Jakarta, CNBC Indonesia – J&T Global Company will carry out an initial public offering, aka Initial Public Offering (IPO) on the Hong Kong stock exchange. In the prospectus document, J&T openly admits to circumventing Indonesian law regarding restrictions on foreign investment.
In its prospectus, J&T explains the risks of their business in Indonesia. Companies owned by J&T in Indonesia are acknowledged to face the risk of violating regulations regarding the negative investment list (DNI). In the current DNI regulations, foreign entity ownership of companies operating in the courier sector is limited to 49%.
J&T Global, in the prospectus, explains how they will register PT Global Jet Express (the name of the J&T Indonesia company) as a domestic capital company (PMDN).
“We conduct our business through affiliated entities in Indonesia, parent companies in Indonesia and their subsidiaries. We have contracts with parent companies in Indonesia, shareholders in Indonesia, both corporations and individuals,” wrote J&T’s prospectus.
The agreement gives J&T Global effective control over affiliated consolidated entities in Indonesia, obtains all economic benefits from Indonesia, and has the option to purchase all shares in the company in Indonesia if Indonesian law allows.
At the Directorate General of General Legal Administration (AHU) of the Ministry of Law and Human Rights, PT Global Jet Express is registered as a company with Domestic Investment (PMDN) status.
However, in J&T’s prospectus, PT Global Jet Express is stated to be 100 percent owned by Winner Star Holding Ltd. Winner Star was then owned by Onwing GLobal Limited, which was owned by J& Global Express Limited based in the Cayman Islands. The controlling shareholder of J&T Global Express is Jet Jie Lie, founder of J&T.
Looking at this case, Hotman Paris & Partners Partner, Frank Alexander Hutapea said, the key to this case is Article 33 of the Investment Law and Article 12 of the Postal Law.
This legal regulation states that business actors are prohibited from making business agreements using other people’s names.
“According to the Postal Law, if a PT is a foreign investor (PMA), being a 49% shareholder is not enough, there are other obligations,” he said to CNBC Indonesia.
“Please ask the relevant ministry whether this violates the investment law and ask whether nominations through contractual arrangements are prohibited? and is this a nominee?” said Frans.
This was due to a discrepancy in the prospectus where J&T Global Express previously admitted that it did not have any shares in Indonesia.
It is known that J&T started its business in Indonesia and then slowly expanded overseas by collaborating with several e-commerce companies. J&T provides logistics services to e-commerce Taobao owned by Alibaba Group, retailer Shein to TikTok owned by ByteDance.
Even though Indonesia is the first market, in the first 6 months of this year, more than half of its revenue of $4 billion still came from China.
In its prospectus, J&T named Chinese technology giant Tencent, investment company Hillhouse, venture capital company Sequoia, and Singaporean state investment company Temasek as among the supporting investors in this action. They will all buy more shares in the IPO.
Meanwhile, J&T shares are targeted to go public on October 27.