The 2025 Success Guide to Investing in Indonesia

The 2025 Success Guide to Investing in Indonesia

  • InCorp Editorial Team
  • 15 October 2024
  • 4 reading time

Every crisis brings new opportunities to start something, like a new business. If there is something good that follows the COVID-19 crisis, it is a quicker business incorporation process, and investing in Indonesia becomes a great opportunity. Everything can now be done online, including company registration. Moreover, your company can be registered in less than 1.5 months with this online process.

Although being hit hard by the pandemic, Indonesia has implemented several measures to recover in terms of its economy. As reported by the Indonesia Economic Prospects by the World Bank, the real GDP of Indonesia is projected to increase to 5.2% in 2023 on recovering private consumption growth.

Investing in Indonesia: Foreign ownership

Before incorporating a company or business in Indonesia, it is important for foreign investors to consult the Negative Investment List. It is a list that regulates allowance and restrictions on foreign ownership.

To make it easy for you to do business in Indonesia, we have summarized highly profitable sectors that can be explored by foreign investors, along with their foreign ownership allowance:

  • Business sectors allowing 100% foreign ownership: e-commerce businesses (min. investment: IDR 100 billion), bars, cafes, restaurants, hospital services, hospital management and consultancy, raw materials manufacturing for pharmaceuticals, and distribution affiliated with production, among others.
  • Business sectors are allowing max. 67% foreign ownership: medical equipment testing institutions, internet service providers, call centers, airport activity services, and distribution and warehousing, among others.
  • Business sectors are allowing max. 49% foreign ownership: e-commerce businesses (investment below IDR 100 billion), land transportation, passenger land transportation, and medical equipment supplier, among others.
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Investing in Indonesia as foreigners

Investing in Indonesia with an Investor KITAS

A factor that plays a significant role in contributing to a more investment-friendly environment in Indonesia is Investor KITAS. Indonesian investor KITAS is attractive because of its easy application and work permit fee waiver.

Foreign investors do not need to wait months to start working after pouring the initial investment. When they satisfy all the investment requirements, the work permit’s hefty fee of USD 1,200/year is no longer required.

Foreign investors can choose between the two types of investor KITAS available, namely the 1-year or 2-year KITAS. Once the KITAS is secured, they are permitted to enter and leave Indonesia unlimited times as long as the KITAS is still valid. It is also worth knowing that getting an investor KITAS is much faster than getting a regular work KITAS.

The requirements for an investor KITAS application are quite easy to satisfy: a minimum of IDR 10 billion in authorized capital, IDR 10 billion in paid-up capital, and IDR 1 billion in personal shares.

Apply for Investor KITAS in Indonesia
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Next Steps after Incorporation in Indonesia

After successful company incorporation, the next step is opening a corporate bank account, preferably at a bank licensed as a Foreign-Exchanged Bank, as it can handle foreign currencies. In addition, businesses engaging in export and import activities must undertake the customs registration process, with exemptions applying when certain conditions are met (contact us for further details).

Finally, all types of foreign investment companies in Indonesia that do business must fulfill their corporate income tax obligations. In Indonesia, a general flat rate of 22% applies. Small enterprises with an annual turnover of less than IDR 50 billion can enjoy a 50% discount off the standard corporate income tax rate.

Investing in Indonesia: How InCorp Indonesia Can Assist

It may be a challenge for foreign investors to comply with local regulations of company establishment, KITAS application, and business licenses for their business setup journey. That’s why InCorp exists.

As part of InCorp Group in Singapore, we are a leading consulting company in Indonesia providing integrated market-entry and corporate services. Start investing in Indonesia right away. We are ready to assist.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

It depends on the type of company you decide to establish.
  • In a local (PT) company, a foreigner cannot become a commissioner. It is possible to have a foreign director, but there has to be at least one local Director in PT.
  • In a foreign-owned (PT PMA) company, a foreigner can be a director or a commissioner.

Foreign citizens can expand to Indonesia and establish a foreign-owned company (PT PMA). Depending on the business line you want to pursue, there are regulations for foreigners to follow when setting up a company in Indonesia. One of the most important is the so-called Positive Investment List, which is updated frequently and with other Indonesian regulations.

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.

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.