With its strong economic growth and strategic location in Southeast Asia, Indonesia is a prime destination for foreign investors, including South Korean entrepreneurs seeking to expand their businesses. However, it is essential for South Korean investors to understand the specific requirements for starting and fully owning a business in Indonesia.
Let’s explore the steps involved and the sectors that allow full foreign ownership.
Also read: Do South Korean Citizens Need a Visa for Indonesia?
Can South Korean Entrepreneurs Start and Own a Business in Indonesia?
Yes, South Korean entrepreneurs can set up and fully own a business in Indonesia, as long as it operates within sectors that permit complete foreign ownership. The Indonesian government categorizes industries into two primary groups:
- Positive Investment List (DPI): This list details the industries completely open to foreign investment to promote economic growth.
- Negative Investment List (DNI): This list limits foreign investment in certain sectors or requires specific conditions, such as forming partnerships with local companies or adhering to ownership restrictions.
Also read: Can a Foreigner Own 100% of a Business in Indonesia?
Industries Open to Full Ownership for South Korean Investors
South Korean entrepreneurs can fully own businesses in several sectors listed under the Positive Investment List, including:
- Agriculture: Includes crop cultivation, livestock farming, and aquaculture.
- Manufacturing: Encompasses the production of textiles, electronics, and automotive components.
- Tourism: Covers businesses like hotels, resorts, and other tourism-related ventures.
- Telecommunications: Covers the provision of internet and mobile communication services.
- Financial Services: Covers banking, insurance, and other financial activities.
- Healthcare: Encompasses the operation of hospitals, clinics, and other healthcare facilities.
These industries offer substantial growth opportunities, as Indonesia is actively seeking foreign investment to boost its economy.
Also read: Major Industries in Indonesia (Based on Contribution to GDP)
Industries with Restrictions on Foreign Investment
Certain industries, such as mining, oil and gas, real estate, and retail, are not fully open to foreign investors. These industries often come with conditions such as:
- Minimum investment amounts.
- Requirements to partner with local businesses.
- Obligations for technology transfer or export commitments.
To remain compliant with current regulations, it is crucial to consult with the Indonesian Investment Coordinating Board (BKPM). (We can help you with this. Contact us now!)
How South Korean Entrepreneurs Can Set Up a Business in Indonesia
There are two primary ways for South Korean entrepreneurs to establish a business in Indonesia:
- PT PMA (Penanaman Modal Asing): A limited liability company that permits either full or partial foreign ownership.
- PMA Representative Office: A non-profit office acting as a foreign company’s liaison in Indonesia.
To establish a PT PMA, South Korean entrepreneurs must meet certain requirements, including:
- A minimum paid-up capital of IDR 10 billion (approximately KRW 870 million).
- Appointing at least two directors, one of whom must be an Indonesian citizen.
- Obtaining approval from the BKPM.
For a PMA Representative Office, the requirements are less stringent, requiring a registered office in Indonesia and an Indonesian representative.
Also read: Corporate and Company Structure in Indonesia: Complete Guide
Why Indonesia is a Great Opportunity for South Korean Entrepreneurs
Indonesia’s rapidly growing economy, strategic location, and large population of over 270 million people present vast opportunities for South Korean entrepreneurs. Key sectors like agriculture, manufacturing, and tourism present great opportunities for investment. Familiarizing yourself with Indonesia’s regulations and industry classifications can make the business setup process more efficient.
For expert guidance in registering a company in Indonesia, you can rely on InvestinAsia’s Indonesia PMA company registration and Indonesia Representative Office Set Up services to simplify the process.
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