Home Blog Investment in Indonesia 2023: Top 5 Sectors You Should Consider Business Setup | Company Registration | Indonesia Investment in Indonesia 2023: Top 5 Sectors You Should Consider InCorp Editorial Team 22 August 2023 4 minutes reading time Table of Contents Indonesia’s Economic Outlook In 2023 3 Key Factors of Why You Should Invest in Indonesia What Sectors Show Great Potential for Investment Opportunities in Indonesia? Get the Right Investment Opportunities in Indonesia with InCorp Indonesia’s Economic Outlook In 2023 Global economic growth in 2023 has been fluctuating. However, Indonesia can maintain its growth rate. The global market continued to shop for Indonesia’s abundant natural resources like palm oil, nickel, and tin. Thanks to the exports sector in Q1 of 2023 and other avenues of investment opportunities in Indonesia. The steady trading condition indicates Indonesia’s economy is reaching the government’s economic growth target of about 5% at the end of the year. The increase in Indonesian export trade to Switzerland also contributes to the plan. The export sector reached new highs in the first quarter of 2023. The total value of exports in early May 2023 was up to USD 23.50 billion which is 9.89% higher than the previous month. Other than trading, the Indonesian government lifted most travel restrictions in Indonesia. Foreign tourist arrivals almost tripled between January and March. Combining Indonesian exports of natural commodities with the travel boom, it is no surprise that Indonesia is well on its way to a full economic recovery. 3 Key Factors of Why You Should Invest in Indonesia With the government eager to enact prudent macroeconomic policies and reforms to improve the investment landscape, Indonesia presents vast opportunities for foreign investors. Some key factors include: 1) Indonesia provides various benefits such as removing or reducing tariffs, as it is part of ASEAN’s regional free trade agreements (FTA). Typically, all taxable goods imported into Indonesia have a 7.5% import duty and a 10% value-added tax. However, under the agreement, goods originating from ASEAN benefit from an applied 0-5% tariff rate. 2) The Special Economic Zones (SEZs) The Special Economic Zones (SEZs) in Indonesia offer investors access to preferential regulatory infrastructure and taxation to channel investment into specific locations. Businesses in these zones enjoy fiscal incentives such as tax allowance and withholding import tax that help reduce the tax burden on a newly set up business. Also, non-fiscal incentives are provided for Immigration, Business licenses, and land rights to help enterprises seamlessly commence their operations. 3) ASEAN’s labor market host Being a host to ASEAN’s most prominent labor market, the government offers tax incentives for establishing training programs for unskilled laborers, thus making the country ideal for labor-intensive manufacturing. Read more: Indonesia Elections in 2024: What will Happen to Investment? What Sectors Show Great Potential for Investment Opportunities in Indonesia? 1. Healthcare and Pharmaceuticals With the introduction of the Positive Investment List, Hospitals with more than 200 beds, pharmaceutical manufacture, and wholesale industries are now open to 100% foreign shareholding. Given the sector’s large market size, new demand for products treating chronic diseases and the government’s amplified spending make the healthcare sector a lucrative opportunity for foreign investors. 2. Manufacturing Investment in Indonesia Production of electronics, automotive, textiles, footwear, food and beverages, and chemicals have significantly contributed to the economy. It forms 20% of Indonesia’s GDP and has had a 4% year-on-year growth since 2016. 3. Startup Investment in Indonesia: E-Commerce and Digital Economy Based Industry Indonesia’s digital economy has seen exponential growth and is expected to be valued at US$124 billion by 2025, making the country a prime location to invest. Avenues such as Digital Wallets, Cloud Kitchen Services, Online Education and Consultation, Delivery Services, and Digital Marketplaces are viable options for investors seeking to capture Indonesia’s digital space. For example, some tech giants are now acquiring businesses, such as local low-capital banks, to Read more: Unlocking Investment Opportunities in the New Capital of Indonesia 4. Fast-Moving Consumer Goods According to market research conducted by Technavio, Indonesia’s retail market is expected to grow by US$37.2 billion during 2021-2025. The market also will accelerate at a Compound Annual Growth Rate of 4.06%. In 2019, Global Retail Development Index also ranked Indonesia’s retail market in fifth place based on its investment attractiveness, making FMCG one of the productive sectors foreign investors should consider. 5. Infrastructure Investment in Indonesia Indonesia has shown improvement in its efforts to lower the risks of its infrastructure projects through schemes like viability gap funds (VGF) and public-private partnerships (PPP), as cited on Infrastructure Asia – a Singapore-based infrastructure investment advisory. Indonesia also aims to invest around US$430 billion in infrastructure from 2020-2024 – a 20% increase compared to 2019. Get the Right Investment Opportunities in Indonesia with InCorp Despite the ample investment opportunities in Indonesia, investing overseas comes with its fair share of challenges. While you focus on the strategic aspect of your business, InCorp Indonesia full range encompasses company registration, recruitment, and even your tax and accounting needs. Read Full Bio Verified by Ales Cina Consulting Manager at InCorp Indonesia Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights. Frequently Asked Questions What are the shareholder rights in a PMA company? Shareholders of a PMA Company in Indonesia have various rights, including voting rights in general meetings, entitlement to dividends and liquidation proceeds, and access to information. They must approve significant matters through general meetings of shareholders with specified quorums, such as: Amending articles of association Changing share capital Appointing or dismissing directors and commissioners Approving major transactions, dividends, and financial statements Company reorganization How much is the minimum fund required to establish a PT PMA business in Indonesia? The investment requirement for PMA companies in Indonesia varies based on their classification under the Indonesia Industrial Standard Classification (KBLI). Generally, a minimum investment of IDR 10,000,000,000 (ten billion Indonesian Rupiah), excluding investment in land and buildings, is needed to conduct one business activity in one location. Can a PMA company keep non-Rupiah bookkeeping and use a language other than Indonesian? For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance. How is the process of liquidating a PMA company in Indonesia, and how long does it take? The procedures for (voluntarily) liquidation typically involve the following steps: Conduct a general shareholder meeting to approve the liquidation and the liquidator’s nomination Notify the Ministry of Law and Human Rights as well as the creditors of the liquidation and the distribution plan for the assets by newspaper notice All business licenses and tax numbers should be canceled or revoked; the tax office will conduct a tax audit to revoke the tax number Make sure creditors are paid and that any liquidation funds are distributed to shareholders (if any) Conduct a general meeting of shareholders to approve the liquidator’s discharge and acquittal Notify the Ministry of Law and Human Rights of the liquidation’s outcome. After receiving the notification, the Ministry of Law and Human Rights will deregister the company’s status as a legal entity and remove its name from the Company Registry Release the liquidation’s outcome in a newspaper Completing the liquidation process can take around two years. Get in touch with us. 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