investment regulations Indonesia

Indonesia continues to attract foreign investors with its large domestic market, strategic location in Southeast Asia, growing economy, and expanding business opportunities.

For foreign entrepreneurs and companies considering entering the Indonesian market, understanding investment regulations in Indonesia is an essential first step. Establishing a business, however, involves more than incorporating a company. Investors need to consider foreign ownership rules, business classification, licensing, investment requirements, taxation, immigration, and ongoing regulatory compliance.

Indonesia’s business and investment regulatory framework has also continued to evolve. In particular, the risk-based business licensing framework was updated through Government Regulation No. 28 of 2025, while the implementation of risk-based licensing and investment facilities through the Online Single Submission (OSS) system is further regulated under Minister of Investment and Downstreaming/BKPM Regulation No. 5 of 2025. That same regulation also introduced one of the most significant changes for investors in years: a 75% reduction in minimum paid-up capital for establishing a PT PMA, covered in detail below.

This guide provides an overview of the key investment regulations in Indonesia in 2026 that foreign investors should understand before establishing or operating a business in Indonesia.

Important: Investment requirements may vary depending on the business activity, KBLI classification, sector-specific regulations, ownership structure, and other circumstances. Foreign investors should obtain an up-to-date legal assessment before making investment or incorporation decisions.

Understanding Foreign Investment in Indonesia

Foreign investment in Indonesia is commonly conducted through a Foreign Investment Company (Perseroan Terbatas Penanaman Modal Asing or PT PMA).

A PT PMA is an Indonesian limited liability company with foreign investment and may be used by foreign individuals or entities to conduct business in Indonesia, subject to applicable investment, corporate, licensing, and sector-specific regulations.

Before establishing a PT PMA, foreign investors should consider several fundamental questions:

• What business activity will the company conduct?
• What is the appropriate KBLI classification?
• Is the intended business activity open to foreign investment?
• Are there any foreign ownership restrictions?
• What investment and capital requirements apply?
• What business licenses and approvals are required?
• What tax obligations will apply?
• Will foreign directors, commissioners, or employees require immigration or work-related arrangements?
• What ongoing reporting and compliance obligations will apply?

These questions are interconnected. Choosing the wrong business activity or KBLI at the beginning, for example, may affect the company’s ownership structure and licensing requirements later.

For this reason, business planning and legal structuring should ideally take place before company incorporation.

Key Investment Regulations in Indonesia in 2026

1.      Foreign Ownership and Business Activities

One of the first issues foreign investors should examine is whether the intended business activity is open to foreign investment and whether any ownership restrictions apply.

Indonesia’s investment framework generally provides that commercial business activities are open to investment unless they are specifically closed or subject to particular requirements. Certain sectors may nevertheless be subject to foreign ownership limitations, special licensing requirements, or other conditions.

The applicable framework includes Presidential Regulation No. 10 of 2021 on Investment Business Fields, as amended by Presidential Regulation No. 49 of  2021 . This framework

— commonly referred to as the Positive Investment List — replaced the earlier Negative Investment List and opened more than 200 business sectors to 100% foreign ownership, including telecommunications, logistics, manufacturing, professional services, technology, and hospitality.

Therefore, foreign investors should not assume that every business activity permits unrestricted foreign ownership.

Can Foreigners Own 100% of a Company in Indonesia?

The answer depends on the specific business activity and applicable sectoral regulations.

Some business activities may allow foreign investors to hold full ownership, while others may be subject to restrictions, ownership caps, or a mandatory local partnership requirement (typically with an Indonesian company, cooperative, or MSME).

This makes the identification of the correct KBLI code an important step before determining the company’s shareholder structure.

Foreign investors should therefore assess:

• The intended business activity;
• The applicable KBLI;
• Whether the activity is open to foreign investment;
• Any foreign ownership limitations;
• Sector-specific requirements; and
• Whether additional approvals or partnerships are

2.      PT PMA vs. Local PT: Which Structure Applies to You?

Foreign investors sometimes ask whether they can simply establish a standard local PT (Perseroan Terbatas) instead of a PT PMA. In practice, this is rarely an available option — but understanding the distinction helps clarify why.

 

	PT PMA	Local PT
Ownership	May include foreign individuals or entities	Must be 100% Indonesian-owned
Who can use it	Foreign investors, subject to sector rules under the Positive Investment List	Indonesian citizens and entities
Minimum paid-up capital	IDR 2.5 billion (per BKPM Reg. No. 5/2025)	Determined by company agreement; no foreign-investment-linked minimum
Commercial activity	May generate revenue, sign contracts, hire staff	May generate revenue, sign contracts, hire staff
Licensing pathway	OSS-RBA, subject to foreign investment requirements	OSS-RBA, without foreign ownership restrictions
Typical use case	Foreign investors entering the Indonesian market	Indonesian founders, or foreign investors partnering with local shareholders in restricted sectors

 

Key takeaway: A foreign individual or foreign company generally cannot hold shares in a local PT. If a business activity is intended to include foreign ownership — even a minority stake — the correct structure is a PT PMA, not a local PT. Some foreign investors are advised to use a local PT through nominee arrangements; this practice is not legally recognized in Indonesia and carries significant legal risk, including loss of the underlying investment.

For business activities where foreign ownership is restricted or capped under the Positive Investment List, the appropriate approach is typically a joint-venture PT PMA, with foreign and Indonesian shareholders holding shares in proportions permitted for that specific KBLI

— not a fully local PT with an informal foreign backer.

3.      Establishing a PT PMA in Indonesia

Foreign investors who wish to establish a business in Indonesia generally need to establish an appropriate Indonesian legal entity.

For a PT PMA, the incorporation process commonly involves:

1. Determining the proposed business activities;
2. Identifying the appropriate KBLI;
3. Reviewing foreign ownership requirements;
4. Determining the shareholders and management structure;
5. Preparing the company’s constitutional documents;
6. Executing the Deed of Establishment before a notary;
7. Obtaining legal entity approval; and
8. Proceeding with business registration and licensing through the applicable government systems.

The corporate structure should be considered together with the company’s intended operations.

For example, the choice of business activities can influence licensing requirements, foreign ownership considerations, investment requirements, and sector-specific obligations.

In practice, incorporation should not be treated as a standalone administrative exercise. It is part of a broader market-entry strategy.

4.      Business Licensing Through OSS

Indonesia implements a Risk-Based Business Licensing (Perizinan Berusaha Berbasis Risiko) framework through the Online Single Submission (OSS) system.

Government Regulation No. 28 of 2025 governs the current risk-based business licensing framework. It covers, among other matters:

• Basic requirements;
• Business licensing;
• Business licensing supporting activities;
• Standards, procedures, and criteria;
• OSS services;
• Supervision;
• Evaluation and policy reform; and
• Other regulatory requirements.

The risk-based approach means that licensing requirements depend on the nature and risk level of the relevant business activity.

Depending on the business, the process may involve:

• Business Identification Number (NIB);
• Business licenses according to the applicable risk level;
• Supporting Business Licenses or PB-UMKU;
• Sector-specific approvals;
• Basic requirements; and
• Other regulatory

Does an NIB Mean That the Business Is Fully Licensed?

Not necessarily.

An NIB is an important component of the Indonesian business licensing system, but obtaining an NIB does not automatically mean that every operational requirement has been satisfied.

Additional licenses, certifications, approvals, or compliance requirements may apply depending on the business activity.

Foreign investors should therefore assess the full licensing chain, rather than treating the NIB as the final step.

5.      Why KBLI Matters for Foreign Investors

The Klasifikasi Baku Lapangan Usaha Indonesia (KBLI) is the Indonesian Standard Industrial Classification used to classify business activities.

KBLI is particularly important because the selected business activity can affect:

• Foreign ownership considerations;
• Licensing requirements;
• Risk classification;
• Investment requirements;
• Sector-specific obligations; and
• The company’s permitted scope of business

An incorrect KBLI selection may create complications during licensing or when the company begins operating.

For example, a foreign investor may have a business concept that covers several activities. The legal and licensing analysis should determine which activities are actually intended to be carried out and which KBLI classifications appropriately reflect those activities.

Why Should KBLI Be Determined Before Incorporation?

Because the KBLI is closely connected to the company’s business scope and licensing requirements.

A better approach is:

Business Plan → Business Activities → KBLI → Foreign Ownership → Investment Requirements → Licensing → Operations

rather than:

Incorporate First → Figure Out the Regulations Later

This distinction can help foreign investors reduce unnecessary restructuring and regulatory complications.

6.      Investment and Capital Requirements

PT PMA capital requirements involve two distinct figures that are often confused with one another.

Following BKPM Regulation No. 5 of 2025, the minimum paid-up capital for establishing a PT PMA was reduced by 75%, from IDR 10 billion to IDR 2.5 billion. Separately, the total investment value for the business project must generally exceed IDR 10 billion per KBLI code, excluding land and buildings — this figure is not deposited upfront and is realized progressively as the company operates.

These two requirements serve different purposes and should not be treated interchangeably, and certain sectors are subject to different calculation methods or exemptions.

For a full breakdown of paid-up capital vs. total investment value, sector-specific exemptions, and how the 12-month capital lock-up works, see our dedicated guide: Minimum Capital for PT PMA Indonesia: What Foreign Investors Need to Know in 2026.

Tax and Financial Compliance

Establishing a PT PMA is only the beginning of a company’s regulatory obligations. Once the company begins operating, it may have various tax, accounting, and financial reporting obligations depending on its activities and circumstances. These may include:

• Tax registration;
• Corporate income tax obligations;
• VAT obligations where applicable;
• Employee-related tax obligations;
• Withholding tax obligations where applicable;
• Accounting and financial records;
• Corporate reporting; and
• Other tax or financial compliance

Foreign investors should consider tax and accounting requirements as part of the initial business structure rather than treating them as issues to be addressed only after operations begin.

Immigration and Work-Related Requirements for Foreign Investors

Foreign investors who intend to live or work in Indonesia should also consider the applicable immigration requirements.

Depending on the individual’s purpose of stay and activities in Indonesia, appropriate immigration documentation may be required.

The immigration position should also be considered together with the individual’s role in the Indonesian company.

For example, the requirements may differ depending on whether a foreign national is:

• Visiting Indonesia for business purposes;
• Investing in an Indonesian company;
• Serving as a director or commissioner;
• Working for an Indonesian company; or
• Staying in Indonesia for an extended

Foreign investors should therefore avoid assuming that company ownership automatically gives them the right to work or reside in Indonesia.

Ongoing Compliance After Establishment

One of the most common misconceptions among foreign investors is that regulatory work ends once the company has been incorporated and licensed.

In reality, maintaining a business in Indonesia may involve continuing obligations relating to:

• Corporate governance;
• Business licensing;
• Tax compliance;
• Investment reporting;
• Employment;
• Immigration;
• Sector-specific regulations;
• Changes in shareholders or management;
• Changes in business activities; and
• Other regulatory

A company may therefore need to review its compliance position periodically, particularly when its business model changes or new regulations are introduced.

Common Challenges Faced by Foreign Investors in Indonesia

1.      Choosing the Wrong KBLI

An incorrect business classification may affect licensing, foreign ownership analysis, and the company’s ability to conduct its intended activities.

2.      Assuming All Business Activities Are Open to 100% Foreign Ownership

Foreign ownership should be reviewed based on the specific business activity and applicable regulations.

3.      Treating NIB Registration as the End of the Licensing Process

Additional licenses or approvals may still be required depending on the business activity.

4.      Using Outdated Regulatory Information

Indonesia’s investment and business licensing framework continues to evolve. Information published several years ago may no longer accurately reflect the current regulatory requirements — the 2025 reduction in PT PMA paid-up capital is a good example of a change that quickly rendered older guides inaccurate.

5.      Focusing Only on Incorporation

A successful market entry strategy requires more than establishing a legal entity. Investors should also consider licensing, tax, immigration, employment, commercial contracts, and ongoing compliance.

6.      Structuring the Business Before Understanding the Regulatory Framework

Foreign investors may face unnecessary restructuring if they determine the shareholder structure, business activities, or corporate model before reviewing the applicable legal requirements.

A Practical Roadmap for Foreign Investors Entering Indonesia

For foreign investors, the Indonesian market-entry process can generally be approached through the following stages:

Step 1 — Define the Business Model

Identify what products or services the business will provide and how the business will operate in Indonesia.

Step 2 — Identify the Relevant Business Activities

Translate the business model into the activities that the Indonesian company will actually conduct.

Step 3 — Determine the Appropriate KBLI

Review the relevant KBLI classification and assess whether it accurately reflects the intended business activities.

Step 4 — Review Foreign Ownership Requirements

Determine whether the intended business activity is open to foreign investment and whether any ownership restrictions or conditions apply.

Step 5 — Determine the Corporate and Investment Structure

Determine shareholders, management, capital structure, investment requirements, and other corporate considerations.

Step 6 — Establish the PT PMA

Prepare and execute the necessary corporate documents and complete the company establishment process.

Step 7 — Complete OSS and Other Licensing Requirements

Obtain the NIB and complete the applicable risk-based business licensing and sector-specific requirements.

Step 8 — Prepare Tax, Employment, and Immigration Compliance

Ensure that the company’s operational structure is aligned with applicable tax, employment, immigration, and other regulatory requirements.

Step 9 — Maintain Ongoing Compliance

Continue monitoring corporate, licensing, tax, investment, and sector-specific obligations after the business begins operating.

How Batin-hub Supports Foreign Investors

Entering the Indonesian market requires coordination between legal, regulatory, corporate, and business considerations.

Batin-hub supports foreign investors and international businesses seeking to establish and operate in Indonesia through an integrated legal and business approach.

Our support may include:

• PT PMA and Company Establishment
• Foreign Investment Structuring
• KBLI and Business Activity Assessment
• Foreign Ownership Review
• OSS and Business Licensing
• Corporate and Regulatory Compliance
• Tax and Accounting Coordination
• Visa and KITAS Assistance
• Market Entry and Business Advisory
• Ongoing Legal and Compliance Support

Our approach is designed to help foreign investors understand the regulatory requirements before making important business decisions.

Rather than treating incorporation, licensing, and compliance as separate administrative processes, we help connect these requirements to the investor’s broader business objectives.

Frequently Asked Questions

Can foreigners invest in Indonesia?

Yes. Foreign individuals and companies can invest in Indonesia, subject to applicable investment regulations, foreign ownership requirements, business licensing, and sector-specific rules.

Can foreigners own 100% of a company in Indonesia?

In some business activities, foreign investors may be able to hold 100% ownership. However, foreign ownership depends on the specific business activity, KBLI, and applicable sectoral regulations.

What is a PT PMA?

A PT PMA is an Indonesian limited liability company established with foreign investment. It is one of the principal corporate structures used by foreign investors to conduct business in Indonesia.

What is KBLI?

KBLI stands for Klasifikasi Baku Lapangan Usaha Indonesia, the Indonesian Standard Industrial Classification used to classify business activities.

Is an NIB enough to operate a business in Indonesia?

Not necessarily. Depending on the business activity and risk level, additional business licenses, supporting licenses, approvals, or other requirements may apply.

How much investment is required to establish a PT PMA?

As of 2026, minimum paid-up capital and total investment value are two separate requirements, and both may vary by sector. See our dedicated guide to PT PMA minimum capital for the full breakdown.

Do foreign investors need a visa or KITAS?

Foreign nationals who intend to stay or work in Indonesia may require appropriate immigration documentation depending on their purpose and activities. Company ownership and immigration/work authorization should be assessed separately. Investors seeking residency through an Investor KITAS should note that this pathway has its own separate capital threshold, unaffected by the 2025 reduction in PT PMA paid-up capital.

Can a foreign investor use a local PT with a nominee arrangement instead of a PT PMA?

No. Nominee arrangements, where an Indonesian citizen formally holds shares on behalf of a foreign investor in a local PT, are not legally recognized in Indonesia and carry significant legal risk, including potential loss of the underlying investment. Foreigninvestors should use a PT PMA — structured as a joint venture where required by sector-specific ownership limits.

Do PT PMA companies have ongoing compliance obligations?

Yes. Depending on their activities, PT PMA companies may have continuing obligations relating to corporate governance, licensing, taxation, investment reporting, employment, immigration, and sector-specific regulations. This includes quarterly LKPM (Investment Activity Report) filings to BKPM.

Conclusion

Indonesia remains an attractive market for foreign investors in 2026. However, successful market entry requires more than identifying a business opportunity.

Foreign investors should understand the relationship between business activities, KBLI classification, foreign ownership, corporate structure, investment requirements, OSS licensing, taxation, immigration, and ongoing compliance.

The most effective approach is to consider these issues before establishing the company rather than addressing them one by one after incorporation.

Because Indonesian investment and business regulations may change and requirements can vary across sectors, foreign investors should obtain an up-to-date assessment based on their specific business model and intended activities.

With appropriate preparation and professional guidance, investors can enter the Indonesian market with greater clarity, efficiency, and regulatory confidence.

Planning to Invest or Establish a Business in Indonesia?

If you are a foreign investor planning to establish a company, launch a business, or expand your operations into Indonesia, Batin-hub can assist you in navigating the legal and business requirements.

From business activity and KBLI assessment to PT PMA establishment, licensing, compliance, and market-entry support, our team helps you build a clearer path into the Indonesian market.

Contact Batin-hub to discuss your Indonesia investment plans.

Legal References

• Government Regulation No. 28 of 2025 on Risk-Based Business
• Minister of Investment and Downstreaming/BKPM Regulation No. 5 of 2025 on Guidelines and Procedures for Risk-Based Business Licensing and Investment Facilities through the OSS System.
• Presidential Regulation 10 of 2021 on Investment Business Fields, as amended by Presidential Regulation No. 49 of 2021.

Also read: Minimum Capital for PT PMA Indonesia: What Foreign Investors Need to Know in 2026

Ensure Your Investment Plan Complies with Indonesian Regulations

Understanding investment regulations before entering the Indonesian market helps foreign investors avoid pitfalls regarding company structure, KBLI (business classification codes), share ownership, capital, licensing, and compliance obligations. Decisions made at the initial stage can significantly impact long-term operational success.

Batin-hub is ready to assist foreign investors in navigating Indonesia’s legal and regulatory landscape—covering everything from business activity and foreign ownership analysis to the establishment of a PT PMA (Foreign-Owned Company), OSS licensing, capital and investment requirements, as well as tax, immigration, and ongoing compliance needs.

Do not let regulatory uncertainty hinder your business expansion plans. Consult with the Batin-hub team to receive legal guidance tailored to your specific business activities, investment structure, and operational needs in Indonesia.

Contact Batin-hub today to launch your investment in Indonesia with the right legal structure, targeted compliance, and a secure business foundation via:

WhatsApp / Phone: 0851-61417988.