By: Advocate RIKHARDUS IKUN, S.H., M.H., C.MSP., C.NSP., C.CPr.
LAW FIRM JAMES RICHARD & PARTNERS
Foreign investors may conduct business activities in Indonesia, provided they comply with the applicable investment, business licensing, and sector-specific regulations.
Important matters to consider:
1. Determine the business activity and KBLI code Make sure the selected business activity is open to foreign investment and meets the applicable requirements. Foreign ownership rules may vary depending on the business activity.
2. Use the appropriate business entity In general, Foreign Investment (PMA) activities are conducted through a limited liability company established under Indonesian law and domiciled in Indonesia (a PT PMA), subject to any applicable special requirements.
3. Obtain a NIB and business licenses through OSS Businesses must obtain a Business Identification Number (NIB) and fulfill the business licensing requirements applicable to their risk level and activities. Risk-based business licensing is currently governed, among other regulations, by Government Regulation No. 28 of 2025, which replaced Government Regulation No. 5 of 2021.
4. Check investment and business location requirements Pay attention to the applicable investment value and capitalization requirements, basic requirements, location suitability, environmental and building requirements, and any sector-specific licenses or approvals that may be required. Investment value and paid-up capital may be subject to different rules, so check the requirements for the relevant business activity.
5. Avoid unlawful nominee or “name-lending” arrangements Do not use ownership arrangements that conceal the actual owner or controller. In Bali and other regions, businesses should also ensure that their actual activities match their registered business activities and licenses, and do not violate investment restrictions.
6. Ensure immigration and employment matters comply with the rules Investor status does not automatically authorize a person to work in any position. Foreign nationals’ work activities, the employment of foreign workers, and residence permits must comply with immigration and employment regulations.
In short: legal foreign investment involves more than simply bringing capital into the country. The company structure, business activity, foreign ownership, investment value, NIB, licenses, location, taxation, employment, and immigration matters should all be reviewed carefully.
Key legal framework: the Investment Law, Law No. 6 of 2023, Government Regulation No. 28 of 2025, and related implementing and sector-specific regulations. Requirements may vary by business activity and may change, so the latest regulations should be checked.
This information is for educational purposes only and is not a substitute for legal advice based on the facts and documents of a specific matter.
