Legal Literacy - This article discusses the scope of investment in Indonesia. Investment is defined as the activity of investing capital or money in a company or project with the aim of making a profit. In Indonesia, investments are divided into two types, namely direct investment and indirect investment. Let's check out the following article!

By: Hafid Nafi Rozzaki

Understanding Investment

Before talking about the scope of investment, we need to understand what investment is. Investment in the Indonesian Dictionary, is defined as the activity of investing capital or money in a company or project with the aim of making a profit.

The notion of investment has a very broad scope, because it includes direct investment (direct investment) and indirect investment (indirect investment) or commonly known as portfolio investment.

There is a fundamental difference between direct investment and indirect investment, especially in terms of company management and supervision to related to shareholders in the company.

Scope of Investment: Direct Investment (Direct investment)

Direct investment according to the World Bank, is stated as a form of long-term investment in a new or existing business activity by exercising control over the management of the company actively. So the investing party, namely the investor, is actively involved in the management control and has an influence on the company's performance and is responsible for the company's development.

Direct investment can be done in two ways, namely by establishing a new company or by investing in an existing company in order to expand the business, merger or acquisition. The investors in direct investment are domestic investors (PMDN) and Foreign Investors (PMA)

In Indonesia, direct investment is regulated in Law No. 25 of 2007 concerning Investment (Law 25/2007). The term investment in Law 25/2007 is intended as direct investment. This is emphasized in the explanation of Article 2 of Law 25/2007, where what is meant by investment in all sectors of the Republic of Indonesia Indonesia is direct investment and does not include indirect or portfolio investments.