{"id":16376,"date":"2025-09-12T09:49:32","date_gmt":"2025-09-12T02:49:32","guid":{"rendered":"https:\/\/investinasia.id\/blog\/?p=16376"},"modified":"2025-10-20T13:56:57","modified_gmt":"2025-10-20T06:56:57","slug":"legal-basis-for-foreign-investment-in-indonesia","status":"publish","type":"post","link":"https:\/\/investinasia.id\/blog\/legal-basis-for-foreign-investment-in-indonesia\/","title":{"rendered":"What Is the Legal Basis for Foreign Investment in Indonesia?"},"content":{"rendered":"<p>The legal basis for foreign investment in Indonesia is founded on the 1945 Constitution, Law No. 25 of 2007 on Investment, the Omnibus Law, and various implementing regulations such as the Positive Investment List. Together, these laws create a comprehensive framework that allows foreign investors to participate in Indonesia\u2019s economy while ensuring alignment with national development priorities.<\/p>\n<h2>Constitutional Foundation<\/h2>\n<figure id=\"attachment_15474\" aria-describedby=\"caption-attachment-15474\" style=\"width: 735px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"size-full wp-image-15474\" src=\"http:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/06\/company-building.webp\" alt=\"What Is the Legal Basis for Foreign Investment in Indonesia?\" width=\"735\" height=\"413\" srcset=\"https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/06\/company-building.webp 735w, https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/06\/company-building-300x169.webp 300w\" sizes=\"(max-width: 735px) 100vw, 735px\" \/><figcaption id=\"caption-attachment-15474\" class=\"wp-caption-text\">What Is the Legal Basis for Foreign Investment in Indonesia? (pexels.com)<\/figcaption><\/figure>\n<p>The starting point is Article 33 of the 1945 Constitution, which gives the state authority to manage natural resources for the benefit of the people. While foreign investment is permitted, it must contribute to economic democracy and sustainable growth.<\/p>\n<p><strong>Also read: <a href=\"https:\/\/investinasia.id\/blog\/fdi-legal-protections-in-indonesia\/\">FDI Legal Protections in Indonesia: More Than Just Incentives<\/a><\/strong><\/p>\n<h2>Investment Law No. 25 of 2007<\/h2>\n<p>The Investment Law is the primary legal instrument for both domestic and foreign investors. It ensures:<\/p>\n<ul>\n<li><strong>Legal certainty<\/strong> with clear regulatory guidelines.<\/li>\n<li><strong>Equal treatment<\/strong> for local and foreign investors.<\/li>\n<li><strong>Transparency<\/strong> in investment policy.<\/li>\n<\/ul>\n<p>Foreign investors must establish a <a href=\"https:\/\/investinasia.id\/blog\/what-is-a-pma-company\/\">PT PMA (foreign-owned limited liability company)<\/a>, with minimum investment requirements exceeding IDR 10 billion (excluding land and buildings).<\/p>\n<p><strong>Also read: <a href=\"https:\/\/investinasia.id\/blog\/the-minimum-capital-for-pma\/\">The Minimum Capital for Establishing PMA Company in Indonesia<\/a><\/strong><\/p>\n<h2>Positive Investment List<\/h2>\n<p>Presidential Regulation No. 10 of 2021 introduced the <a href=\"https:\/\/investinasia.id\/blog\/indonesia-positive-investment-list\/\">Positive Investment List<\/a>, replacing the older Negative List. It identifies:<\/p>\n<ul>\n<li><strong>Priority sectors<\/strong> eligible for tax holidays and incentives.<\/li>\n<li><strong>Restricted sectors<\/strong> with ownership caps.<\/li>\n<li><strong>Open sectors<\/strong> that allow up to 100% foreign ownership.<\/li>\n<\/ul>\n<p>Only a few activities, such as narcotics or gambling, remain completely closed.<\/p>\n<p><strong>Also read: <a href=\"https:\/\/investinasia.id\/blog\/top-foreign-investment-sectors-in-indonesia\/\">Top Foreign Investment Sectors in Indonesia<\/a><\/strong><\/p>\n<h2>Omnibus Law and Risk-Based Licensing<\/h2>\n<figure id=\"attachment_15435\" aria-describedby=\"caption-attachment-15435\" style=\"width: 735px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"size-large wp-image-15435\" src=\"http:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/05\/how-to-start-construction-company-1200x900.webp\" alt=\"What Is the Legal Basis for Foreign Investment in Indonesia?\" width=\"735\" height=\"551\" srcset=\"https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/05\/how-to-start-construction-company-1200x900.webp 1200w, https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/05\/how-to-start-construction-company-300x225.webp 300w, https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/05\/how-to-start-construction-company-768x576.webp 768w, https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/05\/how-to-start-construction-company-1536x1152.webp 1536w, https:\/\/investinasia.id\/blog\/wp-content\/uploads\/2025\/05\/how-to-start-construction-company.webp 1920w\" sizes=\"(max-width: 735px) 100vw, 735px\" \/><figcaption id=\"caption-attachment-15435\" class=\"wp-caption-text\">What Is the Legal Basis for Foreign Investment in Indonesia? (pexels.com)<\/figcaption><\/figure>\n<p>The Omnibus Law (Law No. 11 of 2020) modernized Indonesia\u2019s business climate. It streamlined licensing with a risk-based approach under Government Regulation No. 5 of 2021, reducing bureaucracy and creating a more efficient entry process for foreign investors.<\/p>\n<h2>Role of BKPM<\/h2>\n<p><a href=\"https:\/\/investinasia.id\/blog\/what-is-bkpm-indonesia\/\">The Investment Coordinating Board (BKPM)<\/a>, now the Ministry of Investment, coordinates licensing, policy, and investor support. It serves as the one-stop service hub for both local and foreign investors.<\/p>\n<h2>International Treaties and Protection<\/h2>\n<p>Indonesia has signed 74 Bilateral Investment Treaties, many of which remain in force. These agreements protect against expropriation, ensure repatriation rights, and allow dispute resolution through bodies such as ICSID.<\/p>\n<p><strong>Also read:<\/strong> <strong><a href=\"https:\/\/investinasia.id\/blog\/indonesia-tax-treaties-benefit-for-foreign-investors\/\">How Indonesia\u2019s Double Tax Treaties Benefit Foreign Investors<\/a><\/strong><\/p>\n<h2>Incentives for Foreign Investors<\/h2>\n<p>To attract global capital, Indonesia provides:<\/p>\n<ul>\n<li><strong>Tax holidays and allowances<\/strong> for strategic industries.<\/li>\n<li><strong>Land use rights<\/strong> for up to 95 years.<\/li>\n<li><strong>Import duty exemptions<\/strong> for certain projects.<\/li>\n<\/ul>\n<p><strong>Also read:<\/strong> <strong><a href=\"https:\/\/investinasia.id\/blog\/indonesia-investment-incentives\/\">Indonesia Investment Incentives: Government Support for Foreign Businesses<\/a><\/strong><\/p>\n<h2>How to Enter the Market<\/h2>\n<p>While the legal framework is comprehensive, navigating it can be challenging. Investors must comply with strict corporate structures, licensing processes, and sector-specific rules. A reliable partner simplifies the process.<\/p>\n<p>That\u2019s where <strong><a href=\"https:\/\/investinasia.id\/services\/pma-registration\">InvestinAsia\u2019s Indonesia PMA Company Registration Service<\/a><\/strong> becomes invaluable. We handle incorporation, licensing, and compliance, ensuring your business enters Indonesia with full legal protection and efficiency.<\/p>\n<p>You can also enjoy <strong><a href=\"https:\/\/investinasia.id\/services\/pt-pma-kitas\">special package prices for PT PMA and KITAS services<\/a><\/strong>.<\/p>\n<p>Ready to start your business and investment in Indonesia? <strong><a href=\"https:\/\/wa.me\/6281295665565?text=Hello!%20I%20have%20a%20question%20about%20https:\/\/investinasia.id\/,%20I%20know%20from%20Google%20(SEO)\" target=\"_blank\" rel=\"noopener\">Chat with us now for FREE consultation!<\/a><\/strong><\/p>\n<p>&nbsp;<\/p>\n<h2>FAQs<\/h2>\n<h3><strong>What law governs foreign investment in Indonesia?<\/strong><\/h3>\n<p>Law No. 25 of 2007 on Investment is the main legal framework, supported by the Constitution, <a href=\"https:\/\/investinasia.id\/blog\/complete-guide-to-indonesia-omnibus-law\/\">Omnibus Law<\/a>, and implementing regulations.<\/p>\n<h3><strong>Can foreign investors own 100% of a company in Indonesia?<\/strong><\/h3>\n<p>Yes, depending on the sector. The Positive Investment List defines which industries allow full ownership. Check the details here: <a href=\"https:\/\/investinasia.id\/blog\/can-a-foreigner-own-of-a-business-in-indonesia\/\">Can a Foreigner Own 100% of a Business in Indonesia?<\/a><\/p>\n<h3><strong>What is a PT PMA?<\/strong><\/h3>\n<p>It is a limited liability company with foreign shareholding, required for foreign investment in Indonesia.<\/p>\n<h3><strong>Are there incentives for foreign investors?<\/strong><\/h3>\n<p>Yes. Tax holidays, allowances, and import duty exemptions are available for eligible sectors.<\/p>\n<h3><strong>Who oversees investment in Indonesia?<\/strong><\/h3>\n<p>The Ministry of Investment (formerly BKPM) is the main regulatory body.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The legal basis for foreign investment in Indonesia is founded on the 1945 Constitution, Law No. 25 of 2007 on Investment, the Omnibus Law, and various implementing regulations such as &hellip; <\/p>\n","protected":false},"author":1,"featured_media":16377,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15],"tags":[77],"class_list":["post-16376","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-investment","tag-legal-reviewed"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Legal Basis for Foreign Investment in Indonesia | InvestinAsia<\/title>\n<meta name=\"description\" content=\"Discover the legal framework for foreign investment in Indonesia, from the Constitution to PT PMA rules, and how to register your company easily.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/investinasia.id\/blog\/legal-basis-for-foreign-investment-in-indonesia\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Legal Basis for Foreign Investment in Indonesia | InvestinAsia\" \/>\n<meta property=\"og:description\" content=\"Discover the legal framework for foreign investment in Indonesia, from the Constitution to PT PMA rules, and how to register your company easily.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/investinasia.id\/blog\/legal-basis-for-foreign-investment-in-indonesia\/\" \/>\n<meta property=\"og:site_name\" content=\"Blog - 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