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ndonesia has emerged as one of Southeast Asia’s most attractive destinations for foreign direct investment (FDI), offering a vast consumer market, political stability, and abundant natural resources. However, for foreign investors, entering Indonesia’s market requires an understanding of its unique legal and regulatory environment.
This guide provides a clear overview of the legal framework for foreign investment in Indonesia, including company structures, sectoral limitations, licensing procedures, and recent policy developments.
Why Invest in Indonesia?
With a population of over 270 million, Indonesia presents immense growth opportunities in sectors such as infrastructure, manufacturing, digital economy, energy, and consumer goods. In recent years, the government has taken bold steps to attract FDI by simplifying business regulations through:
What Is a PT PMA?
Foreign investors are required to establish a PT PMA (Perseroan Terbatas Penanaman Modal Asing)—a limited liability company with (partially or fully) foreign ownership.
Key Characteristics
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Must be registered through BKPM (Indonesia Investment Coordinating Board)
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Requires minimum authorized capital (see below)
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Can conduct business in most sectors unless restricted
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Considered a legal entity under Indonesian law
💡 A PT PMA allows full operational presence, tax registration, and hiring capabilities.
Minimum Capital Requirements for Foreign-Owned Companies
Per BKPM Regulation No. 4 of 2021:
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Minimum total investment: IDR 10 billion (± USD 650,000) per business line
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Minimum paid-up capital: IDR 2.5 billion
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Applies per KBLI (Indonesian business classification code)
This ensures the investor is committed to long-term development in Indonesia.
The Positive Investment List (Daftar Prioritas Investasi)
In 2021, Indonesia introduced a new Positive Investment List that categorizes sectors as:
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Fully open to FDI
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Open with certain conditions (e.g., local partnership, licensing)
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Closed to FDI (e.g., narcotics, weapons, gambling)
Sectors like manufacturing, renewable energy, and digital technology are now 100% open to foreign ownership.
✅ Always consult the latest list via BKPM or legal counsel to determine sector eligibility.
Licensing & OSS (Online Single Submission)
The OSS system is Indonesia’s digital platform to streamline business licensing. After establishing your PT PMA, you must:
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Register for NIB (Business Identification Number)
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Apply for commercial/operational licenses based on your sector
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Register for tax ID (NPWP), BPJS (social security), and other compliances
OSS integration is mandatory for all businesses, local or foreign.
Common Challenges Faced by Foreign Investors
How AUFAR & Co Supports Foreign Investors
At AUFAR & Co Law Office, we guide foreign investors through every legal step—from entity setup and licensing to ongoing compliance and expansion.
Our services include:
We are committed to helping you invest with clarity, confidence, and legal certainty.
