Why Is Indonesia an Attractive Country for Investors?
Those who want to open a company in Indonesia should know that the government has put in place many programs meant to help them. Our company formation consultants in Indonesia can explain the legislation governing foreign direct investments in the country.
You can also find out from the video below why Indonesia is considered an attractive destination for foreign investors:
Foreign investments in Indonesia
With more than 200 million individuals in population, Indonesia represents one of the largest markets in Southeast Asia which is why it attracts thousands of foreign investors on a yearly basis. The industries mentioned above together with tourism make the most important investment sectors for those interested in incorporating companies in Indonesia.
Other emerging industries foreign investors are attracted to are agriculture, information technology, the biomedical and the financial ones. During the last few years, the energy sector has also started attracting numerous foreign direct investments in Indonesia.
Our Indonesia company incorporation agents can offer more information on how to open companies in this country.
Assistance offered by the government to foreign investors in Indonesia
There are numerous programs, incentives and laws put in place by the government for those who want to start companies in Indonesia. Among these are:
- low import and export duties, as trading is one of the most important industries here;
- privatization programs for industries like the financial and transportation ones;
- foreign tax credits to companies operating on the Indonesian market;
- a wide network of double tax treaties signed with countries all over the world;
- corporate tax reductions for small and medium-sized enterprises in various industries.
Indonesia is also home to several special economic zones and integrated economic development zones in which foreign investors operating through companies registered in Indonesia can benefit from numerous incentives, among which VAT exemptions.
Top 10 reasons to invest in Indonesia
Indonesia has come a long way in the past 10 years and became one of the most appealing Southeast Asian countries to open a company in because:
- the government has put a lot of effort into easing the company registration procedure;
- starting with 2015, foreign investors are allowed to buy land in Indonesia;
- the Indonesian economy has expanded thanks to the quick developed of the middle-class;
- the Indonesian GDP has registered a continuous growth in the last 10 years;
- the government has strived to offer an open investment climate in order to attract foreign investors;
- Indonesia is the second most biodiverse country in the world, which help the tourism sector;
- Indonesia’s rich lands provide one of the largest commodity sources in the world 60% of the commodities here being exported;
- in 2016, the government has launched a Master Plan for Economic Development which should continue until 2025;
- Indonesia is of the countries in which consumption hit record levels year after the year;
- entering the Indonesian market is not that easy, however, this implies a low competition and higher profits for businesses.
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.
A few years back the company registration process was also simplified. If you want to open a company in Indonesia and need assistance, please feel free to contact our local consultants.