Problems relating to Trade and Investment on Indonesia
11. Restriction on profits remittance abroad |
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Issue |
Issue details |
Requests |
Reference |
| (1) Refusal / Difficult Remittance of Royalty | - GOI totally disallows remittance of royalty for reasons that there is no economic rationality in royalty. | ||
| (2) Collection Deadline and the Rate of Running Royalty | - Concerning the period of running royalty, while the term is indefinite for trademark/brand royalty, that of technical know-how is 15-years maximum, while the rate is 5% maximum. Even at 4%, it takes a haggling with the authority. | - There is no clear-cut guideline on "15-years maximum" and running royalty | |
| (3) Collection on ROI is restricted | - Minister's Decrees, Cabinet Orders, etc. have been promulgated to restrict investor's collection of return on investment (ROI) under the production sharing contract (PSC). These Decrees and Orders in part retroactively apply to the existing PSCs, and may impact the future business profitability. | - In light of securing the investment environment and operational profitability, it is requested that GOI hereafter makes it a point to secure opportunities to exchange dialogues with FFEs and operators of oil and gas businesses, before introducing the legislative measures. | - Minister of Energy and Mineral Resources Order No.22 (2008) - National Budget Act 10 November 2008, Act No.41 25 August 2009, as amended by Act No.26 (2009) - Regulation on Collection of Cost and Income Tax (No.79, 2010) |
| (4) Shortage of the Contract Period under Production Sharing Contract (PSC) | - Extension is necessary on the contract period under the profit sharing contract (PSC) for contract continuation, maintenance of production volume, securing economy, and consummation of finance. Contractor's continuation of long-term investment and assurance of future return on investment (ROI) are necessary for starting new production, and maintenance and expansion of the existing production volume. Performance under existing and new sales contract as well as repayment of bank borrowing becomes possible only upon fulfillment of all these requirements and necessities. | - It is requested that GOI: -- propels consultation on the extension of the Contract Period under PSC, and -- get it extended as soon as possible. |
- Regulation of Minister of Energy and Mineral Resources No. 35/2008), Article 28 |
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