Foreign Ownership in Indonesia: 8 Key Rules for Investors

Foreign ownership in Indonesia is possible through a foreign investment company, commonly known as a PT PMA (Perseroan Terbatas Penanaman Modal Asing). A PT PMA allows foreign investors to conduct eligible commercial activities in Indonesia, subject to investment, licensing, and sector-specific rules.

Foreign investment is not automatically permitted in every business activity or at every ownership percentage. The permitted structure depends on the company’s business classification, applicable investment conditions, and current licensing requirements.

1. Understand the PT PMA structure

A PT PMA is an Indonesian limited liability company with foreign investment. Investors establish a legal entity in Indonesia to carry out approved business activities. The company must meet applicable company law, investment, licensing, tax, and reporting obligations.

Foreign investors should determine the intended shareholders, directors, commissioners, business activities, and operating location early in the planning process. These choices can affect licensing, ownership conditions, and reporting. A PT PMA must conduct business only within the scope of its registered and licensed activities.

2. Check foreign ownership rules by business activity

The general investment framework opens business activities to investment unless an activity is closed, reserved for the central government, or subject to specific conditions. Some activities may allow full foreign ownership, while others may carry ownership limits, licensing requirements, or partnership conditions.

The rules are tied to the specific business activity. Therefore, foreign ownership in Indonesia should be assessed using the company’s planned activities and their applicable classifications—not just a broad industry label. Verify the current requirements before agreeing on a shareholder structure or signing investment documents.

Indonesia’s investment framework is set out in Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021. Sector-specific regulations may also apply.

Reviewing foreign ownership in Indonesia early can help investors choose a workable company structure.

3. Identify the correct KBLI code

Each proposed business activity must be matched to a KBLI code, Indonesia’s standard classification for business activities. The code helps determine whether the activity is open to foreign investment and what licenses, standards, or other requirements apply.

A company with several lines of business may need to register more than one activity. Selecting a code based only on a similar business name can lead to licensing or reporting problems if the code does not describe the actual operations.

Use the official OSS KBLI portal to look up activities and review the current classification. Check KBLI updates and conversion information when referring to older company documents.

The correct KBLI code helps determine how foreign ownership in Indonesia applies to the planned activity.

4. Review restricted and closed sectors

Some business activities are closed to investment, while others are open only if specified conditions are met. Conditions may include restrictions on foreign ownership, special permits, or other requirements set by sector-specific regulations.

A general statement that an industry is “open” does not confirm that every activity within it is available to a PT PMA. For example, a business may combine consulting, construction, trade, or tourism activities, each with different classifications and requirements.

Before investing, compare every planned activity with the current investment list and relevant sectoral rules. This step helps confirm whether the ownership structure and business plan are legally workable.

Foreign ownership in Indonesia should therefore be checked for every activity the company plans to register.

5. Check investment and capital requirements

PT PMA companies are subject to investment and capital requirements. The applicable thresholds and calculation method can depend on the business activity, company structure, project location, and current regulations.

BKPM’s current framework provides a general minimum investment value and minimum issued or paid-up capital for PT PMA companies, with conditions and possible exceptions. Because rules may change and activity-specific treatment matters, verify the latest requirements before setting the company’s capital or submitting an application. See the BKPM investment procedure guidance and the current BKPM regulation on OSS licensing.

Requirements for foreign ownership in Indonesia can also affect the company’s investment and capital plan.

6. Obtain the right business licenses

Business licensing in Indonesia uses a risk-based approach through the Online Single Submission (OSS) system. Depending on an activity’s risk level, a company may need a business identification number (NIB), a standard certificate, or an additional business license.

A PT PMA should make sure that its licenses cover the activities it actually performs. It should also check whether it needs location, building, environmental, or operational approvals. Requirements can vary by activity and location, so confirm them during setup and whenever the company expands its operations.

7. Set up accounting and tax compliance

A PT PMA needs reliable accounting records to track revenue, expenses, assets, liabilities, and tax obligations. Financial reporting should follow the applicable Indonesian accounting standards and reflect the company’s actual business activities.

Tax compliance may include corporate income tax, employee withholding, withholding on certain payments, periodic tax returns, and VAT obligations where applicable. Companies should confirm which registrations and filings apply to their circumstances and maintain supporting invoices, contracts, payroll records, and payment evidence.

Foreign investment reporting or other submissions may also apply. Keeping a compliance calendar and reconciling accounting records with tax filings can help the company meet deadlines and respond to requests from authorities.

8. Get professional guidance

Foreign ownership in Indonesia involves more than registering a company. Investors need to align the shareholder structure, KBLI codes, investment plan, licenses, accounting setup, and tax processes.

Professional guidance on foreign ownership in Indonesia can help investors coordinate company setup and compliance.

Gana Konsultan Indonesia supports businesses in Lombok with corporate, accounting, and tax services. For help planning a PT PMA or reviewing compliance needs, visit Gana Konsultan’s corporate services or contact the team. The appropriate legal or investment professional should confirm eligibility and current requirements for the proposed business.

Conclusion

Foreign ownership in Indonesia is available for many business activities through a PT PMA, but ownership percentages, licensing, and investment conditions depend on the exact activity and current rules. Identify the right KBLI codes, check restrictions, confirm capital requirements, and plan accounting and tax compliance before starting operations.

Review the official rules and seek professional advice before committing to a company structure or investment plan.