NFT Indonesia A Lucrative Opening for Foreign Investors

NFT Indonesia: An Emerging Opportunity for Foreign Investors

  • InCorp Editorial Team
  • 16 May 2023
  • 4 minute reading time

With the craze of NFTs becoming more prevalent each waking day, the question everyone may fear to ask still stays the same. What are NFTs? ‘NFT’ stands for Non-Fungible Tokens. Now, what does non-fungible mean? Non-fungible means that it is one of a kind and cannot be replaced with something of equivalent value.

How do NFTs work?

NFTs are one-of-a-kind digital items or assets bought and sold on the Ethereum blockchain. Like Bitcoin and Dogecoin, Ethereum is a blockchain cryptocurrency supporting these NFTs and other transactions. NFTs are traded on a marketplace, with the most famous being OpenSea. When trading NFTs, a certificate of ownership for the NFT is transferred from one account to another. This newly purchased certificate is kept safely and separately in a digital wallet.

If up until here, you’re still finding yourself confused about cryptocurrencies, then first read up on our ‘Guide to Cryptocurrency in Indonesia’.

From the perspective of the creator economy, NFTs are paving ways for creators to unleash their potential in more inclusive, transparent, and decentralized methods. NFTs are opening up doors to a global audience and allowing more to interact in more meaningful ways, identifying growth strategies and leveraging talent. They have the freedom to release content to supporters and on a digital platform with complete control of their work.

How Indonesia Familiarizes Itself with NFT

With the world’s digital economy going in the direction of Metaverses, Web 3, and Decentralized Autonomous Organizations (DAO), artists from all walks of life are using this momentum to catapult themselves in this free-for-all creative space. NFTs have allowed creators total freedom of their content and have pushed interaction with their ever-inclusive communities. Including local artists.

Living in a peak creator economy era, artists are unleashing their potential more transparent and decentralized way by constantly looking for new ways to grow and leverage their talent. One of the early local adopters in this space, Art Moments Jakarta, has fully supported the digital economy by taking a hybrid live-online approach to the exhibition in 2021. This event brought together a community of over 64 local and international artists, galleries, and curators.

One breakthrough for the NFT community in Indonesia was Indonesia’s first-ever NFT artwork competition called ‘NFT Art Prized Moments’ held on the ‘environmentally friendlier’ Tezos blockchain. For local NFT artists, being given a platform was an indicator of only more significant NFT based events in the future. For fellow Indonesians seeing NFTs supported by a notable community such as Art Moments Jakarta, the idea of NFTs is slowly but surely getting the attention it duly deserves, especially when moving to a more digitized world.

NFT Indonesia: Understanding The Regulatory Aspects

With the trend of NFTs gaining constant momentum, from a legal point of view, Indonesian authorities have taken an interest in examining the existence of blockchain technology. After several internal discussions, it is recognized that assets using cryptocurrency must be reported for the annual tax return.

However, Indonesia’s tax laws on blockchain technology still have no specific regulations yet. Which makes it difficult for NFTs to fall into a particular category as it adopts a non-fungible characteristic.

With Indonesian banks recognizing only the rupiah for monetary exchange, cryptocurrencies used for trading NFTs fall under a grey area of legal issues in Indonesian law. A decentralized NFT marketplace makes the applicable laws quite unclear for NFT transactions.

This opens up clear opportunities for international arthouses, artists, and any sort of digital creator to thrive in this somewhat confusing Indonesian market. With the support of proper communities, using the freedom of blockchain technology, big tech, and digital companies can conduct early activities in Indonesia, even after having to comply with several statutory obligations such as tax obligations or complicated business registrations.

Seeing the digital economy boom, it would be irresponsible not to consider the aforementioned regulations. However, considering the business potential it has for a company, having a local entity helping out in business activities would be most advisable. Using such a situation would put companies in the early adopters’ stage when setting up business activities in Indonesia.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.