Indonesia: New regulation on guidelines and procedures for the implementation of investment climate development activities

By Dini Retnoningsih, Lubis Ganie Surowidjojo

E: dini@lgslaw.co.id,

E: indra@lgslaw.co.id

Background
The BKPM Regulation No. 9/2017 is issued in order to implement the provisions under Article 16 (1) and (2) of Law No. 23 of 2014 on Regional Government, which mandate the central government to arrange norms, standards, procedures and criteria for the implementation of investment climate development activities.

Scope BKPM Regulation No.9/2017
BKPM Regulation No. 9/2017 sets out as a set of guidelines for the officials at the BKPM, and The One Stop Integrated Service and Investment Agency (Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu or DPMPTSP) at the provincial/regency/city level (together hereinafter referred to as “Government”) with regard to the development of the investment climate by implementing several activities as stipulated under Article 4 of BKPM Regulation No. 9/2017, comprises:

1. investment deregulation;
2. development of investment potential and opportunities; and
3. business empowerment.

Investment deregulation
Article 5 of BKPM Regulation No. 9/2017 stipulates that in order to offer improved and simplified investment process for investors, the Government is authorised to implement several investment deregulation activities which comprised of the following activities:

1. drafting proposal on policy and/or law and regulation proposals with regard to the Investment and the evaluation of such investment implementation;
2. drafting proposal on incentive policy, simplification and facility of Investment;
3. drafting proposal for policies on the business simplification, procedural simplification, and timeframe and cost for licensing and non-licensing; and
4. socialising information on policies and/or laws and regulations relating to investment to the central government, regional government, city, business practitioners and stakeholders within the investment sector.

Development of investment potential and opportunities
According to Article 10 of BKPM Regulation No. 9/2017, development of investment potential and opportunity at the regional level can be implemented through: the identification of investment potential; the mapping of investment opportunities; and the documentation of the mapping results of such investment opportunities into the Regional Investment Potential Information System (Sistem Informasi Potensi Investasi Daerah or SIPID).

Identification of investment potential is regulated under Article 11 of BKPM Regulation No. 9/2017, which stipulates that identification of regional investment potential can be conducted by collecting data and information on investment potential which includes information on geography, demographics, economic condition, investment and supporting facilities and infrastructure and major commodity; and analysing the data and information on investment potential.

Furthermore, Article 12 of BKPM Regulation No. 9/2017 stipulates provisions on the mapping of investment opportunities, which can be conducted through:

1. Verification of the results from the analysis of investment potential;
2. Analysis of the results of verification of investment potential data and information which are supported by study results and site visit; and
3. Drafting of regional investment opportunities maps.

As for documentation of the mapping results of investment opportunities, Article 14 of BKPM Regulation No. 9/2017 stipulates that these activities are conducted through the recording and updating of business potential mapping results and regional profiles which have been implemented by BKPM and the Investment Unit and DPMPTSP at the provincial/regency/city-level.

Business empowerment
Pursuant to Article 1 (11) of BKPM Regulation No. 9/2017, Business Empowerment is defined as an effort to facilitate the guidance and counselling, national business services, and partnership with small, medium and large-scale business. Article 15 of BKPM Regulation No. 9/2017 stipulates that such Business Empowerment can be executed through implementing these several activities:

1. Facilitating the implementation of business management guidance for small and medium scale businesses. By providing this business management guidance, the Government aims to increase the position of small and medium scale businesses into large scale businesses, therefore they will be ready to be partnered up with foreign/domestic investment companies across Indonesian territory (see Article 16 (2) of BKPM Regulation No. 9/2017);
2. Facilitating the implementation of small and medium scale business partnerships with foreign/domestic investment companies with the objectives to achieve partnerships between small and medium scale business under a fair economy across Indonesian territory (see Article 17 (2) of BKPM Regulation No. 9/2017);
3. Facilitating the capacities improvement of small and medium scale businesses with the objectives to provide solutions for business in order to be able to partnered up with foreign and domestic investment companies across Indonesian territory (see Art. 18 (2) of BKPM Regulation No. 9/2017).

BKPM Regulation No. 9/2017 has been effective since August 30, 2017.

W: www.lgslaw.co.id

E: dini@lgslaw.co.id, indra@lgslaw.co.id

T: (62-21) 831-5005, 831-5025

F: (62-21) 831-5015, 831-5018