The 2023 Success Guide to Investing in Indonesia

The 2023 Success Guide to Investing in Indonesia

  • InCorp Editorial Team
  • 23 August 2023
  • 4 minute reading time

Every crisis brings new opportunities to start something, like a new business. If there is something good that follows the COVID-19 crisis, it is a quicker business incorporation process, and investing in Indonesia becomes a great opportunity. Everything can now be done online, including company registration. Moreover, your company can be registered in less than 1.5 months with this online process.

Although being hit hard by the pandemic, Indonesia has implemented several measures to recover in terms of its economy. As reported by the Indonesia Economic Prospects by the World Bank, the real GDP of Indonesia is projected to increase to 5.2% in 2023 on recovering private consumption growth.

Investing in Indonesia: Foreign ownership

Before incorporating a company or business in Indonesia, it is important for foreign investors to consult the Negative Investment List. It is a list that regulates allowance and restrictions on foreign ownership.

To make it easy for you to do business in Indonesia, we have summarized highly profitable sectors that can be explored by foreign investors, along with their foreign ownership allowance:

  • Business sectors allowing 100% foreign ownership: e-commerce businesses (min. investment: IDR 100 billion), bars, cafes, restaurants, hospital services, hospital management and consultancy, raw materials manufacturing for pharmaceuticals, and distribution affiliated with production, among others.
  • Business sectors are allowing max. 67% foreign ownership: medical equipment testing institutions, internet service providers, call centers, airport activity services, and distribution and warehousing, among others.
  • Business sectors are allowing max. 49% foreign ownership: e-commerce businesses (investment below IDR 100 billion), land transportation, passenger land transportation, and medical equipment supplier, among others.

Read more: Indonesia Embraces US Investment Opportunities

Investing in Indonesia as foreigners

Read more: The New Leaf of Agriculture Investment in Indonesia

Investing in Indonesia with an Investor KITAS

A factor that plays a significant role in contributing to a more investment-friendly environment in Indonesia is Investor KITAS. Indonesian investor KITAS is attractive because of its easy application and work permit fee waiver.

Foreign investors do not need to wait months to start working after pouring the initial investment. When they satisfy all the investment requirements, the work permit’s hefty fee of USD 1,200/year is no longer required.

Foreign investors can choose between the two types of investor KITAS available, namely the 1-year or 2-year KITAS. Once the KITAS is secured, they are permitted to enter and leave Indonesia unlimited times as long as the KITAS is still valid. It is also worth knowing that getting an investor KITAS is much faster than getting a regular work KITAS.

The requirements for an investor KITAS application are quite easy to satisfy: a minimum of IDR 10 billion in authorized capital, IDR 10 billion in paid-up capital, and IDR 1 billion in personal shares.

Apply for Investor KITAS in Indonesia

Still have a question about Investor KITAS/ITAS? We have listed all the things you need to know about Investor KITAS/ITAS in Indonesia. 

Next Steps after Incorporation in Indonesia

After successful company incorporation, the next step is opening a corporate bank account, preferably at a bank licensed as a Foreign-Exchanged Bank, as it can handle foreign currencies. In addition, businesses engaging in export and import activities must undertake the customs registration process, with exemptions applying when certain conditions are met (contact us for further details).

Finally, all types of foreign investment companies in Indonesia that do business must fulfill their corporate income tax obligations. In Indonesia, a general flat rate of 22% applies. Small enterprises with an annual turnover of less than IDR 50 billion can enjoy a 50% discount off the standard corporate income tax rate.

Read more: Unlocking Investment Opportunities in The New Capital of Indonesia

Investing in Indonesia: How InCorp Indonesia Can Assist

It may be a challenge for foreign investors to comply with local regulations of company establishment, KITAS application, and business licenses for their business setup journey. That’s why InCorp exists.

As part of InCorp Group in Singapore, we are a leading consulting company in Indonesia providing integrated market-entry and corporate services. Start investing in Indonesia right away. We are ready to assist.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.