The TCF project has concluded successfully in December 2016.  As of January 2017, the operation of the EU Desk at BKPM, located at BKPM – Indonesia Investment Coordinating Board (Jl. Jed. Gatot Subroto No. 44 Jakarta, 12190 Indonesia) will be resumed and supported by the EU-Indonesia Business Network

General investment procedures and licences

Sector-specific licensing


Partnerships with Indonesian companies

Project opportunities

Other FAQs

General investment procedures and licences

Is Indonesia fully open to foreign investment for my line(s) of business?

Details on any line of business that is closed to investment or has certain restrictions or foreign ownership limitations are found in the “Negative Investment List” (or DNI) – a Presidential Regulation which was last revised in 2014. The list can be downloaded here. If your line of business does not feature on this list, then Indonesia is fully open to investment in that area. If you would like further clarifications or support in verifying whether there are any DNI provisions relating to your line(s) of business, please get in touch with the EU Desk: 

How often is the Negative Investment List (DNI) revised, and when is the next revision due?

As a standard procedure, the DNI is now reviewed every two years, meaning the next scheduled review will be in the first half of 2016. There is scope for the list to be reviewed at any time however. The EU Desk will share details of the next revision on this site and other platforms once it is available.

What are my options for setting up a company in Indonesia? What types of companies are allowed?

Investors have two options when it comes to the legal entity of their operation in Indonesia:

  1. A Limited Liability Company with foreign shareholders (PMA), or
  2. A Representative Office

A PMA entity enables you to conduct business transactions and sales, while a Representative Office is not able to conduct direct sales or generate revenue. However, if your initial priorities are to identify a variety of business opportunities (e.g. tenders etc.), conduct market research and build relations with stakeholders, then opening a Representative Office could be a suitable first step.

The EU Desk will be happy to discuss your particular circumstances and priorities in detail, and to advise which type of company would be the most appropriate.

Is there a minimum investment required to establish a foreign-owned company?

Yes. Currently, the minimum investment required to establish a foreign-owned Limited Liability Company (PMA) is 10 billion Rupiah (IDR), or roughly 750,000 USD based on the current exchange rate. This covers the total intended spend during the development stage and can include loans.The minimum paid-up capital for a PMA is 25% of the minimum required investment – so 2.5 billion IDR (around 200,000 USD). This covers funds that the individual or partners collectively have at their disposal to finance the investment, excluding loans.

How do you set up a Representative Office and how long does it take?

Licence applications to establish all foreign-owned entities (including Representative Offices) are now processed online through BKPM’s National Single Window for Investment. Companies first need to create an account and follow the instructions on documents that need to be uploaded.There are two types of Representative Office:

  1. Foreign Company Representative Office (or ‘KPPA’)
  2. Trade Company Representative Office (or ‘SIUP3A’)

It typically takes around 5 working days to establish a KPPA and 7 working days to establish a SIUP3A, assuming the documentation is in order.How do you set up a PMA (company with foreign ownership) and how long does it take?Establishing a PMA consists of three key stages: preparation, pre-operation and commercial operation. A brief description of each phase is provided below:

  1. Preparation:

Once you have established which category your line of business falls under in Indonesia, and having consulted the Negative Investment List, you first need to obtain your Principal License. The application process is conducted online through BKPM’s National Single Window for Investment. For some lines of business, including business consulting, applicants will need to present their investment plan in person to BKPM. For most business types however, this face-to-face meeting will not be necessary. Once the necessary checks have been conducted on your application and supporting documents, your license can be processed within three working days, assuming all of your documentation is in order. A premium three-hour service is now also available at BKPM for investment projects worth 100 million Rupiah or more, and/or those that will create at least 1,000 jobs. For this service, investors need to come to BKPM in person where they will receive a premium, dedicated, express processing service which includes BKPM’s Principal License, the Company deeds and their legalization by the Law and Human Rights Ministry, as well as the tax identification number (NPWP).

  1. Pre-operation:

This is the phase where the company obtains the necessary investment facilities and permits (national, regional and local) to prepare for commercial operations.

  • Commercial operation:

Once you have the relevant investment facilities and permits in place, it is time to obtain the Business License from BKPM, which enables you to commence commercial operations. Assuming all elements of the application are in order, this license can be processed and issued within seven working days. Once your company is established, it is also a requirement to submit an Investment Activities Report (known as an “LKPM”) every three months to BKPM. This is so that the investment can be tracked and monitored, and – as importantly – BKPM can identify ways to provide ongoing support if and when this is needed.For further guidance on the specific steps for establishing a PMA which will be relevant for your company, please contact the EU Desk.

Can the EU Desk process license applications from European companies?

No. The EU Desk is located in BKPM and works closely with its officers, but only BKPM’s Licensing Officials can process license applications. BKPM’s staff will provide feedback directly to investors on their applications and request clarifications / additional information where necessary. If needed, the EU Desk can check on the status of a European license application from a to understand any issues, and the desk can help to communicate these with the company in order to reach an effective resolution. Nevertheless, the principle exchange of information and documentation will need to be directly between the applicant and BKPM.

Is there any difference in the licensing process between establishing a PMA (company with foreign ownership) as Joint Venture or through an Acquisition?

When forming a joint venture (JV), the parties need to apply for a new Principal License under the new company’s name. In the case of an acquisition, it depends on whether the company being acquired is also a PMA (foreign-owned company) or a PMDN (domestic company). If it’s a PMA, then you need to apply for a Principal License change, in recognition of the new shareholder(s). If the acquired company is a PMDN however, then you need to apply for a Principal License status change.

Will my new PMA be able to use the business licenses and permits of the partner (in the case of a JV) or of the acquired company (in the case of an acquisition)?

In the case of a JV – no, since a new entity is being created. In the case of an acquisition, if the other company is already a PMA, then yes you can use their licenses, provided there’s no change in the business activity. If the company being acquired is a PMDN (domestic company) however, then you need to re-apply for your licenses under your new status.

What is the required ratio for hiring foreign and local staff in Indonesia?

The current ratio is 1:3, that is, for every 1 (one) foreign staff member, the employer must employ 3 (three) local staff. This information is correct as of 23 October 2015, based on Minister of Manpower of Republic of Indonesia Regulation No. 35 Year 2015 which is an amendment of the previous Manpower Regulation No. 16 Year 2015 Regarding Procedures for the Employment of Foreign Labor in Indonesia.

Does one or more of the Commissioners of a foreign-owned company (PMA) need to be Indonesian?

No. All Commissioners can be foreign nationals if the company wishes this to be the case.Does BKPM have an in-house notary?Yes. BKPM’s in-house Notary is able to process the company’s Deed of Establishment for its new Indonesian entity. The standard fee is Rp. 15 million. Only where the company structure is complex is the fee slightly higher – this depends on individual cases.

Sector-specific licensing 

Beyond BKPM’s main licenses, what other licenses do I need to obtain and where can they be obtained?

The sector-specific licenses and permits you will need to obtain for your business in Indonesia will depend on the sector(s) and specific business activities in question. To streamline and simplify the licensing process, BKPM has been working closely with related ministries and authorities to significantly reduce the number of licenses required for investment, as well as the overall timeframe to obtain these licenses. In 2015, BKPM has been working on reducing licensing frameworks in the following areas:
Source: BKPM

All licenses are now processed through BKPM’s One Stop Service (OSS) Centers – whether at the national, provincial or district level. This means that investors are no longer required to submit documentation at various ministries, authorities and institutions.

The OSS Centre has Liaison Officers from each Ministry or Authority who will be happy to have a consultation with you or your representative to discuss specific licensing requirements. The OSS Centers offer a walk-in service at BKPM as well as the Provincial Investment Coordinating Boards (BPM-D). Consultation meetings with BKPM’s Officials can also be arranged in advance by contacting BKPM’s Investor Relations Unit:


What incentives are available for investment?

National investment incentives focus around three core areas: 

  • Tax Holiday
  • Tax Allowance
  • Import Duty Facility

Depending on your investment activities, BKPM will be able to advise on which incentives are applicable to you, and EU Desk will be more than happy to help facilitate the discussion with BKPM.

What are the provisions of the Tax Holiday?

The standard tax holiday provision is for 5-15 years, with the possibility to extend the holiday to a total of 20 years for projects that are considered to be strategic for the Indonesian economy.

There is a 10-100% reduction on tax for 9 pioneer industries:

  1. Basic metal industries
  2. Oil refinery industries and/or basic organic chemicals
  3. Machinery industries
  4. Industries of renewable resources
  5. Communication devices industries
  6. Agricultural processing
  7. Marine transportation
  8. Manufacturing industries in Special Economic Zones (SEZs)
  9. Economic infrastructure

To qualify for the Tax Holiday incentive, investors must have an approved investment plan of at least Rp. 1 trillion. In certain circumstances however, a lower minimum investment of Rp. 500 billion will qualify for the incentive.

The latest Tax Holiday provisions are outlined in Ministry of Finance Regulation No. MK 159/PMK.010/2015 

What are the Tax Allowance provisions?

Reduction of taxable income of up to 30% of the amount of total investment, at 5% per year over a period of 6 years from the start of commercial production.

A total of 143 business segments are eligible for this Tax Allowance (an increase on the previous regulation which covered 129 segments).

Both new and existing investors are able to apply for a Tax Allowance. 

These provisions are outlined in Government Regulation No. 18/2015. 

What are the Import Duty Facility provisions?

Indonesia’s current Import Duty Facility applies to the import of machinery, equipment, goods and raw materials for production.

The facility provides:

  • Exemption of import duty on machinery and equipment
  • A 2-year import duty exemption for raw materials
  • An additional 2-year import duty exemption for raw materials if the company uses locally-produced machinery and equipment (minimum 30%)

Companies are eligible for this facility provided the following conditions are met:

  • The products / goods are not produced in Indonesia, or;
  • They are produced in Indonesia but the they do not meet the required specifications, or;
  • They are produced in Indonesia but the quantity is not sufficient for the need of the industry

Industries covered by this facility include the following:

  • Tourism and culture
  • Public transportation
  • Public health services
  • Mining
  • Construction
  • Telecommunications
  • Ports 

These provisions are outlined in Ministry of Finance Regulation No.176/PMK.011/2009

Are additional investment incentives available at the provincial or regional level? 

Yes. The provincial Governments have received guidance from the national Government on the provision of incentives. These include:

  • Reduction of / exemption from local tax
  • Reduction of / exemption from local retributions
  • Providing stimulus funds; and/or
  • Providing capital aid

These guidelines are set out in Government Regulation No. 45/2008.

The EU Desk will be happy to facilitate connections and discussions with the Provincial Investment Boards (BPM-D) to discuss incentives that may be available for your company’s planned investment.

Partnerships with Indonesian companies

How and where can I identify potential Indonesian Business Partners?  

BKPM’s Directorate for Business Empowerment Unit has compiled a list of Indonesian Potential Partners. Depending on which sector(s) you are interested in, the EU Desk will be happy to share mini-profiles or relevant companies based on this list and can also help to introduce you with one or more of these companies.

In addition, the Indonesian Employers Association (Asosiasi Pengusaha Indonesia (APINDO)) runs an International Partnership Service Centre, which can be contacted through their website

I would like to set up a factory in Indonesia and I intend to source some of my factory components locally.  How do I get in touch with potential local suppliers and/or customers?

Depending on your sector, business lines and desired factory location, the EU Desk will be able to assist you with introductions. Alternatively, if you intend to establish your operation within an industrial park or estate, you may directly contact the management of the industrial park / estate and locate your potential suppliers and / or customers through their tenants list. 

My company will be establishing a manufacturing site in Indonesia and we would like to source parts and components locally. Do you have any information on the requirements for local content sourcing?

The value of local contents or Nilai Tingkat Kandungan Dalam Negeri (TKDN) varies according to the industry in question and the company’s investment plan. In automotive manufacturing, for example, the local content requirement can be up to 80%, depending on the type of vehicle in question. For smartphone manufacturing, the Government has announced a 30% minimum local content requirement for the manufacturing of 4G LTE smartphones. The regulation is set to come into force on 1st January 2017. Depending on your investment specification, the EU Desk will assist you in your discussion with BKPM and the relevant ministries. 

Project opportunities

Where can I find the list of potential investment projects that are open for FDI?

Depending on the sector you are looking to invest, BKPM regularly posts procurement-related and other project news in the What’s Coming and Procurement News sections of its website.  

Alternatively, relevant ministries and departments within the Agriculture, Livestock, Marine Affairs and Fisheries, Public Works and other heavy industry sectors typically produce reports on investment opportunities. The EU Desk will be more than happy to assist you in your enquiry.

Where can I find the plans and full list of Public Private Partnership (PPP) projects available in Indonesia?

The Ministry of National Development Planning (or Badan Pembangunan Nasional (BAPPENAS)) publishes its Public Private Partnership Project Plans Report annually. A copy of the latest report can be downloaded via the BKPM website.

If you are interested in any of the projects listed, BKPM and along with other relevant ministries and authorities will be able to discuss the project further with you, and the EU Desk can help you to facilitate your meeting at BKPM.

My company is interested in Independent Power Producer (IPP) project opportunities. Do you have any details on which projects are available?

Indonesia’s state-owned electricity company, PLN, has issued details of its IPP Projects which will be up for tender in 2016. An overview of these opportunities, along with qualification criteria and contact details can be found in PLN’s presentation downloadable via BKPM’s website, here

Other FAQ

Who should I speak with if I know in which regional province of Indonesia I would like to invest?

Each of Indonesia’s 34 provinces has its own Investment Board (BPM-D) that is directly placed in the regional government’s offices. Like BKPM nationally, these Investment Boards all have One Stop Service Centers that bring liaison officers from the various regional authorities under one roof to process licenses and permits.  

BKPM will be able to advise which authorities you need to seek assistance from, and the EU Desk will be happy to facilitate your enquiry as well as put you in touch with the relevant provincial authorities.

What are the standard tax rates in Indonesia?

  • Income Taxes include (1) Individual: progressive rate 5-30%; (2) Corporation: flat rate 25% (5% lower for public companies); (3) Small and Medium Enterprise: 50% lower (terms & conditions apply).
  • Value Added Tax: 10%
  • Property Tax: flat rate 5% (effective rate 0.1%)

For further details, please refer to the most recent publications by some of the leading accountancy and advisory firms, including:

As my company will be employing local staff, where should we apply for their social security?

As an employer, you must register your employees with the Indonesian Worker Social Security or BPJS Ketenagakerjaan, previously known as the Jaminan Sosial Tenaga Kerja (JAMSOSTEK).

Guidelines for both employers and employees are downloaded through their website  

What is the minimum wage in Indonesia? 

Provincial Minimum Wages (or Upah Minimum Provinsi (UMP)) and Kabupaten Minimum Wages (Upah Minimum Kabupaten (UMK)) vary from one province and district to another. Based on 2015 data, the highest minimum wage is Rp. 2.56million for DKI Jakarta; Rp. 2.19million in Papua; Rp. 2.15million in Sulawesi Utara; Rp. 2.10 million in Bangka Belitung and Rp. 2.02million in Kalimantan Timur.   

It is worth noting that minimum wages have tended to increase each year. For example, 2015 saw an average increase of 12.5% nationwide from the previous year. The highest increases were in Bangka Belitung (28.1%), Banten (20.8%), Gorontalo (20.8%), Sulawesi Tengah (20%), and Sulawesi Barat (18.3%).

As part of the Indonesian Government’s series of Economic Stimulus packages released in late 2015 however, a formula has been introduced to allow for more predictable wage increases. The new wage formula will calculate changes to the annual minimum wage in each province by pegging increases to inflation and GDP growth.

BKPM, along with the relevant provincial and district authorities, will be able to advise you on the current minimum wage applicable to your planned investment location within Indonesia.

Do you have information on average operating costs (including labour and utilities) in Indonesia?

Through its capacity building project supporting BKPM, the EU Desk has compiled detailed market insights for 16 sectors. Most of these documents contain some data from reputable international sources on average operating costs for particular, defined project types. These data sets also benchmark Indonesia’s operating costs against other markets in the region. These documents – known as “sector propositions” can be downloaded free-of-charge at: