Indonesian Legislation Related to Foreign Investments

Updated on Tuesday 05th December 2017

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During the last several years, foreign investments in Indonesia have increased gradually and reach and average of approximately 30 billion USD every year. Also, Indonesia is one of the countries where foreign investments are regulated by a specific law which is completed by other presidential and governmental decrees.

Foreign investors who want to open companies in Indonesia have several options with respect to the types of structured they may use. These are the foreign investment company and the representative office. Our Indonesia company incorporation agents can offer more information on the two types of entities.

Law No. 25/2007 or the Investment Law in Indonesia

Law No. 25/2007 on Investments is the main act providing for foreign investments in Indonesia. Overseas enterprisers who want to start doing business in Indonesia should know that the legislation acknowledges two types of foreign investments:

-          direct;
-          indirect.

Direct foreign investments can be made by setting up a limited liability company (PT PMA) under the supervision of the Investment Coordinating Board. The company will be required to apply for a business license with the Board. The minimum amount of money to invest in the project is 10 million IDR and 25% of the amount must be deposited upon the company incorporation.

Our company registration consultants in Indonesia can help in registering a PT PMA.

Indirect foreign investments in Indonesia

The legislation on foreign investments in Indonesia also provides for an indirect form of investment through the Stock Exchange under the strict supervision of the Financial Services Authority.
In the category of indirect foreign investments in Indonesia are also the industries with restrictions to foreign enterprisers and companies. These industries are:

-          agriculture;
-          forestry;
-          transportation;
-          telecommunications;
-          culture;
-          tourism.

However, only a few sub-sectors of these industries are restricted to foreign investments. Also, the list is subject to changes which are decided by the government.

Foreign investors who want to open companies in Indonesia are advised to first verify the openness for foreign investments before deciding to start doing business. For assistance in registering a company in Indonesia, please contact us.


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