Investing in Balikpapan: Capitalize on Business Opportunities in Indonesia

In the heart of East Kalimantan lies a thriving business opportunity Indonesia is eager to embrace. Balikpapan, a city teeming with potential, offers an enticing landscape for entrepreneurs.

In this article, we’ll navigate the steps, strategies, and secrets to setting up a successful enterprise in this dynamic hub. Whether you’re an established entrepreneur or a budding business enthusiast, prepare to embark on a journey filled with boundless potential and growth.

Business potential in Balikpapan

Located on the southeastern coast of East Kalimantan in Indonesia, Balikpapan is a seaport city facing the Makassar Straits. One of Indonesia’s most bustling cities with abundant natural resources, Balikpapan is well-known for its oil, coal, and mining industries. 

The dynamic oil, coal, mining, and other emerging industries are why almost all domestic flights go to Balikpapan instead of Samarinda.

With a population of over 736,000 and the rapid development of infrastructure and digital scene, Balikpapan is an intriguing mix of business hub and stopover destination.

Why invest in Balikpapan? 

There is a bright prospect for business opportunities in Balikpapan. Big plans are going on, such as infrastructure development, refinery expansion, and digital-based business evolution.

Here are the reasons, in elaboration, that you should invest in Balikpapan:

Infrastructure development

The construction of the Balikpapan-Samarinda toll road is one of the most significant projects in Balikpapan. 

This project is currently underway and is part of the Indonesian government’s plan to create 1,000 kilometers of additional toll roads by the end of 2019. The toll road network in Indonesia spans 950 kilometers across the country.

The Indonesian government and loans from China fund the construction of the 99-kilometer-long Balikpapan-Samarinda toll road. This project has an estimated investment of US$985 million (IDR13.1 trillion).

Private-sector investments are also involved in certain aspects of the project. Upon completion, this toll road is anticipated to reduce travel time between Samarinda and Balikpapan from three hours to one hour.

Refinery Development Master Plan (RDMP)

To enhance the product and boost the competitive edge of refineries in Indonesia, RDMP was created to revamp the five existing refineries in Balikpapan (East Kalimantan), Cilacap (Central Java), Balongan (West Java), Dumai (Riau), and Plaju (South Sumatra).

The RDMP also aims to meet the fuel demand in cities in Indonesia, including Balikpapan. Only by growing the refinery industry will be able to achieve the energy security goal in the country. 

By coinciding with the newly introduced Grass Root Refinery project, the completion of RDMP is expected to boost fuel production by 150%.

Digital-based business expansion

Balikpapan is now one of Indonesia’s most active digital application user cities. As a result, this promotes the expansion of digital businesses in the city.

One of Indonesia’s most prominent digital applications, Go-Jek, plans to expand its services to Balikpapan, including online transportation, food delivery, logistics, and digital payment.

Therefore, it is not surprising to see that with the massive use of digital applications in Balikpapan, more and more businesses will leverage this trend and emerge. 

The digital evolution in Balikpapan is particularly advantageous for micro, small, and medium businesses.

What are the types of legal entities in Balikpapan?

As a general guideline, foreign investors should acquaint themselves with Balikpapan’s three types of legal entities, as outlined below.

Foreign-Owned Company (PT PMA) 

Foreign investors can own a foreign-owned company in Balikpapan. Only PT PMA allows 100% foreign ownership. The percentage of ownership, however, is based on the business sector you’re in. You can refer to the restrictions in the Negative Investment List.

A foreign investor must meet the below requirements to set up a PT PMA in Balikpapan:

• IDR 10 billion as the minimum investment
• IDR 10 billion as the minimum paid-up capital
• Use Online Single Submission System (OSS) to apply for business permits and licenses

Local Company (PT)

Setting up a local company is the easiest option, but foreigners need help to own one. However, you don’t need to worry if you’re interested in establishing a PT.

You can start doing business in Balikpapan through a special-purpose vehicle arrangement that provides professional shareholders/commissioners/directors with 100% of the company ownership.

Representative Office

Overseas parent companies often use a representative office to test the market and establish its presence in Indonesia. The primary purpose of this entity is to do market research, not to perform any profit-generating business activities.

Once your brand has established its presence in the country, you can opt to develop either a local or foreign company, PT PMA.

How to set up your business in Balikpapan 

With a wealth of experience in aiding clients with business incorporation and licensing, InCorp Indonesia stands prepared to facilitate your entry into the Indonesian market.

Whether you’re in the process of selecting the ideal legal entity for your business or seeking additional guidance on establishing your enterprise in Balikpapan or any other Indonesian city, don’t hesitate to reach out.

Complete the form below, and we’ll promptly respond to your inquiries.