The classic definition of a foreign direct investment (FDI) company is a company from one country making a physical investment in a factory or a business expansion in another country and can be extended to include investments made to acquire a lasting interest in enterprises operating outside of the national economy of the investor. The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a Multinational Corporation (MNC). The intricate process required to set up a multinational corporation for the purpose of foreign direct investment is detailed.

To begin the process of foreign direct investment, many companies choose a Representative Office, referred to as a PMA (Penanaman Modal Asing) in the Indonesian language. The Representative Office is your first line of interaction with all of the various Ministries involved in setting up a Foreign Direct Investment (FDI). The following is a list of the various offices involved and their purpose:

  1. Foreign Direct Investment Representative Office for the Ministry of Finance to accomplish all of your organization's commercial banking requirements.
  2. Foreign Direct Investment Representative Office for the Investment Board (BKPM) to accomplish all of your organizations legal negotiation for the FDI.
  3. Foreign Direct Investment Representative Office for the Ministry of Manpower for the expatriate visas and other manpower requirements.
  4. Foreign Direct Investment Representative Office for the Ministry of Industry and Trade for the agent of negotiation for Import and Export.
  5. Foreign Direct Investment Representative Office for the Ministry of Public Work for the use of consultants and contractors.
  6. Foreign Direct Investment Representative Office for the Ministry of Energy and Mineral Resources in the event the Foreign Direct Investment involves mining.

© PTG 2013