BVI companies well set to invest in Indonesia

The British Virgin Islands (BVI) company has long been a vehicle of choice for Indonesian corporate and finance deals. Foreign direct investment (FDI) into Indonesia structured through BVI entities totalled US$157.4 million in Q1 of 2014 in respect of 70 projects. This put the BVI ninth in terms of FDI into Indonesia, behind only such financial heavyweights as the US and Hong Kong, and traditional trading partners such as the Netherlands. BVI companies are involved in large-scale, tangible and valuable projects in Indonesia across a spectrum of sectors including mining, retail, and the food industry, and bring the corresponding benefits of FDI injection into these areas.

Investors into Indonesia remain attracted to the BVI for its common-law legal principles, administrative simplicity and ability to ring-fence liabilities. BVI as a jurisdiction is recognized by regulators worldwide, enabling investors to exit through a private sale or a listing on a major stock exchange. BVI companies can list their shares on major international stock exchanges, including the London Stock Exchange, the New York Stock Exchange and the Hong Kong Stock Exchange.

The BVI does not impose a double layer of tax or regulation. BVI companies are flexible in their structure and handling, and there are few prescriptive statutory requirements. Ultimately, a BVI business company will be more flexible in operation, particularly if the company needs to raise equity finance for working capital purposes. The incorporation and ongoing costs of using a BVI company are low, while high standards are maintained as required by the International Organization of Securities Commissions (IOSCO), of which the Financial Services Commission in the BVI is a member.

MICHAEL GAGIE is managing partner of Maples and Calder’s Singapore office and global head of its British Virgin Islands law practice. IAIN ANDERSON is an associate based in Singapore.