In this post I will cover some legal aspects more relevant from foreign investors' standpoint. Most of the legal system follows European Law.
About convertibility - IDR (Indonesian Rupiah) is fully convertible without any restrictions. Though there are certain rules such as notification to BI (Bank of Indonesia) if the amount is more than USD 10,000. Channeling of funds should be through Indonesian resident banks. But nothing restrictive.
Similarly entities are allowed to avail foreign loans though notifications and regular reporting is required. In some cases pre-loan notification is also required such as when the loan tenor is more than a year.
Company Structures for an investors: Primarily 4 types - 1) Limited Liability 2) Representative Office 3) Direct Participation in a listed company, and 4) Direct Participation in certain sectors.
Similar to European Civil Law the companies in Indonesia have two layers of management and shareholders (supervisors) - wherein management is called board of directors and supervisors are called board of commissioners.
How to establish a company: At least two shareholders are required and the process, though simple, takes around two months. Following are the broad steps:
1) Take an approval from BKPM (Foreign Investment Coordinating Body). This can be done either before or after formation of a company.
2) Send the Articles for approval by Ministry of Law and Human Rights (MoLHR)
3) After obtaining above approvals register the company with Department of Trade.
Representative Offices: Foreign investors can also open a rep office instead of registering the companies if the purpose is mainly to liase, after sales services, or market research. As this entity is allowed to enter into agreements with staff and lease premises, but is not allowed to conduct any business activities.
Restricted Structures: Partnerships and to large extent Co-operatives are not open to foreign participations.
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