Note: As of October 2025, Regulation No. 5/2025 reduced the minimum paid-up capital for foreign companies to IDR 2.5 billion, with the IDR 10 billion investment plan requirement remaining in place.
Indonesia’s dynamic economy and strategic location in Southeast Asia make it an attractive destination for foreign investors. As the largest economy in the region, with a population of over 270 million and a growing middle class, the country offers vast business opportunities across numerous sectors. But one key question remains for many international entrepreneurs: can a foreigner fully own a business in Indonesia?
Understanding the rules surrounding foreign ownership is essential before launching operations. Although the government has progressively relaxed its investment policies in recent years, certain restrictions still apply.
Indonesia’s Evolving Investment Climate
Over the past two decades, Indonesia has taken significant steps to become more investor-friendly. From streamlining licensing systems to overhauling investment laws, the country is now more accessible than ever to global investors.
One of the most notable milestones was the introduction of the Positive Investment List (PIL) in 2021, which replaced the previous Negative Investment List. This marked a shift toward a clearer, more transparent framework for determining which sectors are open to full or partial foreign ownership.
Decoding the Positive Investment List
The Positive Investment List serves as the foundation of Indonesia’s foreign investment policy. It classifies business sectors into three broad categories:
- Fully open to foreign investment
- Conditionally open with ownership caps or specific requirements
- Closed to foreign investors or reserved for domestic players
Each business activity is identified by a KBLI (Indonesian Standard Business Classification) code. Understanding this classification system is critical, as it determines whether a foreign company can operate independently, must partner locally, or is restricted entirely.
Strategic sectors such as green energy, data infrastructure, and healthcare have seen increased accessibility, reflecting the government’s push toward innovation-driven development.
Sectors Fully Open to 100% Foreign Ownership
Indonesia has opened the door wide for foreign ownership in many modern and export-oriented industries. These include:
- E-commerce and digital marketplace platforms
- Data centers and cloud computing services
- Renewable energy generation (solar, wind, hydropower)
- Energy efficiency consulting and green building services
- Manufacturing of electric vehicles (EVs), EV batteries, and EV components
- Export-oriented textile and garment manufacturing
- Footwear and leather goods manufacturing
- Pharmaceutical manufacturing (with conditions)
- Cosmetic and personal care product manufacturing
- Industrial machinery and component manufacturing
- Logistics and warehousing (especially in bonded zones)
- Wholesale trade of industrial and commercial goods
- Tourism-related services such as travel agencies and tour operators
- Hotel development and management (excluding ownership of land)
- Software development and IT consulting services
- Animation, game development, and digital creative industries
- Agricultural technology and precision farming equipment
- Vocational and industrial training centers
- Business process outsourcing (BPO) and call centers
- Environmental monitoring and waste management technology firms
These liberalized sectors reflect Indonesia’s intent to attract high-value investment that supports sustainability, digitalization, and global competitiveness. Foreign investors may fully own companies in these sectors by setting up a PT PMA, provided they meet all regulatory and capital requirements.
Areas Where Foreign Ownership Remains Restricted
Despite the broader liberalization, some business areas remain protected. These include:
- Traditional retail and distribution businesses targeting local markets
- Certain subsectors of agriculture and fisheries
- Small-scale construction services
- Media and broadcasting
- Mining of strategic minerals (subject to special permits and divestment rules)
In many of these areas, foreign investors are permitted to own only a portion of the company—often ranging from 49% to 85% — and must work with an Indonesian partner. Some sectors are entirely off-limits, particularly those reserved for cooperatives, MSMEs, or those considered critical to national interests.
Establishing Full Ownership with a PT PMA
The primary legal vehicle for foreign investors seeking full ownership is the Perseroan Terbatas Penanaman Modal Asing (PT PMA)—a Foreign Investment Limited Liability Company.
This structure allows foreign individuals or entities to own 100% of an Indonesian company in approved sectors. A PT PMA is governed under the Company Law and regulated by the Ministry of Investment/BKPM.
Key Requirements for PT PMA:
- Minimum capital: IDR 2.5 billion (USD 160,000), with an investment plan of IDR 10 billion (USD 640,000)
- Minimum two shareholders, which can be foreign individuals or legal entities
- A registered local office address is mandatory
- Business Identification Number (NIB) and operational licenses must be obtained via the OSS (Online Single Submission) system
Once incorporated, a PT PMA operates as a fully legal business entity with the right to generate profit, hire staff, enter contracts, and open bank accounts in Indonesia.
Alternative Structures When Full Ownership Isn’t Possible
In sectors where 100% foreign ownership is not allowed—or where a foreign investor wants to test the market before fully committing—other options are available:
Representative Office
Ideal for market exploration, establishing a local presence, or building brand awareness. However, it cannot engage in direct commercial transactions or generate revenue.
Joint Venture
Common in sectors with ownership limits. A foreign investor partners with an Indonesian party, sharing equity, responsibilities, and risk. Careful legal structuring is crucial to protect interests.
Nominee Arrangements
Some investors consider using local nominees to bypass restrictions. This approach is illegal under Indonesian law and exposes both parties to legal and financial risk. Legitimate structures like PT PMA or joint ventures are the recommended route.
Practical Considerations for Foreign-Owned Businesses
Establishing a business in Indonesia involves more than just meeting foreign ownership requirements—it also requires careful compliance with various regulations. Depending on the type of business, foreign investors may need to secure sector-specific licenses and permits from relevant ministries.
Hiring foreign employees requires obtaining a foreign worker utilization plan (RPTKA) and is typically limited to roles requiring specialized skills, as some positions are reserved exclusively for Indonesians.
Important: While foreign companies can obtain long-term land use rights—such as Hak Guna Usaha (HGU) and Hak Guna Bangunan (HGB)—they cannot own land under freehold (Hak Milik) title. This is a key distinction that often catches investors by surprise.
To avoid compliance issues and regulatory delays, it is highly recommended to work with a local advisor who understands Indonesia’s evolving business environment.
Looking Ahead: Indonesia’s Investment Outlook
Indonesia continues to position itself as a global investment destination. The government’s efforts to simplify regulations, develop infrastructure, and incentivize high-value industries are expected to drive strong investor interest over the next decade.
Ongoing reforms are likely to further open up sectors such as fintech, healthtech, and circular economy ventures. With a continued focus on downstream processing, digital transformation, and sustainable development, Indonesia is creating long-term opportunities for foreign businesses aligned with its national growth agenda.
Ready to Invest in Indonesia?
Owning 100% of a business in Indonesia is not only possible—it is increasingly encouraged in many sectors. By choosing the appropriate legal structure and aligning your business with Indonesia’s Positive Investment List, foreign investors can tap into one of Southeast Asia’s most promising economies.
At MAP Resources Indonesia, we assist foreign clients throughout every stage of the investment journey—from eligibility assessments to company registration and licensing compliance.
Contact us today at info@mapresourcesindonesia.com to begin your investment journey in Indonesia with confidence.
