The Government of the Republic of Indonesia enacted the Investment Coordinating Board (Badan Koordinasi Penanaman Modal-BKPM) in 1973 to assist the President of the Republic of Indonesia in formulating national policies on Investment. This board is responsible for the planning, promotion licensing, control and evaluation of investments. In cooperation with Regional Investment Coordination Board (Badan Koordinasi Penanaman Modal Daerah - BKPMD) and other related agencies, it also undertakes the supervision of investment projects, and provides advises to solve difficulties faced during the period of implementation.

Since 1985, it has progressively liberalized both its trade and foreign investment policies. Foreign direct investment has in most cases proven to be a stronger way to develop outward-looking industries than infant industry protection policies under the inward-looking approach.

Approval for foreign investment can be obtained in Indonesia either through the BKPM office in Jakarta or the BKPMD office in every Province, and also through Representative Office of the Republic of Indonesia all over the world such as Indonesian Embassies, Consulate Generals and Consulates. Following the evaluation process, the Chairman of BKPM or Head of Corresponding representative of the Government of the Republic of Indonesia or the Chairman of BKPMD will issue the investment approval. To implement an approved investment project, the BKPM or the BKPMD will issue the following permits / licenses as proposed by the investors: customs approval letter, limited importer license (APIT), foreign manpower plan approval (RPTKA); and permanent business license (IUT).

Under the current regulation, a foreign capital investment (PMA) company is granted a 30 year period to operate after establishment. During this time, if an additional investment to the original were undertaken, then a further 30 year period would be granted for the project. It is also possible to extend the termination by another 30 year.

A foreign capital investment (PMA) company is generally considered to be a joint venture between foreign and Indonesian partners either as corporation partnership or individual partnership. There are no specific requirements on the minimum amount of investment as the parties concerned are left to determine their sums. In practice, the investment approval board requires minimum capital of US $ 25.000. The PMA Company may also be established as fully owned by the foreign investor. However, no later than 15 years of its commercial operation, some of it shares must be divested to Indonesians through the local stock exchange.