Business Facilities

A. Industrial Estates

Industrial estates are available in almost all provinces of Indonesia. The large scale industrial estates are found in Jakarta, West Java (Bekasi, Karawang, Purwakarta), Banten (Tangerang, Serang), Central Java (Semarang, Cilacap), Yogyakarta (Piyungan), East Java (Surabaya, Gresik, Sidoarjo, Pasuruan, Probolinggo), North Sumatera (Medan), West Sumatera (Padang), Lampung, Riau (Batam Island, Bintan Island), South Sulawesi (Makassar) and East Kalimantan (Bontang).

B. Bonded Zones

Bonded Zone means a zone with particular boundaries within which processing of goods and materials, construction designing, engineering activity, sorting, preliminary inspection, final inspection and packing of imported goods and materials from the other areas within Indonesian Custom Territory (Daerah Pabean Indonesia Lainnya/DPIL) are carried out with purpose mainly for export.

On the importation of goods and/or material for the production process in Bonded Zone certain facilities can be granted such as postponement of import duties, excise free, value added tax (PPN), sales tax on luxury goods and income tax of article 22 shall not be collected

Foreign Investment (PMA) as well as Domestic Investment (PMDN) Companies, Limited Companies of Non PMA/PMDN and Cooperatives with legal status are able to obtain approval as an Operator of Bonded Zone and Companies Operating in Bonded Zones.

Operator of Bonded Zone (Penyelenggara Kawasan Berikat/PKB) shall be a limited company, a cooperative with legal status or a foundation which owns, controls, manages and provides facilities and infrastructure in the interest of other parties in Bonded Zone he operates on the basis of an agreement.

Meanwhile, Companies Operating in Bonded Zone (Pengusaha Didalam Kawasan Berikat/PDKB) shall be limited companies or Cooperatives undertaking a processing of goods and materials in a Bonded Zone.

Up to February, 2003 there are 15 Operators of Bonded Zone (PKBs) spread in Jakarta (Cakung, Marunda and Tanjung Priok operated by government), Bogor, Purwakarta, Karawang, Semarang, Pasuruan, Medan, Mojokerto, Bintan Island, Aceh, and Batam Island and 426 Companies Operating in Bonded Zone (PDKBs).

C. Banking, Insurance and Leasing

Bank Indonesia (BI) as an independent state institution is fully autonomous in formulating and implementing each of its task and authority as stipulated in the new Central Bank Act, Law No. 23/1999. As a central bank, BI has a single objective of attaining and maintaining stability of the rupiah value. In the pursuit of the objective, it is supported by 3 sectors of task which are formulating and implementing monetary policy system, regulating and ensuring a smooth payment system, developing sound banking and credit systems by building and supervising banks.

BI does not perform the commercial activities of banks in general, of commercial banks as well as of rural credit banks. Therefore, BI cannot serve saving and checking accounts as well as deposits from the public. In addition the public cannot directly request for credit from BI.
(Online : www.bi.go.id)

Relating to foreign investment, Bank Indonesia plays the following roles :

1. Issuing a letter of clearance for final draft loan agreement of Foreign Direct Investment (FDI) companies.
2. Monitoring the FDI accounts.
3. Ensuring that the capital for FDI projects originates mostly from offshore.
4. Registering all offshore loans received by FDI companies.

To support business activities in Indonesia, there are foreign banks operating in Indonesia such as ABN AMRO Bank, American Express Bank, Bank of America NA, Citibank NA, Deutsche Bank AG, JP.Morgan Chase Bank, Standard Chartered Bank, The Bangkok Bank Comp. Ltd., The Bank of Tokyo-Mitsubishi Ltd., The Hong Kong and Shanghai Banking Corp.

Besides there are 5 (five) state-owned banks, namely PT. Bank Ekspor Indonesia (Persero), PT.Bank Mandiri (Persero), PT.Bank Negara Indonesia (Persero),Tbk., PT. Bank Rakyat Indonesia (Persero), and PT.Bank Tabungan Negara (Persero). In addition, there are 36 (thirty six) Devisa National Private Banks, 40 (forty) Non Devisa National Private Banks, 26 (twenty six) Region Development Banks, and 24 (twenty four) Joint Ventures Banks.

Other financial institutions include 176 insurance companies both international and national, and 145 leasing companies in Indonesia.

D. Stockmarkets

According to the Law concerning the Capital Market, the guidance, regulation, and day-to-day supervision of capital market is provided by the Capital Market Supervisory Agency (Badan Pengawas Pasar Modal/Bapepam). Also, it implements an orderly, fair, and efficient capital market activity and protect the interest of investor and public.

The functions of Bapepam are:

1. Drafting Capital Market rules and regulations;
2. Guiding and supervising any Person granted business license, approvals, registration and other person related to Capital Market;
3. Establishing disclosure principles for Issuers and Public Companies;
4. Settlement of the objection by Person imposed sanction by Stock Exchange, Clearing Guarantee Corporation, and Central Securities Depositary;
5. Establishing Capital Market accounting standards;
6. Protecting technical implementation of Bapepam main function according to the policy required by Minister of Finance;
7. In implementing the function, Bapepam has the authority to grant licenses, approvals, effective registration to capital market participants and provide effective registration statement;
8. Up to present Bapepam has granted business licenses to 2 exchanges namely The Jakarta Stock Exchange (JSX) and The Surabaya Stock Exchange (SSX), 117 Underwriters, 207 Broke-dealers and 70 Investment Managers.

E. Representative Office

A foreign company may establish a representative office in Indonesia in one of province capitals. Its activity is limited to supervising and coordinating the business of its principal and branches. This office is not allowed to make any business transaction with companies or persons in Indonesia either for export or import or domestic trading.

The representative office can :

1. Obtain work permits for expatriate managers.
2. Obtain multiple entry visas for its expatriate personnel as well as exemption from exit-tax (SKFLN).

The representative office is led by one or more foreign or Indonesian citizens who are appointed by a foreign company or joint foreign companies as their representatives with the intention of :

1. Handling the company or its affiliates concerns, and or
2. Preparing the establishment and development of foreign direct investment companies, in Indonesia or in other countries and Indonesia.

Source: Indonesia Investment Coordinating Board