.com/members/)

Rent information for major industrial complexes can be found in KOTRA Overseas Market News.

KOTRA overseas market news (news.kotra.or > country regional information > Indonesia > investment > investment location conditions)

<Cost of land for industrial complex near Jakarta>

(Unit: US$)

region	Land purchase cost (m²)			Management cost (m²/month)
	lowest	best	average	lowest	best	average
Bogor	213.2	337.6	275.4	0.06	0.06	0.06
Bekasi	150.0	170.0	161.7	0.05	0.10	0.06
Tangerang	142.1	240.1	183.6	0.03	0.08	0.06
Karawang	170.6	227.4	204.7	0.06	0.08	0.07
attack	142.1	163.5	152.8	0.03	0.05	0.05

* Exchange rate: US$ 1= IDR 14,700

* Source: Collier's International Indonesia (4th quarter of 2019)

Q46. I would like to know about the location of the special economic zone designated by the Indonesian government, the benefits of moving in, and how to move in.

Indonesia's special economic zone is called KEK (Kawasan Ekonomi Khusus) in Indonesian, and is expressed in English as SEZ (Special Economic Zone). This special economic zone is a strategic area established to promote local economic revitalization and balanced regional development through active investment attraction. As of February 2020, there are 18 special economic zones (12 operating and 6 under development). Since the fostering industries and incentives are different for each region, it is recommended that you contact the local management agency of the special economic zone in advance to confirm if there is an area of ​​interest. Incentives and people in charge for each economic zone can be checked through the Investment Project on the committee's website (kek.go.id).

The Indonesian government said it would attract more than $50 billion in investment over the next 10 years for further development in special economic zones (SEZs) and expand and simplify tax incentives for SEZ investors. This is because the overseas relocation of many Chinese companies is accelerating due to the US-China trade war, and despite Indonesia being the largest market country in Southeast Asia, it was judged to be extremely sluggish in attracting investment compared to other competing countries in Southeast Asia. . The Indonesian government expects to attract 726 trillion rupiah worth of investment in SEZs by 2030.

The Indonesian government has enacted the Law on Employment Creation 2020 (UNDANG-UNDANG CIPTA KERJA; also known as the Omnibus Law). Against this background, although Indonesia has the largest economy in Southeast Asia, it has had difficulties attracting FDI and fostering manufacturing compared to neighboring countries. As a solution to this, the need to create a friendly environment for business operators and promote business activities led to the passage of the so-called Omnibus Act, which includes comprehensive regulatory reform.

The Omnibus Act shifted more of the SEZ-related powers, including the right to appoint SEZ administrative bodies and ratify SEZ designation proposals, to the central government. Following changes in SEZ-related regulations, the following benefits are provided to businesses operating within SZE.

1. Tax and duty exemption and discount
   
   1. Local governments are obligated to discount PBB (land and building ownership tax) and BPHTB (land and building rights transfer tax) by at least 50% (maximum 100%) for companies located in SEZs.
   2. The government will grant privileges on income tax, value-added tax, luxury goods sales tax, import duties and taxes, and consumption tax to companies locating in SEZs.
2. Minimum Wage - The National Assembly will have the authority to determine the minimum wage within the SEZ.
3. Real Estate Ownership - Foreigners are allowed to own real estate in SEZs for tourism development purposes, and the property owners are granted permission to use and own real estate for apartments for 30 years.
4. Designation of industrial zones - The National Assembly will have the power to designate industrial zones for SEZs, which means it can decide whether companies within the SEZ will be granted special benefits based on their business sector. According to the Omnibus Act, the hierarchy for SEZ projects is changed as follows.

Before the Omnibus Act	After the Omnibus Act
central government	central government
SEZ National Committee	SEZ National Committee
local government	SEZ Regional Committee
SEZ Regional Committee	local government

Note: The lower you are, the weaker your authority becomes.

<Data: Special Economic Zone Committee (kek.go.id)>

Q47. What are the advantages of establishing a factory in a bonded area designated by the Indonesian government?

A bonded factory is a system that recognizes preferential treatment in bonded areas at each factory level. The bonded factory system is integrated with the bonded zone system and is called a bonded zone enterprise (Pengusaha Di Kawasan Berikat). Bonded factories can be divided into bonded factories located in bonded industrial complexes, general industrial complexes, and bonded factories located outside of other industrial complexes.

Bonded factories located in bonded industrial complexes only need to obtain a bonded business license, Pengusaha Di Kawasan Berikat, while bonded factories located in general industrial complexes and other areas outside the industrial complex must obtain Pengusaha Di Kawasan Berikat and Penyelenggara Kawasan Berikat. In other words, general industrial complexes and other industrial complex areas receive both a bonded area permit and a bonded business (factory) permit simultaneously and are called Penyelenggara Kawasan Berikat Merangkap Pengusaha Di Kawasan Berikat.

A bonded factory is a place or company that processes raw materials for export.

defined. Once approved as bonded, you can receive bonded import taxes when importing raw materials from other bonded companies, both overseas and domestic.

Preferential treatment is as follows:

• Import tax bonded when importing raw materials
• Exemption from VAT and luxury tax (exemption from taxation: goods imported/exported between bonded factories for further processing, goods exported to subcontractors, goods brought in from subcontractors, machinery and equipment under lease contract, imported raw materials, machinery)
• Domestic sales of finished products can be up to 50% of the previous year's export performance. Bonded factories generally must be located in a bonded industrial complex or industrial complex, but location outside the industrial complex area is permitted if the following conditions are met.
• Companies that use local raw materials or local production processes - If there is no industrial complex in the county or city where the company is located (confirmation from the relevant industrial complex and local government office is required)
• In areas other than bonded industrial complexes or industrial complexes, applying for a bonded area with a minimum factory site area of ​​10,000 m2 or more takes approximately 1-2 months to complete the procedures below.
• Apply for bonded area designation to the local customs office
• Due diligence by local customs authorities
• Establishment of customs office staff office within the factory
• Secure local customs approval
• Application for designation as bonded area at Central Customs Service
• Central Customs Service due diligence and approval secured
• Audit on past tariffs
• Customs settlement and payment before designation of bonded area (within 1 month after notification of decision)

Q48. Where can I find information on infrastructure (industrial electricity, gas, etc. utility costs, etc.) that must be checked in order to enter the Indonesian market?

Utility costs such as electricity and gas in Indonesia vary depending on the region. Therefore, once the location selection is confirmed, it is recommended to collect more detailed information through local due diligence. According to Decree No.30/2009 (2009 Electricity Law), it is stipulated that electricity tariffs throughout Indonesia no longer need to be unified and can therefore be set differently depending on the business area (Wilayah Usaha). Electricity rates are set differently depending on the end user group. Typically, the power bill is

It is set according to the consumer's ability to pay and the power capacity available for each demand group. The higher the power capacity that can be generated, the higher the power bill. To ensure that electricity is widely distributed to all demand groups, demand groups that consume a lot of electricity are given a higher weight when setting electricity rates. In order to differentiate electricity rates, subsidies are applied differently. For example, the electricity bill for small households is IDR 319/kWh, which is 1/4 of the actual electricity production cost of IDR 1,350/kWh (as of 2015), and the remainder is covered by subsidies.

Until 2013, PLN's revenue was determined entirely by regulated electricity tariffs. Electricity rates are determined by the central government and require final approval from the National Assembly. However, Kota Tarakan and Batam areas are subject to local government approval. As increases in electricity tariffs require parliamentary approval, PLN's financial position becomes directly affected by the political process. If electricity prices fall below the cost of generating electricity, the Treasury must subsidize PLN to cover the shortfall. As power generation costs stabilized from 2013, subsidy expenditures also stabilized. In addition, according to MoEMR Regulation No.31/2014 (amended by No.9/2015), PLN is now able to pass on the effects of inflation, oil price increases and exchange rate fluctuations to consumers (automatic adjustment mechanism). The above subsidies include a margin for Public Service Obligation (PSO). The PSO profit rate is 5% in 2009, 8% in 2010 and 2011, and 7% from 2012 to the present.

<Major public service fees (2022.6)>

Major public services	Fee (Rupiah)
Electrical (industrial)	1,352 ∼ 1,699
Gas (industrial)	140,000
capital	2,000 ∼ 20,000
Petroleum (gasoline)	10,000 ~ 14,500
LPG	16,000

* Data sources: Indonesia Water Corporation, Indonesia Electric Power Corporation, Indonesia Gas Corporation, aturduit.com, GAIKINDO

https://web.pln.co.id/kontak-kami, https://pamjaya.co.id, https://pgn.co.id/

Q49. What are the main difficulties faced by companies doing business in Indonesia? What are the main reasons for disinvestment in Indonesia?

The biggest difficulties faced by companies entering the market are the import and export conditions, which include unclear tax administration by the Indonesian government during import and export, lack of accurate regulations for customs clearance, unclear export and import laws in bonded areas, and arbitrary authoritative interpretation by Indonesian customs. In addition, the excessive time spent on Indonesian customs clearance procedures and the possibility of informal costs occurring are major factors that reduce the satisfaction of companies doing business in Indonesia. Companies are complaining about the lack of practical and specific solutions to the above problems. Regarding the import and export of raw materials, although Indonesia is a country rich in raw materials, it is difficult to supply raw materials due to issues such as corruption in government offices, and the margin amount in the distribution process is higher than the price of imported raw materials. This is also a factor that reduces investor attractiveness.

Second, there are legal/institutional issues. The license renewal period is too short, and the standards vary depending on the person in charge at the competent government office, so difficulties are often encountered. When regulations and systems are changed, such changes may not be sufficiently notified to stakeholders and related organizations prior to implementation, or may be implemented without reflecting the reality of stakeholders. In addition, revisions to systems and laws are often implemented without sufficient preparation, resulting in many administrative errors and confusion, and often resulting in different interpretations between corporate practitioners and related officials. Furthermore, there are cases where there are inconsistencies between various laws and regulations, and the process of application often relies on the arbitrary interpretation of the person in charge. In the case of customs duties, there are frequent cases where companies are not aware of changes in tariffs until import customs clearance is actually made, and customs officials who are supposed to be aware of the relevant details are often unaware of them, making mistakes on the spot. This is causing confusion and increasing difficulties for business owners.

Third, the actual absence of an investment control tower and integrated services is a problem. Government agencies are actively trying to attract investors with the slogan 'One Stop Service', but at the actual investment stage, due to lack of coordination between higher-level and lower-level agencies, inconsistencies in the contents of laws, and abuse of authority by public officials in charge, One Stop Service is not possible. is not being done properly. overall investment statement

Inquiries about licensing and licensing for specific specialized fields of entry are often divided between BKPM and the relevant departments, so there is a lack of a system that allows foreign investors to reduce time and costs through a detailed and consistent process.

Lastly, companies are withdrawing investments due to steep wage increases, increases in utility costs such as electricity and gas fees, difficulties in obtaining financial support and financing, lack of cost competitiveness due to the absence of raw material procurement companies, difficulties in securing skilled workers, and differences in cultural thinking. It is acting as a factor in causing difficulties.

Q50. Please tell me the type of visa required for staying in the country, issuance procedure, required documents, and estimated cost.

The types of visas are as follows:

Visa-free: It is possible to enter the country without a visa for the purposes of tourism, visiting relatives, public affairs, and attending lectures/seminars within 30 days, but it is not yet open due to the current coronavirus situation. Visa on arrival: Purchased at the airport arrival hall when visiting for the above purposes for more than 30 days. You can stay for 1 month and can be extended once (500,000 rupiah or US$ 35) Socio-cultural visa (education, etc.): The period of stay is 60 days, can be extended up to 2 times for 2 months each, for a total of 180 days (200 days) 10,000 rupiah or US$ 150)

Single-entry business visa (business): Initial 60 days, can be extended up to 2 times for 2 months (maximum stay of 180 days, 2 million rupees or US$ 150 for each extension)

Multiple-use visa (business): allows free entry and exit for 1 year, requires departure and re-entry before the expiration of 60 days of stay each time, is currently closed due to the coronavirus and has not yet been opened

Temporary Residence Permit Visa (KITAS): Issued to foreign investors and employees of Indonesian government/private organizations. A work visa can be issued only after payment of $1,200 of the foreign manpower use permit development fund at the Labor Office in advance. The period of stay is 1 year, which can be extended 5 times by 1 year. Also, if the investor has a capital of 1 billion rupees or more, the Labor Office can issue a 2-year investor Kitas visa without paying the development fund.

The procedures for issuance and residence of a limited-term residence permit (KITAS) are as follows.

① Submit a foreign employment plan (RPTKA) permit

② Apply for a development fund payment bill, pay $1,200 in development fund, and issue NOTIFIKASI

③ Visa issuance instruction cable transmission confirmation letter

④ Visa issuance

⑤ A limited-term residence permit (KITAS) is issued by the immigration office with jurisdiction over your place of residence.

⑥ Report to local police station (STM)

⑦ Application for issuance of temporary resident certificate (SKPS)

⑧ Report of foreign employment (Wajib Lapor)

Q51. As it is a long-term project, the people involved are planning to travel on a business visa. Are there any problems?

If you plan to work locally for the long-term for profit, you must obtain approval from the Minister of Labor and Employment and obtain a work permit from the Ministry of Labor. You must have a work permit to receive a corresponding visa (a limited short-term work visa, not a business visa). Work visas are usually issued for a period of one year, which can be extended every year. When issuing a work visa, the development fund cost is US $1,200 per year (per person), and if the period is shorter than that, it must be paid at US $100 per month. Regardless of whether it is a one-year work visa or a short-term work visa, even if there is a change in the working period midway, refunds are not possible for the development fund (human resources development fee, DPPK) already paid. Since it usually takes a long time to prepare a work visa and the cost is high, some people obtain a business visa and work in the field as a way to avoid this. However, under Indonesian visa-related laws, if you stay for the purpose of working, you must work. It is legal to obtain a visa and stay there. If you are caught working while holding a business visa and are caught by the relevant authorities, you may be deported or subject to a large fine, so you need to be especially careful.

[Investment Advancement (Common)]