Juridical Review Of The Status Of A Subsidiary That The Parent Company Changes Status To Foreign Investment

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Juridical Review of the Status of a Subsidiary When the Parent Company Turns into a Foreign Investment

Introduction

Foreign Investment (PMA) is a strategic step taken by companies to increase their potential for profits through investment in other countries. The main motives behind this investment are to gain profits from supporting factors such as low labor wages, proximity to the source of raw materials, wide market access, and the use of industrial technology and design. On the other hand, investment countries hope to increase national development through investor participation. However, problems often arise when the status of a subsidiary must be adjusted when the parent company changes its status to PMA. The law governing investment in Indonesia has not been explicitly and detailed explaining the status of a subsidiary within the legal framework of foreign investment.

Background of the Study

The Investment Coordinating Board (BKPM) issued BKPM Regulation No. 5/2013 which contains guidelines and procedures for licensing and non-permission in investment. Through this regulation, there is an obligation for PT Non PMDN/PMA whose shares are taken over by PT PMA to change their status to PT PMA. In the same year, the regulation underwent changes through BKPM Regulation No. 12/2013 which deleted a number of provisions that previously required subsidiaries to obtain principle permits. In particular, articles 28 paragraph 8 and 9 in Law No. 5/2013 which was deleted, showed that the change in the company's main status to PMA did not necessarily require a subsidiary to follow changes in status.

Methodology

This study uses a normative juridical and analytical descriptive approach. This study relies on secondary data from various legal sources, including books, legal norms, and relevant laws and regulations. This aims to gain a deeper understanding of the legal provisions governing the status of the subsidiary.

Analysis of the Problem

From the analysis, we can conclude that even though the parent company has changed its status into a foreign investment, subsidiaries are not automatically required to change their status to PMA. This indicates the need for further review of existing regulations in order to provide legal certainty for business actors and ensure that investment conditions remain attractive to investors.

Discussion

In this context, it is important for the government to focus more attention on foreign investment policies and how existing provisions have an impact on the company's structure. Simplification and clarification of rules will help increase investor confidence and speed up the investment process in Indonesia, which in turn can contribute to national economic growth. As a step ahead, a review of laws and regulations relating to the status of subsidiaries within the PMA framework must be a priority, in order to create a more transparent and accountable investment environment.

Conclusion

In conclusion, the juridical review of the status of a subsidiary when the parent company turns into a foreign investment is a complex issue that requires further review of existing regulations. The government must focus more attention on foreign investment policies and how existing provisions have an impact on the company's structure. Simplification and clarification of rules will help increase investor confidence and speed up the investment process in Indonesia, which in turn can contribute to national economic growth.

Recommendation

Based on the analysis, the following recommendations are made:

  1. The government must review and simplify the existing regulations related to the status of subsidiaries within the PMA framework.
  2. The government must provide legal certainty for business actors by clarifying the rules and regulations related to the status of subsidiaries.
  3. The government must increase investor confidence by simplifying and clarifying the rules and regulations related to the status of subsidiaries.
  4. The government must speed up the investment process in Indonesia by simplifying and clarifying the rules and regulations related to the status of subsidiaries.

Limitation of the Study

This study has several limitations, including:

  1. The study only focuses on the juridical review of the status of a subsidiary when the parent company turns into a foreign investment.
  2. The study only uses secondary data from various legal sources, including books, legal norms, and relevant laws and regulations.
  3. The study does not conduct a field study or survey to gather primary data.

Future Research

Future research can be conducted to:

  1. Conduct a field study or survey to gather primary data on the juridical review of the status of a subsidiary when the parent company turns into a foreign investment.
  2. Analyze the impact of the juridical review of the status of a subsidiary on the investment process in Indonesia.
  3. Examine the relationship between the juridical review of the status of a subsidiary and the national economic growth in Indonesia.

References

  1. BKPM Regulation No. 5/2013.
  2. BKPM Regulation No. 12/2013.
  3. Law No. 5/2013.
  4. Various books and legal norms related to foreign investment in Indonesia.
    Frequently Asked Questions (FAQs) on Juridical Review of the Status of a Subsidiary When the Parent Company Turns into a Foreign Investment

Q: What is Foreign Investment (PMA) and how does it affect the status of a subsidiary?

A: Foreign Investment (PMA) is a strategic step taken by companies to increase their potential for profits through investment in other countries. When a parent company changes its status to PMA, it may affect the status of its subsidiary, but it is not automatically required to change its status to PMA.

Q: What are the main motives behind foreign investment?

A: The main motives behind foreign investment are to gain profits from supporting factors such as low labor wages, proximity to the source of raw materials, wide market access, and the use of industrial technology and design.

Q: What is the role of the Investment Coordinating Board (BKPM) in regulating foreign investment in Indonesia?

A: The Investment Coordinating Board (BKPM) is responsible for regulating foreign investment in Indonesia through the issuance of regulations and guidelines.

Q: What are the implications of BKPM Regulation No. 5/2013 on the status of a subsidiary?

A: BKPM Regulation No. 5/2013 requires PT Non PMDN/PMA whose shares are taken over by PT PMA to change their status to PT PMA.

Q: What are the implications of BKPM Regulation No. 12/2013 on the status of a subsidiary?

A: BKPM Regulation No. 12/2013 deleted a number of provisions that previously required subsidiaries to obtain principle permits, indicating that the change in the company's main status to PMA does not necessarily require a subsidiary to follow changes in status.

Q: What is the need for further review of existing regulations on the status of a subsidiary?

A: The need for further review of existing regulations on the status of a subsidiary arises from the complexity of the issue and the lack of clarity in the existing regulations.

Q: What are the benefits of simplifying and clarifying the rules and regulations related to the status of subsidiaries?

A: Simplifying and clarifying the rules and regulations related to the status of subsidiaries can increase investor confidence, speed up the investment process in Indonesia, and contribute to national economic growth.

Q: What are the recommendations for the government to improve the investment environment in Indonesia?

A: The government should review and simplify the existing regulations related to the status of subsidiaries, provide legal certainty for business actors, increase investor confidence, and speed up the investment process in Indonesia.

Q: What are the limitations of this study?

A: This study has several limitations, including the focus on the juridical review of the status of a subsidiary when the parent company turns into a foreign investment, the use of secondary data, and the lack of a field study or survey.

Q: What are the future research directions?

A: Future research can be conducted to conduct a field study or survey to gather primary data, analyze the impact of the juridical review of the status of a subsidiary on the investment process in Indonesia, and examine the relationship between the juridical review of the status of a subsidiary and the national economic growth in Indonesia.

Q: What are the references used in this study?

A: The references used in this study include BKPM Regulation No. 5/2013, BKPM Regulation No. 12/2013, Law No. 5/2013, and various books and legal norms related to foreign investment in Indonesia.