What Are My Options: The Foreigner's Guide For Investment
Alright, where do I start?
As a foreign national seeking investment opportunities in Indonesia, your options are limited but viable. To legally conduct business activities, you'll need a Business Licence, which can be obtained by various business actors including individuals, business entities, representative offices, and foreign business entities.
Establishing Business Entity (PT PMA)
The primary pathway for foreign investors is establishing a PT PMA (Limited Liability Company of Foreign Investment). This structure allows you to conduct business using either fully foreign capital or as a joint venture with domestic investors.
Investment Requirements
PT PMA is classified as a "Large-Scale Business" requiring a minimum investment of more than Rp 10 billion (excluding land and buildings) per 5-digit KBLI business sector per project location.
Specific sectors have different thresholds:
- Large-scale trading: Rp 10 billion or per initial 4-digit KBLI
- Food and beverage services: Rp 10 billion or per initial 2-digit KBLI per location
- Construction services: Rp 10 billion or per initial 4-digit KBLI
- Industrial production: Rp 10 billion for multiple product types on one production line
- Property construction: Rp 10 billion (including or excluding land/buildings depending on project type)
Available Business Fields
Most commercial businesses are open to foreign investors, categorized as:
- Priority Business Fields
- Fields requiring Cooperative or UMKM partnerships
- Fields with specific requirements
- Unrestricted fields open to all investors
Closed Business Sectors
The following sectors are prohibited for foreign investment:
- Category I narcotics cultivation and production
- Gambling and casino activities
- CITES-listed fish species capture
- Coral and reef extraction for commercial use
- Chemical weapons manufacturing
- Ozone-depleting substance industries
- Alcoholic beverages (beer, wine, malt beverages)
Establishing Foreign Business Entity (Representative Office)
Foreign businesses may establish representative offices to conduct activities in Indonesia. These can include franchisors, futures traders, electronic system organizers, and oil/gas permanent establishments.
Important limitation: Representative offices cannot conduct direct sales or issue Bills of Lading.
These entities are exempt from minimum investment requirements that apply to PT PMA.
Conclusion
Foreign investment in Indonesia is restricted to PT PMA and Representative Office structures. Requirements vary based on your chosen sector and business model. Given regulatory complexity, consulting with legal professionals is strongly recommended before proceeding.