In early April, the Capital Investment Coordinating Board issued new regulation that apply to foreign companies (the Regulations).*

The Regulations require foreign companies that operate in Indonesia to divest some of its shares to Indonesian citizens or to wholly owned Indonesian companies, within 15 years of first operating in Indonesia.

The Regulations specify that the minimum amount of direct ownership for Indonesian citizens or businesses is at least Rp10 million for each shareholder. Meanwhile, indirect ownership through the domestic capital market is further regulated in the provisions of the laws and regulations in the capital market sector.

Shares that have been divested to Indonesian citizens or businesses may then be resold to either individuals, Indonesian businesses, or foreign businesses after obtaining approval from the Minister of Law and Human Rights. There is some leeway in the Regulations. For further information, please reach out to your usual contact at our company who will be happy to help.

* Investment Coordinating Board Regulation Number 4 of 2021 concerning Guidelines and Procedures for Risk-based Business Licensing Services and Investment Facilities.