Prepared by: Advocate RIKHARDUS IKUN, S.H., M.H., C.MSP., C.NSP., C.LFS., C.CPr. Director, LAW FIRM JAMES RICHARD AND PARTNERS Chairperson, Bali Regional Board of PERADI UTAMA


I. Legal Issue

What legal provisions govern investment in Indonesia, and what matters should investors consider when carrying out investment activities?

II. Legal Basis

  1. Law No. 25 of 2007 on Investment, as amended, among others, by Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation into Law.
  2. Law No. 40 of 2007 on Limited Liability Companies, as amended.
  3. Presidential Regulation No. 10 of 2021 on Investment Business Fields, as amended by Presidential Regulation No. 49 of 2021.
  4. Government Regulation No. 28 of 2025 on the Administration of Risk-Based Business Licensing.
  5. Implementing regulations concerning investment, business licensing through the OSS system, and other sector-specific provisions applicable to the relevant business activities.

III. Legal Opinion

In principle, investment activities in Indonesia may be carried out by both domestic and foreign investors, provided that they comply with the applicable laws and regulations. Legal protection is afforded to investors in accordance with applicable law, but such protection does not exempt investors from licensing, compliance, or restrictions applicable to particular business fields.

Before making an investment, investors should consider the following:

  1. Form and legal status of the business entity Investors should determine the form of business entity appropriate to their activities and investment structure. In particular, foreign investment must generally be conducted through a limited liability company established under Indonesian law and domiciled in Indonesia, unless otherwise provided by applicable laws and regulations.
  2. Business fields and investment restrictions Investors should confirm that the intended business field is open to investment and review any applicable requirements or restrictions, including limitations on foreign ownership and sector-specific provisions.
  3. Business licensing Business licenses are processed through the OSS system on the basis of the risk level and characteristics of the business activity. The required licenses and standards may vary depending on the business classification, location, scale of activity, and applicable sector-specific provisions.
  4. Ownership and capital structure The shareholder structure, source of capital, investment classification, and applicable investment-value requirements should be reviewed under the rules governing the relevant business field and investment structure. Such requirements may vary by sector and may change as implementing regulations are amended.
  5. Operational and compliance obligations Once business activities commence, investors must comply with tax, employment, investment-activity reporting, corporate governance, environmental, and other sector-specific obligations.
  6. Land and business location If an investment requires the use or control of land, the investor should review spatial-planning compliance, the status and type of land rights, spatial-use approvals, and applicable restrictions. Foreign investors may not hold ownership rights (Hak Milik) over land. The land rights available will depend on the relevant legal subject, intended use, and applicable regulatory requirements.
  7. Investment agreements Investment arrangements should preferably be documented in writing and clearly set out, among other things, the amount and form of capital contributions, the parties’ rights and obligations, profit and risk allocation, decision-making, guarantees or liabilities, dispute resolution, and the mechanisms for terminating or transferring the investment.
  8. Activities of foreign nationals in Indonesia If a foreign investor or foreign worker will carry out activities in Indonesia, investment activities should be distinguished from employment or operational activities. Such activities must comply with the relevant immigration and employment requirements.

IV. Conclusion

Investment in Indonesia may, in principle, be undertaken by both domestic and foreign investors. However, investors must ensure that the form of business entity, ownership and capital structure, business field, licensing, location, and operational activities comply with applicable laws and regulations.

For foreign investors, an agreement with a local partner alone is not sufficient. Investors should also review the requirements to use an Indonesian business entity, whether the relevant business field is open to investment and subject to any restrictions, capital requirements, licensing, and—where relevant—immigration and employment requirements.

This legal opinion is general in nature and does not take into account the facts, documents, business field, investment value, investor’s country of origin, ownership structure, or project location in any particular case. Accordingly, it should be tailored and verified before being relied upon in connection with a specific transaction or matter.