The Investment Coordinating Board (Badan Koordinasi Penanaman Modal / “BKPM”) recently issued Regulation No. 4 of 2021 on Guidelines and Procedures for Risk-Based Licensing and Investment Facilities (“Reg. 4”), which requires a foreign direct investment company (“PMA”) to have at least IDR 10 billion in issued and paid-up capital (previously, IDR 2.5 billion). It is as yet unclear whether this will apply retroactively to existing PMAs or whether they will be ‘grandfathered’ and be exempted from the requirement.
Reg. 4 allows for exemptions if these are provided for by other legislation; however, to date we have yet to see any such exemptions stipulated in other regulations. ABNR has requested clarification from the BKPM and will update this newsletter accordingly.
The IDR 2.5 billion requirement was first introduced under a 2013 BKPM precursor to Reg. 4 (and several reiterations have been issued since then). While the 2013 regulation did not expressly state whether or not it was of retroactive application, it was clear from our discussions with the BKPM that the 2013 regulation was not intended to apply retroactively to applications that had been approved prior to its issuance (in other words, their investments were grandfathered). It is to be hoped that this will also be the case with Reg. 4.
Whilst Reg. 4 was issued on 1 April 2021, it does not enter into force until June 2. ABNR will provide a further update after the BKPM has responded to our request for clarification.