Foreign investors weighing Indonesia against Singapore in 2025 will find two strong but distinct value propositions. While Singapore excels in regulatory efficiency and targeted sectoral support, Indonesia offers unmatched tax breaks, broader sector coverage, and a growing domestic market of over 270 million people.
Indonesia’s Generous, Long-Term Incentives
Indonesia leads ASEAN in pure incentive generosity. Foreign investors can secure 100% Corporate Income Tax (CIT) exemption for up to 20 years, extended to 30 years for projects in IKN Nusantara. This covers all business sectors, thanks to the expansion from the Omnibus Law and Presidential Regulation No. 10/2021.
Even smaller projects benefit: investments between IDR 100–500 billion enjoy a 50% CIT reduction for 5 years plus an additional 25% cut for 2 years. These incentives directly support capital-intensive industries, manufacturing, renewable energy, and strategic infrastructure.
Also read: Comparing Indonesia’s Foreign Business Entry Barriers vs. Other ASEAN Countries
Sectoral Flexibility and Market Scale
Indonesia has expanded its priority sector list to 246 categories, covering industries from electric vehicles and pharmaceuticals to mining and the digital economy. Foreign ownership can now reach 100% in most sectors, with no mandatory local partner, making market entry easier and faster.
The domestic market’s scale is another strategic advantage. Unlike Singapore, whose incentives often target companies serving external markets, Indonesia offers direct access to ASEAN’s largest consumer base, enhancing ROI for market-driven investments.
Also read: Indonesia Negative Investment List (DNI): Latest Update
Singapore’s Precision-Focused Incentives
Singapore’s incentives are narrower but tailored for high-value sectors like finance, asset management, and technology. For example, its Financial Sector Incentive (FSI) schemes offer a 5% concessionary tax rate or even 0% for qualifying fund management activities. However, most benefits last just 5 years and have high entry requirements, such as SGD 800 million assets under management.
While Singapore’s regulatory stability, intellectual property protection, and dispute resolution mechanisms are world-class, its incentives rarely match Indonesia’s in duration or sectoral breadth.
Also read; How to Leverage Tax Incentives to Lower Investment Costs in Indonesia
Key Comparison: Indonesia Leads in Scale and Duration
| Aspect | Indonesia | Singapore |
|---|---|---|
| Tax Holiday Duration | Up to 30 years | Typically 5 years |
| Sector Coverage | 246 sectors, broad-based | Targeted high-value sectors |
| Ownership Rules | 100% foreign ownership in most sectors | Strict sector-based limitations |
| Minimum Investment | USD 6.6 million | High capital/AUM thresholds |
| Market Access | 270M domestic consumers | Global financial hub |
Verdict: If your investment focus is manufacturing, infrastructure, renewable energy, or consumer-driven sectors, Indonesia offers more substantial, longer-term benefits. Singapore remains ideal for specialized financial services and innovation-heavy projects that require legal certainty and advanced infrastructure.
Also read; How Incentives Encourage Investment in Indonesia in Times of Economic Instability
Start Your Business in Indonesia Without Hassle
Navigating Indonesia’s generous but complex investment incentives requires local expertise. From understanding BKPM requirements to structuring your company for maximum tax savings, the right guidance ensures compliance and speed.
InvestinAsia specializes in Indonesia company registration services—helping foreign investors secure licenses, leverage tax benefits, and establish a fully compliant business in record time. Whether you’re targeting IKN Nusantara or Jakarta’s industrial hubs, our end-to-end service ensures you unlock the full potential of Indonesia’s FDI incentives.
We also provide other services such as:
- PMA registration in Indonesia (Foreign Company)
- Representative office registration in Indonesia
- Indonesia Local PT PMDN Set Up
- Indonesian Virtual office setup
- Business registration number in Indonesia
- Business Licenses in Indonesia
- Trademark Registration in Indonesia
- Franchise License in Indonesia
If you are interested in starting a business in Indonesia without hassle, you can start by contacting us for FREE consultation.
FAQs
What is the minimum investment required for Indonesia’s tax holiday?
A minimum IDR 500 billion (USD 33.3 million) investment qualifies for a full tax holiday of up to 20 years. Smaller investments from IDR 100 billion receive partial reductions.
Does Indonesia allow 100% foreign ownership?
Yes, in most sectors, following the Omnibus Law and Presidential Regulation No. 10/2021.
Which sectors are prioritized for FDI in Indonesia?
246 sectors, including EV manufacturing, renewable energy, digital economy, pharmaceuticals, and mining.
Why choose Indonesia over Singapore for FDI?
For longer tax breaks, broader sector access, lower entry thresholds, and a large domestic market.
How can I start a company in Indonesia as a foreign investor?
Partner with a local specialist like InvestinAsia to handle compliance, licensing, and strategic setup.
