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Doing business in Indonesia Contents

Executive summary 4 Disclaimer

Foreword 6 This document is issued by Hongkong and Shanghai Banking Introduction – Doing business in Indonesia 8 Corporation Limited (the ‘Bank’) in Indonesia in partnership with PricewaterhouseCoopers (PwC). Conducting business in Indonesia 12 It is not intended as an offer or solicitation for business to anyone Taxation in Indonesia 18 in any jurisdiction. It is not intended for distribution to anyone located in Audit and accountancy 26 or resident in jurisdictions which restrict the distribution of this Human Resources and Employment Law 28 document. It shall not be copied, reproduced, transmitted or further 30 distributed by any recipient.

Banking in Indonesia 32 The information contained in this document is of a general nature only. HSBC in Indonesia 34 It is not meant to be comprehensive and does not constitute financial, Country overview 36 legal, or other professional advice. You should not act upon Contacts 38 the information contained in this publication without obtaining specific professional advice. This document is produced by the Bank together with PricewaterhouseCoopers (‘PwC’). Whilst every care has been taken in preparing this document, neither the Bank nor PwC makes any guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or PwC be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and/or PwC only and are subject to change without notice. This document is not a ‘Financial Promotion’.

The materials contained in this publication were assembled in August 2012 and were based on the law enforceable and information available at that time. Executive summary

As the fourth most populous 2. Issuing the Negative List of railways, power and utilities. country in the world, supported Investment in June 2010 to Investments in mining and by good political and economic open more business sectors agriculture sections are also stability, Indonesia’s large to foreign investors. actively encouraged. domestic market offers a wide range of investment 3. Amending Tax Laws in 2008 With a population of almost opportunities for foreign and and 2009 to improve tax 240 million of which more domestic investors. administration and to reduce than 80% are Moslem, Islamic the corporate income economics and banking is also With a target economic to a flat 25% rate starting a potential growing sector in growth of more than 6% for from 2010. Indonesia. the coming years, there is a growing emphasis for the 4. Amending laws and Currently, establishing an government of Indonesia regulations in certain sectors Indonesian limited liability on attracting more foreign such as shipping and mining in company is the most common investment in order for the order to improve the licensing form of operating as a foreign overall investment to reach the process and attract more investor in Indonesia. projected levels of Indonesian investment in these sectors. Rupiah (IDR) 2,000 trillion, or Other types of presence, approximately US$222 billion, 5. Developing an integrated such as representative by 2014. service for both, the central offices or branches, could and regional governments to be established, but are For the last 10 years the simplify the licensing process subject to certain limitations government of Indonesia for businesses operating and on commercial activities and has been actively introducing investing in Indonesia. restrictions for certain sectors. measures directed at encouraging investing in Another area of focus for the Continued focus on developing Indonesia and improving government is to improve the the regulatory and tax aspects the country’s regulatory and archipelago’s infrastructure. of operating a business in economic environment. Key Through the Public Private Indonesia together with measures recently introduced Partnership (PPP) scheme, the adoption of international can be summarised as follows: the government offers accounting and reporting investment opportunities for standards should further 1. Amending the Investment the infrastructure projects to benefit Indonesia’s drive to Law in 2007 to provide more develop the country’s roads, attract more investment and assurance on matters such improve its competitiveness. as equal treatment among investors, ability to repatriate profit from Indonesia, investment incentives and protection from nationalisation.

4 Foreword

Connecting Indonesia Having operated in Indonesia Alan Richards to the World since 1884, HSBC’s knowledge CEO of the dynamics, and resultant HSBC Indonesia In the fast changing and dynamic opportunities, of the Indonesian world that we live in, we have markets sets it apart from its witnessed a re-balancing of the competitors. HSBC has the world economies as emerging ability to combine both its local markets increasingly drive presence (with an extensive global economic growth. branch network throughout the Indonesia is one of the world’s country) and global strength to leading emerging economies, offer the full range of financial and the third-fastest growing services to businesses wishing economy in Asia. It is also the to tap into this exciting and largest economy in Southeast vibrant market. Asia, supported by: We hope that you will find • GDP of more than US$800 this guide book both useful and billion in 2011, and forecast to informative, and look forward grow by 6.1% in 2012. to helping your business unlock the tremendous potential • Strong domestic consumption. of Indonesia.

• Strong trade and investment flows, including intra-regional flows.

• An Investor-friendly government.

• An abundance of natural resources.

• An ample and increasingly talented work force, underpinned by the world’s fourth-largest population by country.

6 Introduction Doing business in Indonesia

Indonesia is the world’s largest The Indonesian labour force archipelago and is composed numbers around 113 million. of approximately seventeen thousand islands lying along A rapidly rising population is the equator. These include putting strain on the Indonesian several large islands which employment market, with include Java, Sumatera, some 2 million new entrants Kalimantan, Sulawesi and estimated to be seeking jobs Papua, as well as various each year. Agriculture and islands that are popular tourist services are the two biggest destinations, such as Bali, sectors, employing respectively Lombok and Komodo. 43% and 44% of the workforce. . Java is the main and most developed island where almost 60% of the Indonesian population live and most of the business and governmental activities are carried out. With a population of almost 240 million, Indonesia is the fourth most populous country in the world which means it has a large domestic market open for investment.

The Indonesian Constitution guarantees the right to freedom of religion. However, the government only recognises six official religions, namely Islam (86.1%), Protestantism (5.7%), Catholicism (3%), Hinduism (1.8%), Buddhism and Confucianism (3.4%).

8 Economic Structure Physical Infrastructure Legal Framework Most disputes are heard before coming to an agreement. Initial and Growth the courts of general jurisdiction, meetings generally serve to Infrastructure has been Indonesian legislation comes with the State Court being the make acquaintances. Indonesia The major economic sector in one of the challenges for in different forms. court of first instance. Appeals is a relationship-driven market. Indonesia is the manufacturing the Indonesian government from the State Court are heard and processing sector which in attracting foreign investment The following official hierarchy before the High Court, while the Companies may not respond contributes around 24.3% of in Indonesia. Currently, of Indonesian legislation (from Supreme Court can hear a final very quickly to emails especially the Gross Domestic Product Indonesia has around 391 top to bottom) is enumerated appeal from lower courts. if the sender is not well known (GDP). Some major industries thousand kilometers of roads, under Law No. 10 Year 2004 to them. Patience is a key in this sector are food and 6.5 thousand kilometers of on the Formulation of Laws In 1998, the Commercial Court element in doing business beverages, machinery and railways, and 21.5 kilometers and Regulations: was also established to handle successfully in Indonesia. transportation, chemical and of waterways. In addition, insolvency cases as well as textiles. Indonesia developed an 1. 1945 Constitution (Undang- other commercial matters. Business relationships in extensive air transport network Undang Dasar 1945 or UUD’45). Indonesia are based on trust The manufacturing sector is that encompasses 652 airports Building and and familiarity, therefore followed by the agricultural to ensure that all Indonesia’s 2. Law (Undang-Undang or UU) maintaining relationships personal contacts and sector, which includes forestry, islands are accessible, by and Government Regulation networks are important plantation, farming and fishery, either sea or air, although in Lieu of Law (Peraturan In general, English is spoken in making business deals. and the trading and hospitality safety remains a key issue. Pemerintah Pengganti at a business level in Indonesia. sector. These together Undang-Undang or Perpu). However, if dealing with As Indonesians place great contribute around 14.3% The current infrastructure government or undertaking emphasis on age and respect of the GDP. still needs to be significantly 3. Government Regulation business outside the main towards elders in Indonesian developed to support the targeted (Peraturan Pemerintah or PP). cities, e.g. Jakarta, some society is expected. The mining sector, which has economic growth. The priority translation may be required. been one of the priority sectors, areas for the government to 4. Presidential Regulation contributes around 11.9% of encourage further investment (Peraturan Presiden or Perpres). Some basic business the GDP. More than half of this include the power and energy etiquette includes: comes from oil and gas mining. sectors, water and sanitation 5. Regional Regulation facilities, roads, transportation (Peraturan Daerah or Perda). • Avoiding using the left hand Indonesia proved less exposed and telecommunications. to pass or receive anything, to the recent global recession In practice, there are also including business cards than many of its neighbours, The Indonesian government Presidential Instructions and gifts. largely because account is actively promoting a Public (Instruksi Presiden or Inpres), for a relatively small proportion Private Partnership (PPP) Ministerial Decrees (Keputusan • If you are being introduced to of the country’s GDP. In 2011 scheme as an instrument Menteri or Kepmen) and several people, it is customary the real GDP grew by 6.5%, to invite investment in the Circulation Letters (Surat to introduce yourself to the making Indonesia one of the infrastructure sector. Edaran), which sometimes eldest member of the group. world’s best-performing large Under the PPP scheme, the conflict with each other. It is acceptable to shake hands economies. Growth is expected government provides a list with women. to be accelerated in 2012 with an of potential infrastructure The judicial system comprises estimated growth rate of 6.1%. projects around Indonesia several stages of courts Negotiations can be quite to be developed under overseen by the Supreme lengthy so to give enough Exports are also expected cooperation with the Court, which often creates time to carefully consider the to grow, driven largely by private sector. a time consuming court business proposal. Often it healthy demand from China for process for a dispute settlement. takes several meetings before Indonesia’s commodity exports. 10 Value of Realised Investment Projects in Indonesia (in USD Million)

12,000 Primary Sector •Food crops •Plantation •Livestock, 10,000 •Forestry •Fishery •Mining

Secondary Sector 8,000 Manufacturing i.e. •Garment •Food •Leather goods 6,000 •Chemical •Automotive •Other

4,000 Tertiary Sector •Electricity, Gas and Water Supply 2,000 •Construction •Trade •Hotel & Conducting business in Indonesia Restaurant •Transport, Storage and 0 Communication •Housing •Other General Investment Policy 2010 2011 Source: Investment Coordinating Board (www.bkpm.go.id)

With an investment target b. To shorten the length of time e. Certain investment facilities Investment Restrictions of IDR2,000 trillion (equivalent required to do business in such as tax facilities can to US$222 billion) to 2014, Indonesia, a one-stop integrated be granted based on certain Not all types of business are the Indonesian government, service is being developed both investment criteria. Examples open for foreign investors. through the Capital Investment by the central government and include absorbing a large Presidential Regulation No. Coordinating Board (BKPM), regional government to simplify number of manpower, included 36/2010 has been issued to is actively promoting foreign the licensing process. An online in high priority scale business, stipulate the lines of business investment in Indonesia and application system has also been infrastructure development, open and closed to foreign strengthening the investment developed to submit applications. undertaking transfer of investors (Negative List of climate by, among others, Further development in this technology, a pioneer industry Investment/NLI). Under the improving the regulatory licensing area is still required or located in remote, less NLI, foreign investors can framework, simplifying the to implement a full one-stop developed or border areas. identify business areas closed licensing process and improving integrated service. for foreign investment, business the business infrastructures. f. The Indonesian government areas which can be fully owned c. A foreign investor is given the will not perform nationalisation by a foreign investor or those The main legislation governing right to employ expatriates in of foreign investments unless which require joint venture with foreign direct investment in certain positions by obtaining based on the Law. In the case a domestic investor. Indonesia is Capital Investment the proper permit and fulfilling of nationalisation, the Law No. 25/2007 which was the obligation to improve skills government shall provide A certain privilege is given issued in 2007. and expertise of local manpower compensation based on market to investors from ASEAN through training. value. To be more focused in countries where the NLI, based The general investment policy attracting more investors, the on ASEAN agreement, can covered under this current Law d. The Indonesian government Indonesian government has provide a higher shareholding includes the following: ensures the right of foreign also set several key and priority percentage compared to investors to repatriate profit investment sectors which investors from other countries. a. Equal treatment of domestic from Indonesia which can be in include infrastructure, energy investors and foreign the form of payment of dividend, and oil and gas. In addition, The NLI will be reviewed every investors. However, certain reduction of capital, payment seven provinces were identified three years to accommodate national interests must still be liquidation proceeds or payment as priority investment areas; the recent business updates. considered, such as limitation of royalties or technical fees. these are Riau, West Nusa As of the beginning of 2012, on investment in certain The Indonesian government, Tenggara, Papua, West Java, BKPM has set out a policy strategic sectors or in sectors however, has the right to defer East Java, East Kalimantan for a minimum investment which are reserved to develop the repatriation of profit if the and North Sulawesi. of IDR10,000,000,000 or local micro, small or medium investor has any unsettled legal an amount equivalent to business players. liabilities in Indonesia. The graph top right illustrates US$1,075,000 (using 1US$ the value of foreign investment = IDR9,300). This is based projects approved in Indonesia on the assumption that the by business sector for 2010 foreign investment company is and 2011. acknowledged as large scale company. This policy also generalises the investment amount which previously varied between each business sector.

12 Setting up a business

There are various ways for an government’s effort to develop 4. Others The duration is a maximum connected with the operations activities in the area, SEZ offers investor to set up a presence a one-stop integrated service Other types of presence of 35 years, extendable for of the companies. various administrative incentives, in Indonesia, depending on the and simplification of licensing for conducting business in another 25 years. such as easier licensing investor’s type of business. requirements. Indonesia include a Production All land rights should be process, taxation incentives Sharing Contract with the b. Right of building (hak guna registered at the Land Register and availability of complete 1. Indonesian Limited 2. Representative Office Indonesian government. This bangunan). This is a right to at the National Land Agency infrastructure to support the Liability Company (PMA) Foreign companies are permitted is common in the oil and gas construct and own buildings. (Badan Pertanahan National – businesses and industries in The common type of presence to establish a representative mining upstream sectors. This right can be granted BPN). the field of trading, services, for a foreign investor who wants office in Indonesia. However, for a maximum of 30 years, industry, energy and mining, to invest and engage in business unlike a PMA company, a A foreign company can also extendable for 20 years Special Economic transportation, fishery, in Indonesia is by establishing an representative office has more choose an indirect presence and may be renewed at Zones (SEZ) tourism etc. Indonesian incorporated limited restrictions on its activities. by appointing a local company the discretion of the local liability company, commonly as an agent or as a distributor government. The Indonesian Special The incentives are designed known as a PMA company. A representative office can to market and sell its products Economic Zone (SEZ) is a to improve the competitiveness only perform marketing in Indonesia. c. Right of Use (Hak Pakai) Foreign designated area within the of SEZ and attract further There must be two parties or promotion activities, investors who have obtained territory of Indonesia designed investment in the designated holding shares in a PMA market research and review Land rights mining rights from the to become a business and area or business sector. company. These can be a legal of business opportunities in Minister of Energy and Mineral industrial centre for domestic Incentives that can be granted entity or an individual. The Indonesia. It cannot engage Indonesian land legislation does Resources or the Minister of and foreign investors. in a SEZ vary and can consist foreign investor’s shareholding in any commercial activities or not recognise the concept of Forestry have automatically of the following: percentage must meet the generating revenue in Indonesia. freehold land rights. Instead, obtained the right to use the As its main purpose is to boost requirement under the NLI. Representative offices are various rights attached to land within their concession the investment and business available for foreign companies land are divided into separate boundaries for purposes directly The shareholders must also engaged in certain sectors elements and areas subject appoint at least one director which include trading, services, to separate titles. The Basic No. Type Facilities and at least one commissioner oil and gas mining and banking. Agrarian Law recognises several of the PMA company. The types of land rights: 1 Tax Corporate facilities in accordance with the prevailing regulations. director serves as management An exception applies to Reduction of land and building tax for a certain period. of the PMA company and has representative offices of 1. The right of ownership 2 and Importation Import deferment. the authority to represent the foreign companies engaged (hak milik) is an inheritable exemption for raw and supporting materials for production. PMA company, while the in construction services. This right that can be held only by Non-collection of value added tax and luxury goods tax. commissioner supervises and type of representative office is Indonesian citizens. Non-collection of corporate income tax on importation. provides advice to the director. allowed to deliver construction services in Indonesia under 2. For a company, including PMA 3 Delivery of taxable goods to Non-collection of value added tax and luxury goods tax in accordance with The World Bank in its latest a joint operation with a local company, there are three main SEZ from other Indonesian the prevailing regulations. Doing Business 2011 study construction company. rights where the differences lie customs area mentions that it takes 45 in the rights duration of validity, 4 Regional or reduction of regional tax and/or retribution. days and a minimum of eight 3. Branch the nature of utilisation, the and/or retribution procedures to start business A branch office is generally opportunities to mortgage and in Indonesia in the form of a not allowed, except for the proof of title: 5 Land Easiness to obtain land right. PMA company, which is an banking sector. improvement compared to the a. Right of exploitation (hak guna 6 Licences/permits Easiness to obtain licences/permits and expatriate employment. 2010 study which indicated usaha). This is a right to cultivate 7 Requirement of Does not apply except for certain businesses which are reserved 60 days. This improvement state-owned land for agriculture foreign shareholding for cooperative or micro/small/medium-scale companies. is part of the Indonesian and plantation purposes.

14 The government has appointed 2. Ministry of Laws and • Legislative function, to issue 7. Ministry of Manpower Batam, Bintan and Karimun Human Rights regulations, implement tax The Ministry of Manpower has (BBK) islands in Riau Islands The Ministry of Laws and laws and provide an authority as a regulatory body province as a Zone, Human Rights is a government interpretation of tax laws made and has the aim to enhance a variation of the SEZ. body which has the authority by a separate agency under the good corporate governance to approve the establishment Ministry of Finance. and to support the growth Government Agencies of a limited liability company of employment opportunities in Indonesia. • Judiciary function, to handle in Indonesia. The main government agencies any tax objection to a tax and their areas of licensing In addition to that, it has also assessment. This ministry also grants work authority for foreign investors the authority to implement permits to enable a company to looking to do business in government affairs in the 5. Directorate General of employ expatriates in Indonesia. Indonesia are as follows: field of law and human rights, Customs and Excise guide and coordinate the Similar to the Directorate 8. Directorate General 1. Capital Investment implementation of ministerial General of Taxation, the duties of Immigration Coordinating Board (BKPM) duties and administrative and functions of the Directorate The Directorate General As the primary interface services and implement applied General of Customs and Excise of Immigration monitors the between business and research and development, are closely related to collection immigration flows and grants government, BKPM is a education and specific training of State Revenue from import entry visas for expatriates ministerial level agency and preparation of legislation. activities such as collection of entering Indonesia. This mandated to boost domestic import duties. Directorate also grants stay and foreign direct investment 3. Ministry of Trade permits for expatriates working through creating a conducive The Ministry of Trade’s role is 6. Environmental Control and residing in Indonesia. investment climate. to facilitate, encourage, enhance Agency and promote the commercial The government is now paying For specific sectors, investors BKPM has multiple functions sector and activity in Indonesia more attention to environmental would also need to deal with ranging from being an by acting as a service and protection. In this regard, the or obtain licences from other investment promotion agency, support structure for the Environmental Control Agency technical departments such a regulatory body as well as the domestic and international was formed to coordinate as the Ministry of Agriculture agency in charge of approving commercial and trading sector. and control the environment for the plantation sector, the investment planned in Indonesia. including corporate governance, Ministry of Transportation 4. Directorate General conservation and disaster for the shipping sector and BKPM is the first entrance of (DGT) mitigation and environmental the Upstream Oil and Gas for foreign investors planning As one of the government capacity development. Supervisory Agency (BPMIGAS) to do business in Indonesia. agencies responsible for and Ministry of Energy and collection of State Revenue A company wishing to carry Mineral Resources for the oil Several regional governments under the Ministry of Finance, out certain activities would and gas, mining and general have established a regional the Directorate General have to obtain an Analysis of mining sector. investment office in a response of Taxation has three Environmental Impact certificate to provide a better service to main functions: from this agency, which is domestic and foreign investment. also formed on a regional or • Executive function, namely provincial level. to collect taxes and ensure the compliance of taxpayers.

16 Taxation in Indonesia Corporate Income Tax

Under the prevailing Indonesian 20%, regardless of whether invested are not transferred , a company is treated as the profits are remitted to out within six years; a resident of Indonesia for the home country. However, tax purposes by virtue of having a reduced WHT rate may be • Acceleration of fiscal its establishment or its place applicable where a depreciation deductions; of management in Indonesia. is in force. A foreign company carrying out • Extension of tax losses carry business activities through a 2. Tax incentives forwards for up to ten years; (PE) Public companies that satisfy in Indonesia will generally have to a minimum listing requirement • A reduction of the withholding assume the same tax obligations of 40% and certain other tax rate on dividends paid to as a resident taxpayer. conditions are entitled to a tax non-residents to 10%. discount of 5% off the standard Resident taxpayers and rate, providing an effective tax The same tax incentives Indonesian PEs of foreign rate of 20%. Small enterprises can be granted by the DGT companies have to settle (i.e. corporate taxpayers with to companies conducting their tax liabilities by direct an annual turnover of not business in an Integrated payments, third-party more than IDR50 billion or Economic Development Zone withholdings, or a combination equivalent to US$5.4 million) (KAPET). Specific approval of both. Foreign companies are entitled to a 50% discount must be obtained from the without a PE in Indonesia of the standard tax rate, which DGT to qualify for these have to settle their tax liabilities is imposed proportionally tax incentives. for their Indonesian-sourced on of the income through withholding part of gross turnover up to If the company has bonded of the tax by the Indonesian IDR4.8 billion or equivalent to zone (Kawasan Berikat/KB) party paying the income. US$518,000. status, the tax facilities will also include those typically enjoyed 1. Tax rate and period Investment Incentive: The by a KB company, for example: From 2010, a flat rate of 25% DGT, on behalf of the Minister applies for corporate taxpayers. of Finance and based on • Non-collection of Value Added The normal tax period is January the recommendation of the Tax (VAT) and Luxury-goods to December. If corporate Investment Coordinating Board on certain luxury taxpayers would like to use (BKPM) Chairman, may provide goods transactions; a different tax period, e.g. July the following tax concessions to June, they would have to to Indonesian Limited Liability • Exemption from prepaid income obtain an approval from the (PT) companies following tax (Article 22) on the Director General of Tax (DGT) their investment in certain importation of capital goods and then maintain the approved designated business areas or and other equipment directly tax period consistently. in certain designated regions: related to production activities;

Branch (or PE) profits are • A reduction in net income of up • Postponement of import subject to the same corporate to 30% of the amount invested, duty on capital goods and tax rate of 25%, but the pro-rated at 5% for six years equipment and goods and after-tax profits are subject of the commercial production, materials for processing; to withholding tax (WHT) at provided that the assets

18 In the case of dividends received by a resident shareholder, ‘portfolio shareholding’ refers to share ownership of less than 25% of the paid-up capital. In this respect, the withheld by the payer constitutes a prepayment of the income tax liability of the shareholder. ‘Substantial shareholding’ refers to the share ownership of 25% of the paid-up capital or more.

• Exemption from import duty provided certain conditions must be filed on a monthly Dividends for four years on machinery are met and exemption from basis. Payments are generally and certain spare parts. branch profit tax for PEs that required by the 10th or 15th Portfolio Substantial Interest Royalties Branch reinvest their after-tax profits day of the following month. Notes % holdings % % % profits % : New corporate in Indonesia within the same Specifically for VAT, the payment taxpayers in certain pioneer year or in the following year. must be settled before the VAT Resident corporations 1 15 Nil 15 15 N/A industries may enjoy a CIT return is filed. VAT return filing is Resident individuals 10 10 15 15 N/A exemption for a period of five 3. Tax administration done on a monthly basis by the to ten years from the start of Tax liabilities for a particular end of the following month. Non-resident commercial production. After the period or year must be paid corporations and end of the CIT exemption, the to the State Treasury through Late tax payments incur individuals – non-treaty 20 20 20 20 20/0 company will receive a 50% CIT a designated tax-payment bank penalties at 2% per month, reduction for two years. and then accounted for at the while for late reporting the tax office through the filing of administrative penalties are • Deposit security provisions d. Amount that exceeds the Please note that reduced To be eligible for the above the relevant tax returns. The between IDR100,000 and for the Deposit fair amount paid to Double Tax Treaty withholding facilities, taxpayers should be tax payments and filing of IDR1,000,000. Insurance Institution; shareholders or other related rates apply to many territories newly incorporated in Indonesia tax returns for a particular tax • Reclamation provisions parties as compensation for and these may be considered (not earlier than 14 August must be undertaken monthly 4. Tax calculation for mining companies; work performed; when making payments. 2010), should have a legalised or annually, depending upon Taxable business profits • Forestation provisions new capital investment plan of the tax obligation in question. are calculated on the basis for forestry companies; e. Income tax and tax penalties The issue of beneficial a minimum IDR 1 trillion, should of normal accounting principles • Provisions for the cost of closing or sanctions; ownership has come under deposit a minimum of 10% of The Corporate Income Tax as modified by certain tax and maintaining an industrial scrutiny by the tax office. For their planned investment value in Return must be filed annually adjustments. Generally, a waste disposal area, for industrial f. Employer contributions treaty WHT rates to apply banks located in Indonesia, and by the end of the fourth month deduction is allowed for all waste disposal businesses; for life, health and accident to passive income such as should not withdraw the deposit after the book year end. expenditure incurred to obtain, insurance and contributions interests, dividends, and prior to the realisation of the Taxpayers may extend the collect, and maintain taxable c. Benefits-in-kind (BIKs), to unapproved pension funds, royalties, the recipient of such investment plan. filing deadline for a maximum business profits. A timing except for: unless the contributions are income must be the beneficial of two months by submitting a difference may arise if an treated as part of the taxable owner. The recipient must An application for the tax written notification to the DGT expenditure recorded as • food and drink provided to all income of employees. also provide a certificate of holiday must be submitted to before the deadline, attaching an expense for accounting employees; domicile (CoD) prescribed by the Minister of Industry (MoI) a tentative tax calculation. cannot be immediately • employee benefits required for 5. Tax losses the Indonesian Tax Office and or to the BKPM Chairman. A Tax payments must be made claimed as a deduction for tax. job performance such as Losses may be carried forward certified by their home country proposal for approval of the MoF before filing the Return or protective clothing and uniforms; for a maximum of five years. tax authority, certifying that the will be made by the MoI or the before filing the notification Disallowed deductions include: • transportation costs to and from Carrying back of losses is not recipient is a tax resident of BKPM Chairman after carrying for extension based on the places of work; permitted. Offsetting losses that country. Without a certified out research on the applicant. tentative tax calculation. A pre- a. Private expenses; • accommodations for ship crews within a corporate group is CoD, WHT of 20% will apply. Tax holiday proposals may be payment system operates for and the like; not allowed. These aspects need to be submitted to the MoF only until whereby monthly b. Provisions, except for: • the cost of providing BIKs in considered when paying income 15 August 2014. instalments must be paid based remote areas; and 6. Withholding taxes (WHT) of this nature. (generally) on the previous • Provisions for doubtful debts • 50% of the acquisition and WHT is levied on a variety of There are other tax incentives year’s tax liability. for banking and financing maintenance costs of certain payments to corporations and Other than passive income such such as tax-neutral merger companies; company provided cars and individuals, resident and non- as interests, dividends, and for qualifying transactions, Returns for transaction taxes • Insurance claims provisions cellular phones; resident, at the rates shown in royalties, Indonesian income exemption from income tax such as withholding taxes for insurance companies; the table above. for venture capital companies

20 Final Income Description Tax Rate (%) Transactions between related Rentals of land and buildings 10% parties must be dealt with consistently using the arm’s Proceeds from transfers of land 5% length principle. If the arm’s and building rights length principle is not followed, the DGT is authorised to Fees for construction work performance 2/3/4% recalculate the taxable income Fees for construction work planning 4/6% or deductible costs arising from such transactions applying Fees for construction work supervision 4/6% the arm’s length principle. Interest on time or saving deposits and on Bank 20% of Indonesia Certificates (SBIs) other than that Under the General Tax Provisions payable to banks operating in Indonesia and to and Procedures Law, the government requires specific government approved pension funds transfer pricing documentation to Interest on bonds other than that payable to 15% prove the arm’s length nature of banks operating in Indonesia and to government related-party transactions. The approved pension funds DGT has issued guidance on the implementation of transfer pricing Sale of exchange-traded shares on the Indonesian 0.1% which, among others things, stock exchange acknowledges five transfer pricing methods, such as: Income from lottery prizes 25% Forward contract derivatives 2.5% • the comparable uncontrolled price method (CUP); • resale price method (RPM); tax is also collected from certain of the gross amount of • cost plus method (CPM); types of transactions, such as: income, without regard to • profit split method (PSM); and any attributable expenses • transactional net margin • Importation of goods; (as summarised in the table method (TNMM). • Sale of goods to the government; on the next page): • Sale or purchase Expenses relating to gross The transfer pricing guidelines of certain products; income subject to the ‘final’ also provide a possibility of • Sale or purchase of tax above are not deductible. Mutual Agreement Procedures very luxurious goods; (MAPs) and Advance Pricing • Payment of certain services. Other types of services, Arrangements (APAs). In regard governed under MoF to MAP, taxpayers can apply Certain types of income Regulation, are subject for a MAP and continue local are subject to a final income to withholding tax at the dispute resolution at the same tax at a specific percentage rate of 2%. time (with certain limitations). The local dispute resolution includes applying for a tax objection, appealing to the Tax Court and requesting a reduction or cancellation of administrative sanctions.

22 Value Added Tax (VAT) and Luxury-goods Personal Income Tax Sales Tax (LST) Other Taxes

The Indonesian tax system Dividends received by With a few exceptions, VAT 1. Land and building tax distinguishes individual tax individual resident taxpayers is applicable on deliveries Land and building tax (PBB) is a subjects into non-resident from Indonesian companies (sales) of goods and services type of chargeable and resident tax subjects. are subject to 10% final tax. within Indonesia at a rate of on all land and buildings, which Non- resident individuals 10%. VAT on of goods is due annually at 0.5% of the An individual who resides are subject to withholding is zero-rated while the import government-determined in Indonesia, an individual tax at 20% in respect of their of goods is subject to VAT at sales value. who is present in Indonesia Indonesia-sourced income. a rate of 10%. Zero-rated VAT for more than 183 days within Concessions are available is also applicable on exported In a land and buildings transfer, any 12-month period, or however, where a tax services, but subject to a the acquirer is liable for duty an individual who within a treaty is in force. MoF limitation. Currently, only on the acquisition of land and particular year is present in certain exported services, i.e. building rights (BPHTB) Indonesia and intends to reside 2. Tax administration toll manufacturing, repair and at 5% of the greater of in Indonesia, is regarded as Tax liabilities for a particular maintenance, and construction the transaction value or the a resident tax subject. year must be paid to the State services, are subject to the government-determined value. Treasury through a designated 0% VAT rate. The provisions of tax treaties tax-payment bank and then 2. may override the above rules. accounted for at the DGT Inbound use or consumption Stamp duty is nominal and office through the filing of of foreign services or intangible payable as a fixed amount of A resident taxpayer’s income the relevant tax returns. goods, with few exceptions, either IDR6,000 or IDR3,000 is taxed on a worldwide is also subject to a self- on certain documents. income basis. Personal Income Tax Returns assessed VAT at a rate of 10%. must be filed on an annual 1. Tax rates basis within three months The VAT law allows the Statute of Limitation Most income earned by after the end of fiscal year. government to change the individual resident taxpayers Filing extension is allowed VAT rate within the range of Under the current Tax is subject to income tax for a maximum of two months 5% to 15%. However, since Administration Law, the DGT at the following rates: by submitting a written the enactment of the VAT law can issue an underpaid tax notification. Late tax payments in 1984, the government has assessment letter for the years are subject to a 2% tax penalty never changed the VAT rate. up to 2007 only within ten years per month, while for late after the incurrence of a tax reporting the administrative In addition to the VAT, some liability, the end of a tax period penalty is IDR100,000. goods are subject to LST (month) or the end of (part of) a upon import or delivery by the tax year, but no later than 2013. manufacturer to another party For years from 2008 onwards Taxable Income Rate Tax (IDR) at rates ranging from 10% the time span for the issue to 200%. of underpaid On the first IDR50,000,000 5% 2,500,000 letters is reduced to five years. On the next IDR200,000,000 15% 30,000,000 On the next IDR250,000,000 25% 62,500,000 On the next amount of over 30% 30% of the IDR500,000,000 relevant amount

24 Audit and accountancy

Businesses are required to For most business entities in Accounting books by the capital market regulator, Audits are conducted based from the Ministry of Finance maintain accounting records Indonesia the functional currency the Capital Market and Financial on auditing standards and become a member of and prepare annual financial is generally the Indonesian Companies are required to Institutions Supervision Agency promulgated by the Indonesian the IICPA. The Ministry of statements in accordance Rupiah; however, there are a maintain accounting records (Bapepam-LK). Institute of Certified Public Finance oversees the auditing with the Indonesian Financial number of companies whose and prepare annual financial Accountants (IICPA). The profession in Indonesia. Accounting Standards functional currency is a currency statements in accordance with Preservation of books and existing standards are largely Bapepam-LK, which is a part (SAK is the local acronym), other than Rupiah. SAK issued by Indonesia’s records based on the Statements on of the Ministry of Finance, which are mostly adopted accounting standards-setting Auditing Standards issued by also performs the oversight from International Financial For tax purposes, the prevailing body, the Indonesian Financial By law, all accounting books the American Institute of Public function of auditors that audit Reporting Standards (IFRS) tax regulation in Indonesia only Accounting Standards Board. and records must be kept for at Accountants. The auditing public companies. as issued by the International allows a company to use US They must keep journals and least ten years after the end of standards will be shifted Accounting Standard Board Dollar currency, as an alternative ledgers as well as appropriate the company’s reporting period. to International Standards Auditor‘s (IASB) on 1 January 2009. to Rupiah, in its accounting memorandum records. on Auditing within the next independence rules books. The company should Entities that have no public Audit requirements few years. Accounting period obtain approval from the tax accountability are allowed to The Indonesian Auditing authority before it is eligible to adopt SAK For Entities That Statutory audit by a qualified Public companies are required Standards require auditors to Business entities generally use use US Dollar currency in its Have No Public Accountability auditor is mandatory for the to submit to the capital market maintain their independence the 1 January to 31 December accounting. (SAK ETAP), which is simpler following types of entities, regulator, Bapepam-LK, audited and to avoid potential calendar year as their than the full SAK. which are required to annual financial statements conflicts of interests in accounting year. For tax Bookkeeping language submit their annual financial within three months after the delivering their professional purposes the fiscal year in Financial statements statements to the Ministry end of the annual financial services to audit clients. In most cases is also the calendar By law, all accounting books, of Trade: statements period. addition, auditors should also year; however, companies are records and financial statements A complete set of financial observe and comply with the allowed to choose a fiscal year should be prepared using the statements consists of a • Publicly-listed companies. For interim financial statements, relevant independence rules that does not start on 1 January. Indonesian language. A company statement of financial position • Companies involved in the submission to Bapepam- issued by the regulator (i.e. is allowed to use other languages (balance sheet), a statement accumulating funds from LK should be conducted within Ministry of Finance) including Bookkeeping currency only after obtaining permission of comprehensive income, the public (such as banks one month after the date of the independence rules issued by from the Ministry of Finance. a statement of cash flows, and insurance companies). interim financial statements if Bapepam-LK for auditors of Accounting books and financial a statement of changes • Companies issuing not audited; within two months publicly-listed clients. statements are prepared using Accounting basis in equity and notes to the debt instruments. if statements are reviewed, the company’s functional financial statements. Financial • Companies with assets and within three months if the The Ministry of Finance also currency. An entity may present Business entities must apply statements are presented on of 25 billion Rupiah or more. statements are audited. requires rotation of firms financial statements using a the accrual basis of accounting a comparative basis with the • Bank debtors whose financial which have provided audit currency other than its functional in recognising and measuring same information from the statements are required Auditing profession services for six consecutive currency. Functional currency financial statement items. previous year. by the bank to be audited. years provided there are is the currency of the primary Under the accrual basis, the • Certain types of foreign To be able to issue an no significant changes in economic environment in effects of transactions are Reporting format entities engaged in business audit report on a set of the composition of partners which an entity operates; this recognised when they occur in Indonesia that are authorised financial statements, a in the firm. is usually the currency in which (which is not necessarily the The format of the financial to enter into agreements. public accountant must have sales prices or costs for the same as when cash is received statements is set out in the • Certain types of professional certification, company’s goods and services or paid) and when certain SAK. Public companies are also state-owned enterprises. obtain a licence to practice are denominated and settled. criteria for recognising and required to comply with the measuring those transactions format and guidance prescribed are met.

26 Human Resources and Employment Law

The Indonesian Manpower Law, is very common where work b. Welfare obligation example, the minimum wage for Upon termination, an employer which was issued in 2003, relations are between an Employers having more than the year 2011 is IDR1,290,000 is obliged to pay severance encourages worker protection employer and an employee. 10 employees or paying a (equivalent to US$139) per month. payment the amount of by implementing measures Outsourced recruitment is monthly salary of more than which would depend on the designed to formalise relations where a third-party outsourcing IDR1,000,00 must register with d. Leave and break length of service and type between employer and company provides its the Jamsostek programme. Employees are entitled of the employment contract. employees. Encompassing employees to the employer, to annual leave for a minimum labour welfare is the main spirit and is only allowed for workers The Jamsostek programme of 12 days per year. Other 6. Expatriate employees of the Manpower Law. engaged in non-core activities consists of working accident leave must be granted for Employment of expatriates such as janitors, security, etc. protection, death insurance, certain occasions such as is temporary in nature and The following are key points old-age savings and healthcare. leave for female workers due available only for certain that need attention in relation 3. Employee rights All of the components are to the period of menstruation, positions such as Director to employment in Indonesia: mandatory with the exception maternity and miscarriage, or Technical Advisor. a. Working hours of healthcare, should the leave due to marriage or 1. Contracts Normal working hours are employer provide higher or death of family members. Expatriate employees must Indonesian Manpower Law 7 hours per day or 40 hours at least the same benefits obtain a proper work and stay states that employment can per week for 6 working days as the Jamsostek programme. 4. Unions permit in order to become be made verbally and in writing. in a week or 8 hours per day Workers are given the legally employed and reside To avoid legal dispute it is and 40 hours per week for The programme is maintained opportunity to form their in Indonesia. best to have an employment 5 working days in a week. by a designated state-owned own Union. A Union can act in contract in writing. company, PT Jamsostek. representing workers’ interests An Indonesian counterpart Working in excess of the normal Jamsostek contributions are to the employer. Each Union must be employed for each There are two types working hours will be normally made by both employer and must have their own by-laws expatriate being employed of employment contract: considered as overtime employee at prevailing rates. and manage their own budget. to support transfer of and workers are entitled to knowledge and technology a. Fixed-term contracts; compensation for it, except for c. Wages and remuneration 5. Termination to Indonesian employees. b. Permanent employment workers in a management role. An employer is obliged to Indonesian Manpower Law A ratio of 1:3 between contract. comply with the rate of stipulates several articles on the expatriates and Indonesian Normal break time will be a minimum wage for salary termination of employments. employees is expected. A fixed-term contract can only minimum of 30 minutes per determined by the Regional A lower ratio may be accepted be used for certain types of 4 hours of work and 2 days Government from each In principle, termination of in a case of difficulty in hiring jobs, namely seasonal jobs or per week. province. In Jakarta, for employment must be mutually Indonesian counterparts with jobs which will be completed agreed. Therefore, prior to the required qualifications. in a certain period of time. As a percentage of regular termination, an employer is salaries/wages obliged to discuss with the 7. Manpower report Bilingual contracts are Taxable Income individual employee or existing Companies are obliged to permitted. However, if under Borne by Borne by Labour Union in the company submit a Manpower Report dispute and interpretation employers employee regarding the termination annually. This report consists between both languages plan. If such discussion fails of working conditions such as is different, the Indonesian Working accident protection 0.24-1.74% – to resolve a mutual agreement, the minimum/maximum and version will prevail. Death insurance 0.3% – the employer can proceed with average wage, number and the termination only upon education level of both local 2. Staff hiring Old-age saving 3.7% 2% obtaining a declaration from the or foreign employees, etc. Staff hiring can be made by Healthcare* 3% – proper Industrial Relation Dispute either direct recruitment or Resolution Institution. outsourced. Direct recruitment * Maximum of IDR60,000/month for a married employee and IDR30,000 for a single employee 28 Trade

Foreign trade least 65% ASEAN origin. A Import restriction 1. An import trading company new reduction package and compliance can only import limited type The Indonesian government was implemented in January of goods maintains its commitment to 2004, dividing tariffs into non- Companies importing goods a free-trade policy, gradually ASEAN and ASEAN tariffs. into Indonesia must obtain an Under this New Regulation, reducing the overall level of Importer Identification Number the Ministry of Trade divides import tariffs. The focus on Indonesia’s key trade from the Ministry of Trade or types of imported goods into 21 trade liberalisation is primarily opportunities include textiles, the Investment Coordinating categories based on its Tariff/HS designed to support agricultural products and Board. In addition, to import Code. Furthermore, it provides a Indonesia’s medium-term electronics. certain types of products limitation that a trading company growth potential. However, including textile, shoes and can only import goods which falls the government has also Import duty electronic goods, an importer under one category. made moves to promote must possess a special import domestic production through Import duties in Indonesia licence from the Ministry 2. Limitation for a manufacturing import restrictions. vary between 0% to 170%. of Trade. company to import finished However, most imported items products Indonesia is also a member will attract duties in the range To protect domestic industry of the World Trade Organization of 0% to 15%. from certain imported goods, Currently, there are many (WTO). Bilateral negotiations the government imposes manufacturing companies which have begun with ASEAN and In addition to the customs import restrictions on certain are also engaged in the import its partner countries, including duties, an Indonesian company products including alcoholic trading business, i.e. importing Australia, China, and Japan, importing goods from overseas drinks, ammunition, and finished products for direct sale over free-trade pacts. may also be subject to value hazardous waste. to the customers. added tax, sales tax on luxury A free- goods and prepayment of Customs issues may create A manufacturing company will between ASEAN and China corporate income tax. a serious compliance obligation. not be given wide flexibility came into effect in January Non-compliance may lead to anymore to import finished 2010. The authorities are also To promote investment and significant additional exposure products for direct sale to making efforts to strengthen international trading, various to administrative penalties customer. The New Regulation multilateral and regional trade customs facilities are available, which can be up to 500%. only allows a manufacturing arrangements. Although the which include: In view of monitoring import company to import limited type authorities have gradually activities and increasing of finished products, such as: lowered the level of import • Exemption from value state revenue, controlling a. market testing products: goods tariffs, they also remain added tax and customs of import compliance by for market testing purposes and wedded to restrictive practices duty for importation of the Directorate General imported only for limited period. extending existing import bans capital goods and raw of Customs and Excise b. complementary products: such as on sugar and rice to materials for a certain period has recently been stricter. products which are imported boost domestic producers. for a new or expansion project. The Ministry of Trade finally has by the manufacturing importers Under ASEAN commitments issued a regulation effective as from and produced by the foreign Indonesia has reduced tariffs • Duty exemptions and at 2 May 2012 (New companies having a special for all products included in its preferential duties for most Regulation) which stipulates relationship with the importer. original commitment involving imported goods of ASEAN in particular the following two more than 7,000 tariff lines to Origin. In this case, ASEAN provisions: This New Regulation provides 5% or less for products of at origin certification is critical. a transition period up to 31 December 2012.

30 Banking in Indonesia

Banking Environment As part of ‘Know Your Bank Indonesia provides certain amount. Receipt of Rupiah by Customer’ rules, a bank limitations for Indonesian Foreign Parties greater than Indonesian banking institutions requires its corporate individuals, Indonesian legal Rp. 500,000,000 whether are typically classified into customers to provide legal entities (excluding banks) and in one transaction or several commercial and rural banks. corporate documents such foreign parties for buying foreign transactions within Commercial banks differ from as an incorporation deed and currencies. Based on a Bank one day would also require rural banks in the sense that the other relevant licences from Indonesia regulation, Indonesian information on the underlying latter are not involved directly the relevant government individuals, Indonesian legal transaction for the Rupiah in payment systems and have institution to enable opening entities (excluding banks) receipt, and should be a restricted operational area. an onshore account. and foreign parties can buy supported by documents foreign currencies using Rupiah evidencing the underlying In terms of operational definition, Local financing is available from banks. However, if the transaction. ‘Foreign parties’ commercial banks in Indonesia through bank loans or the purchase of foreign currencies include overseas Bank office of are classified into non-syariah capital markets. Such exceeds US$100,000 or its a Bank having its head office and syariah-based principle companies used to introduce equivalent per month, such in Indonesia, overseas corporate commercial banks. There are capital from foreign sources purchase would require some office of a company incorporated 122 commercial banks in by using a commercial bank to additional documentation. in Indonesia, foreign citizens, Indonesia as of May 2010, of swap the foreign currency for Purchases of foreign currency foreign legal entities or institutions which four are state banks and Rupiah. A company may raise against IDR by a resident and Indonesian citizens having 118 are private national banks. funds by selling shares to local or non-resident of a value permanent residence in other and foreign investors through not exceeding US$100,000 countries and that are not Business and Banking the Indonesia Stock Exchange. should be accompanied with domiciled in Indonesia. Foreign exchange controls do a formal signed declaration Indonesian Rupiah cannot be not exist currently in Indonesia. with sufficient stamp duty, On October 2010, Indonesian circulated or convertible in the However, transfers of funds stating that the foreign Government has issued the global market. Therefore, all exceeding US$10,000 (or its exchange purchase transaction Law number 8 of 2010 on entities wishing to conduct equivalent) from and within against IDR does not exceed Prevention and Eradication transactions denominated in IDR Indonesia should be reported US$100,000 or its equivalent of the Crime of Money must open onshore accounts. to the Central Bank. per month across all banks Laundering to substitute the in Indonesia. For purchases previous Law number 15/2002 of foreign currency against and Law number 25/2003. IDR above US$100,000 or its In accordance to the issuance Type Features equivalent per month across all of the latest Bank Indonesia banks in Indonesia, additional Regulation No 11/28/PBI/2009 Savings The initial starting point of banking relationships. documents evidencing the concerning Implementation of Account Payment and transfers – the most liquid assets. underlying transaction, a signed Anti Money Laundering and Interest yielding account mostly available in copy of tax identity (this does Combating the Financing of major currencies (US$ and IDR). not apply for foreign parties), Terrorism programme, the Laws and a signed declaration letter emphasize the implementation Cheques or day-to-day payments (overdraft with sufficient stamp duty of Customer Due Diligence Current facility available depending on credit standing). declaring the validity of the or Know Your Customer Account Payment flexibility mostly available in major underlying documents and that principle in Banking Industry currencies (US$ and (IDR). the underlying document only and reporting of suspicious entitles the purchase of foreign transaction to Financial Time Safe return with higher interest rate. Wide currency against IDR in the Intelligence Unit, INTRAC Deposit range of currencies and tenors. Indonesian banking system at (Indonesia Financial Transaction 32 the maximum corresponding Report and Analysis Centre). HSBC in Indonesia Overview

The HSBC Group in Indonesia Awards for Excellence is represented by: – Best International Trade Bank HSBC Global Network in Indonesia – Trade Finance – The Hongkong and Shanghai Magazine (2009-2011). The Hongkong and Shanghai Banking Corporation Limited, Banking Corporation Indonesia (IMO). – Best International Cash Limited is the founding IMO has operated in Indonesia Management Bank in Indonesia and a principal member of the since 1884, offering a broad – Euromoney (2008-2010). HSBC Group, with over 8,000 range of banking and financial properties in 87 countries and services to multinational – Best Foreign Islamic Finance territories and is one of the corporations, local businesses Bank in Indonesia (Alpha South world’s largest banking and and individual customers. East Asia Awards, 2010). financial services organisations. IMO serves its customers through 107 service outlets with – Country Award for Best main branches in 5 major cities. Corporate/Institutional Internet Banking in Indonesia – Global – PT HSBC Securities Finance Awards (2009-2010). Indonesia (HCID). HCID was established in 1989 – Overall Bank – Best Foreign and is 85% ultimately owned by Bank in Indonesia (Alpha South the HSBC Group. It is licensed East Asia, 2009). as a broker/dealer of securities and underwriter, with primary – Best Co-brand card for services in advisory and debt HSBC Airasia card (Lafferty capital markets. Award, 2009).

– PT Bank Ekonomi Raharja Corporate Sustainability Tbk (BER). HSBC Kita is part of HSBC A publicly-listed bank, BER was Group’s global commitment acquired in May 2009 and is to community enhancement 98.9% ultimately owned by the in Indonesia based on 5 pillars: HSBC Group. Its strength is in Community Investment, serving domestic SME and self- Risk Management, Business employed segments through its Development, Carbon Footprint 92 service outlets in 27 cities. and People & Diversity.

34 Country overview

Capital city Jakarta

Area and population Area of 1,919,440 sq km and population of 238 million

Language Indonesian

Currency Rupiah

International dialling code +62

National Holidays National Holidays in 2012

New Year 1 January Chinese New Year 23 January Prophet’s Birthday 5 February Nyepi Day 23 March Good Friday 6 April Waisak Day 6 May Ascension Day of Christ 17 May Lailiat Al Mi’Raj 17 June Independence Day 17 August Eid Al Fitr 19-20 August Eid Al Adha 26 October Islamic New Year 15 November Christmas Day 25 December

Business and banking hours 8.30am to 5.00pm (Monday to Friday)

Stock Exchange Indonesia Stock Exchange

Political structure Unitary Presidential Republic

Economic statistics Current GDP: 6.5%. Foreign Direct Investment value for 2011 estimated at US$19,475.5 million*

*www. BKPM statistic and publication

36 Contacts

Laksmi Djuwita

Corporate and Inward Investment Service

Tel: +62 21 5289 0700

Email: [email protected]

Website: www.hsbc.co.id

Phone: +62 21 2551 4777

Address: HSBC Indonesia WTC, 3rd floor, Jalan Jendral Sudirman kav. 29-31 Jakarta 12920

3rd Edition: August 2012

Copyright

Copyright 2012. All rights reserved.

‘PwC’ and ‘PricewaterhouseCoopers’ refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.

38 141TP_Indonesia_011012_3