Indonesia Investment Guidebook

INDONESIA
INVESTMENT
GUIDEBOOK
INDONESIA
INVESTMENT
GUIDEBOOK
3 Foreword
FOREWORD
F
oreign investment continues to play an important role in Indonesia’s
economy growth. For this purpose, Indonesia is committed to improve
competitiveness and investment climate for foreign investment.
The Job Creation Law, a comprehensive law that governs and amends many
provisions in various sectors, was signed by President Joko Widodo on 2
November 2020. It aims to carry out structural reforms and accelerate economic
transformation. Some of the structural reforms include the ease of business
licensing procedures, better environmental protection, and changes to existing
labor regulations.
To implement the Job Creation Law, Indonesian Government has launched

a risk-based online single submission (OSS RBA) system for business
licensing. The OSS RBA integrates various government institutions’ systems,
and provides comprehensive information about various policies and
requirements set out for business, including the maximum foreign ownership
of relevant business, the required procedures, as well as the estimated
timeline for the license application process, which eventually leading to
improved transparency. The Government also aims to bring a positive image
for inviting foreign investors with the new “Priority Investment List”. The New
Investment List significantly reduces the number of wholly closed sectors to any
forms of investment (foreign or local) and those that are either totally closed
or partially open to foreign equity investment which will encourage more
foreign direct investment in Indonesia to create jobs.
Against this backdrop, the Ministry of Investment/Investment Coordinating

Board (BKPM) took the initiative to publish “Indonesia Investment Guidebook”.
This book demonstrates our effort to continue assisting investors in
establishing business in Indonesia. We hope that you will find this guidebook
both useful, informative, and serve as a guidance for investors to have a better
understanding on investing and doing business in Indonesia.
Finally, I am honored to invite you to explore the opportunities Indonesia offers

for your future business. The Ministry of Investment/BKPM are more than happy
to facilitate your interests.
December 2021
H.E. Bahlil Lahadalia
Minister of Investment/Chairman of Investment Coordinating Board
Table Of Contents 4
TABLE OF CONTENTS
FOREWORD 3
TABLE OF CONTENTS 4
I. INDONESIA AT A GLANCE 6
1. Economic and Political Overview 7
1.1 Economic Overview 7
1.2 Political Overview 11
2. Investment Climate 11
3. Investment Opportunities 13
3.1 Strategic Priority Projects (Major Projects) 13
3.2 Priority Sectors 14
3.3 Economic Zone as Strategic Investment Location 14
4. Demography 26
5. Regions in Indonesia 26
6. Living in Indonesia 27
6.1 Business Culture 27
6.2 Housing and Living Cost 28
6.3 Health and Education 29
II. INVESTMENT PROCEDURES 30

1. Starting a Business 31
1.1 Ensure Your Business Classification 31
1.2 Ensure the Foreign Share Ownership of
Your Business Activities 31
1.3 Establish the Right Legal Entity 34
2. Getting License 42
2.1 Concept of Risk-Based Business Licensing 42
2.2 Provisions for Risk-Based Business Licensing Services 42
2.3 Procedures for Risk-Based Business Licensing 45
2.4 Validity Period of Risk-Based Business License 48
3. Investment Supervision 48
4. One Stop Services Center 50
III. LEGAL OVERVIEW FOR FOREIGN INVESTOR 53

1. Employment 53
1.1 Employment of Foreign Workers 55
1.2 Fixed Term Employment 56
1.3 Outsourcing 56
1.4 Working Hours 56
1.5 Termination 57
1.6 Wages 58
1.7 Social Security Programs 59
5 Table Of Contents
2. Visa and Immigration 60

2.1 Type of Visas 60
2.2 Stay Permits 61
3. Land and Environment 63
3.1 Land Title 63
3.2 Spatial Conformity 65
3.3 Building 66
3.4 Environmental 67
4. Logistics 68
4.1 National Logistics Ecosystem (NLE) 68
4.2 Indonesia Seaport 69
5. Infrastructure 70
6. Trade 71
6.1 Trade Agreement 71
6.2 Import and Export 72
6.3 Distribution of Goods 73
7. Investment Protection 76
IV. TAXATION 78
1. Corporate Income Tax (CIT) 79
1.1 Tax Rate and Period 79
1.2 Tax Incentives 79
1.3 Tax Administration 86
1.4 Withholding Taxes 88
1.5 Transfer Pricing 89
2. Individual Income Tax 89
2.1 Tax Rate 89
2.2 Tax Administration 90
3. Value-Added Tax and Luxury-goods Sales Tax 90
3.1 Value-Added Tax 90
3.2 Luxury-goods Sales Tax 92
4. Other Taxes 92
4.1 Land and Building Tax 92
4.2 Stamp Duty 93
5. Statute of Limitation 93
CONTACT US 94
I
INDONESIA
AT A GLANCE
7 Indonesia At Glance
1. ECONOMIC AND POLITICAL OVERVIEW
1.1 Economic Overview
Indonesia adalah ekonomi terbesar di Asia Tenggara, ekonomi terbesar ke-10 di dunia dalam hal paritas
daya beli, dan anggota G-20. Indonesia menjabat sebagai Presidensi G20 pada tahun 2022, dan akan
mengadopsi tema 'Recover Together, Recover Stronger' untuk mendorong upaya bersama bagi
pemulihan ekonomi dunia. Pertumbuhan yang inklusif, berpusat pada masyarakat, ramah lingkungan,
dan berkelanjutan merupakan komitmen utama Indonesia sebagai Ketua G20. Akibat pandemi COVID-
19, Indonesia mencatatkan pertumbuhan PDB negatif pada 2020 untuk pertama kalinya sejak 1998,
naik dari +5% di 2019 menjadi -2,1%. Penggerak utama ekonomi adalah konsumsi domestik swasta -
didorong oleh pasarnya yang besar dengan kelas menengah yang tumbuh hampir 70 juta orang (55%
dari PDB).
Ekonomi Indonesia tumbuh untuk pertama kalinya dalam lima kuartal pada periode April-Juni 2021,
mencatatkan ekspansi terkuatnya dalam lebih dari satu dekade. Produk domestik bruto riil Indonesia
naik 7,07% pada kuartal kedua dari tahun sebelumnya. Menurut perkiraan IMF April 2021,
pertumbuhan diperkirakan akan kembali dengan kekuatan penuh menjadi 4,3% pada 2021 sebelum
stabil di 5,8% pada 2022, tergantung pada pemulihan ekonomi global pasca-pandemi.
Figure 1. Indonesia’s Key Economic Outlook Indicators
Main Indicators 2018 2019 2020 (e) 2021 (e) 2022 (e)
GDP (billions USD) 1 1 1 1 1
GDP (Constant Prices, Annual
5.2 5.0 -2.1 4.3 5.8
% Change)
GDP per Capita (USD) 3.9 4.2 3.9 4.3 4.6
General Government
-1.7 -2.2 -4.7 -5.1 -3.9
Balance (in % of GDP)
General Government Gross
30.1 30.6 36.6 41.4 42.8
Debt (in % of GDP)
Inflation Rate (%) 3.3 2.8 2.0 2.0 3.1
Unemployment Rate (% of the
5.3 5.3 7.1 6.5 5.8
Labour Force)
Current Account (billions
-30.6 -30.3 -4.7 -15.1 -18.2
USD)
Current Account (in % of GDP) -2.9 -2.7 -0.4 -1.3 -1.4
SOURCE: IMF – WORLD ECONOMIC OUTLOOK DATABASE, APRIL 2021

NOTE: (E) ESTIMATED DATA
Indonesia at A Glance 8
The Job Creation Law was passed and signed into law in October 2020, and reform labour,
taxes, and other important laws in order to reduce bureaucracy and stimulate investment
in a post-pandemic economy. Under the Job Creation Law, 79 laws have been revised
through one law governing various sectors. This law consists of 15 chapters and 186
articles in which it regulates 11 clusters from employment to environment. Following the
Constitutional Court's ruling Number 91/PUU-XVIII/2020 dated 25 November 2021, the
Omnibus Law on Job Creation still prevails. All substantial provisions in the Law and its
implementing regulations remain in effects. Domestic and foreign investors have nothing
to worry about as the Government of Indonesia will revise the law accordingly within two
years.
Moreover, to respond to the COVID-19 crisis, the government implemented

emergency fiscal packages equivalent to 3.8% of GDP (actual spending) in 2020 and to
4.2% of GDP in 2021, to deal with the health impact, provide relief to households and
firms, and support the vaccine roll-out, and the recovery.
Indonesia Vision 2045

Dengan target pertumbuhan rata-rata 5,7% per tahun, Indonesia menargetkan untuk
menjadi negara berpenghasilan tinggi pada tahun 2036 dan ekonomi terbesar kelima di
dunia pada tahun 2045. Pertumbuhan yang tinggi ini secara bertahap akan meningkatkan
kelas berpenghasilan menengah menjadi sekitar 70% dari populasi Indonesia pada tahun
2045. Untuk itu, penguatan proses transformasi ekonomi untuk mencapai tujuan
pembangunan tahun 2045 telah menjadi fokus dalam rangka pencapaian infrastruktur
berkelanjutan, pembangunan manusia yang tinggi, serta standar pelayanan dan
kesejahteraan masyarakat yang lebih baik.
Figure 2. Economic Growth Scenario in Indonesia’s Vision 2045
Scenario 2016-2045**
1986-2015 Indicators
Basic High
5,1 Economic Growth (billions USD) 5.1 5.7
16 World GDP ranking* 7 5
3.378 GDP per Capita (USD)* 19,794 23,199
Year of acceding to high-income country status 2038 2036
32,8 Contribution of Investment* 33.1 38.1
21,1 Contribution of Industry* 22.5 26
13,5 Contribution of Industry* 7.8 7.4
SOURCE: THE MINISTRY OF NATIONAL DEVELOPMENT PLANNING/NATIONAL DEVELOPMENT PLANNING AGENCY (BAPPENAS),
2019.
NOTES: * END OF THE PERIOD, PERCENTAGE OF GDP.
** BASIC: LOW GLOBAL ECONOMIC GROWTH AND STRUCTURAL REFORM ARE RUNNING AS BUSINESS AS USUAL.
HIGH: STRUCTURAL REFORMS GO AS EXPECTED AND RELATIVELY HIGH GLOBAL ECONOMY ECONOMIC GROWTH.
9 Indonesia at A Glance
Investment Needs
Untuk mencapai tingkat pertumbuhan ekonomi sebesar 5,7-6%, diperlukan investasi
sebesar Rp 35.212,4 triliun - Rp 35.455,6 triliun untuk periode 2020-2024. Untuk
memenuhi kebutuhan tersebut, pemerintah, dan badan usaha milik negara (BUMN) akan
memberikan kontribusi masing-masing sebesar 8,4-10,1% dan 8,5-8,8%, sedangkan
sisanya akan ditanggung oleh sektor publik dan/atau swasta..
Total realisasi investasi langsung Indonesia pada 2015-2019 sebesar Rp 3.381,9 triliun.
Pemerintah menargetkan Rp 4.983,2 triliun pada 2020-2024 untuk mencapai pertumbuhan
ekonomi 6%. Meski kondisi ekonomi nasional mengalami kontraksi ekonomi akibat
pandemi COVID-19, namun target realisasi investasi tahun 2020 sebesar Rp 817,2 triliun
telah dilampaui sekitar Rp 9 triliun dengan kontribusi Penanaman Modal Langsung
Domestik (DDI) lebih tinggi dari Penanaman Modal Asing Langsung (PMA). DDI telah
menjadi lokomotif realisasi investasi dalam periode COVID-19 dan Kementerian
Investasi/BKPM memberikan pendampingan yang sama terhadap DDI dan FDI, seperti
yang ditunjukkan oleh lima tahun terakhir.
Figure 3. Investment Target

(In IDR Trillion)
1,400
1,239.3
1,200
1,099.8
1,000 968.4
817.2 858.5
800
600
400
200
0
2020 2021 2022 2023 2024
SOURCE: BKPM STRATEGIC PLAN 2020-2024

NOTE: A MANDATE FROM PRESIDENT JOKO WIDODO TO INCREASE INVESTMENT REALIZATION OF IDR1,200 TRILLION IN
2022 AND IDR900 TRILLION IN 2021 FROM THE EXISTING TARGET.
Indonesia is still an attractive destination for

foreign investors. At the end of 2020, foreign
direct investment amounted to approximately
IDR 412.8 trillion (USD 28.67 billion).
Figure 4. FDI Trend 2016-2020 by Sector

(IN USD BILLION, EXCL. UPSTREAM OIL, GAS, AND FINANCIAL SECTORS)
Sector 2016 2017 2018 2019 2020

Manufacturing 16.7 13.1 10.4 9.5 13.2
Services 7.8 13 14.1 15.4 12.2
Mining 2.7 4.4 3.1 2.3 2
Food Crops and Plantation 1.6 1.4
1.7 0.9 1.2
Livestock 0.05 0.2
Forestry 0.08 0.05 0.04 0.04 0
Fishery 0.04 0.1 0.02 0.1 0
SOURCE: MINISTRY OF INVESTMENT/BKPM
Figure 5. Top 10 FDI 2016-2020 by Country of Origin

(IN USD MILLION, EXCL. UPSTREAM OIL, GAS, AND FINANCIAL SECTORS)
United Kingdom
British Virgin Islands
USA
South Korea
Netherlands
Malaysia
Hong Kong
China
Japan
Singapor
0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000
2016
2017 2018 2019 2020
SOURCE: MINISTRY OF INVESTMENT/BKPM
1.2 Political Overview
The politics of Indonesia take place in the framework of a presidential representative

democratic republic whereby the President of Indonesia is both head of state and head of
government and of a multi-party system. Executive power is exercised by the government.
Legislative power is vested in both the government and the bicameral People’s
Consultative Assembly. The judiciary is independent of the executive and the legislature.
Having maintained political stability, Indonesia is one of East Asia Pacific’s most
vibrant democracies. As the third largest democracy in the world, Indonesia continues to
uphold the values of democracy and Pancasila. To maintain it, the Government of
Indonesia measures the Indonesian Democracy Index (IDI). Indonesia scored 74.9 points
out of 100 in the 2019 democracy index, up by 2.53 points from the previous year,
categorized as “fair”.
Figure 6. Indonesia Democracy Index 2015-2019
74.9
72.8
72.4
72.1
70.1
2015 2016 2017 2018 2019
SOURCE: STATISTICS INDONESIA (BPS)
2.INVESTMENT CLIMATE
The Indonesian government continues to strive to create economic stability and an

attractive investment climate for investors. This effort has received international
recognition. Based on the ranking results of three international rating agencies, Indonesia
is categorized as an investment-worthy country.
According to Fitch Ratings, Indonesia’s sovereign credit rating is ‘BBB’ with a stable
outlook. The key factors that support Indonesia’s rating affirmation are its good medium-
term economic growth prospects and its low debt burden. In its assessment, Fitch projects
that Indonesia’s economic growth will gradually recover from negative growth due to the
COVID-19 pandemic. In 2021, economic growth is projected to be 5.3%, then it will
increase to 6% in 2022.
Pemulihan ekonomi akan didorong oleh stimulus fiskal dan ekspor yang didukung oleh perbaikan
harga komoditas. Hal ini juga didukung oleh pembangunan infrastruktur dan penanganan pandemi
melalui percepatan program vaksinasi. Lembaga pemeringkat Moody's memberikan kategori 'Baa'
dengan outlook stabil. Hal ini mengacu pada profil kredit Indonesia yang didukung oleh ekonominya
yang besar, defisit fiskal yang rendah, dan beban utang yang sederhana.
Meanwhile Standard and Poor’s (S&P Global) maintained the BBB level with a negative
outlook. This means that Indonesia’s economic growth prospects are strong with a
track record of prudent policies adopted by the authorities.
Figure 7. Indonesia’s Sovereign Credit Rating
Rating Agency Rate Outlook

Fitch BBB (as of March 2021) Stable
Moody’s Baa2 (as of February 2020) Stable
S&P Global BBB (as of April 2021) Negative
According to IMD's World Competitiveness Center, Indonesia improved its overall

competitiveness ranking by 3 positions (from 40 to 37) in 2021 thanks to its improvements
in business efficiency, economic performance, government efficiency, and an increase in
business confidence among Indonesian executives.
Dalam lima tahun terakhir, Indonesia juga berhasil meningkatkan peringkat kemudahan
berbisnis (EODB) Bank Dunia, dari peringkat 106 pada 2016 menjadi peringkat 73 pada
2020. Pada tahun 2020, kemudahan berbisnis untuk Indonesia adalah skor 69,6.
Kemudahan berusaha Indonesia meningkat dari skor 62,1 pada tahun 2016 menjadi skor
69,6 pada tahun 2020, artinya pemerintah terus menerus dan konsisten mereformasi iklim
usaha dan investasi untuk mendukung pertumbuhan ekonomi.
Figure 8. Ranking Ease of Doing Business Indonesia DB 2020 Report
33 37 38
48
81
110 106 116
140 139
Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a Business with Electricity Property Credit Minority Taxes across Contracts Insolvency
Construction Investors Borders
Permits
Topic Score
87.3
81.2 66.8 60 70 70 75.8 67.5 49.1 68.1
SOURCE: DOING BUSINESS REPORT INDONESIA 2020

Ke depan, meskipun Laporan Doing Business telah dihentikan oleh Bank Dunia,
Pemerintah Indonesia tetap fokus pada reformasi struktural dengan menciptakan
peraturan bisnis dan investasi yang lebih baik yang mengacu pada praktik terbaik
internasional dan berfokus pada reformasi sistem dengan menerapkan Sistem Online
Single Submission dengan Pendekatan Berbasis Risiko.
3.INVESTMENT OPPORTUNITIES
3.1 Strategic Priority Projects (Major Projects)
Untuk melaksanakan RPJMN (Rencana Pembangunan Jangka Menengah Nasional) 2020-

2024, dirumuskan Proyek Prioritas Strategis (atau Proyek Besar). Dalam RPJMN 2020-
2024, terdapat 41 Proyek Besar yang direncanakan dengan informasi yang jelas dan
terperinci yang berisi seluruh target, lokasi, dan instansi pelaksana. Proyek-proyek ini
memiliki nilai strategis dan daya ungkit yang tinggi untuk mencapai tujuan pembangunan
prioritas. Melalui Rencana Strategis BKPM 2020-2024, Kementerian Investasi/BKPM
mendukung peningkatan realisasi investasi, khususnya dalam tiga proyek besar pada
Gambar 9.
Figure 9. List of Strategic Priority Projects (Major Projects)
Funding Indications Implementing

No Major Projects Projects Benefits
(in IDR trillion) Agencies
Industry 4.0 in 5
Priority Sub-Sectors: 245.8 Among others:
Food and beverages, Increase industry’s State budget (APBN): 13 Ministry of Industry,
1 textile, apparel, share in total GDP to BUMN: 125.9 Ministry of Trade,
automotive, electronics, 21% Private: 106.9 business entities
chemicals, and (BUMN/private)
pharmaceuticals
10 Priority
Tourist • Increase foreign Among others:
Destinations: exchange earnings in 161 Ministry of Tourism
Lake Toba, Borobudur, the tourism sector to (APBN, public private and Creative
Lombok-Mandalika, US$30 billion by partnership Economy, Ministry
2 Labuan Bajo, Manado- 2024 project/KPBU, BUMN, of Public Works
Likupang, Wakatobi, • Increase the number and and Housing, local
Raja Ampat, Bromo- of tourist trips to 350- private sector) governments,
Tengger-Semeru, 400 million, and business entities
Bangka Belitung, foreign tourists to 22.3 (BUMN/private)
and Morotai million
arrivals
Among others:
Ministry of Energy
317.4
9 Industrial Industrialization outside and Mineral
APBN: 15.7
Estates outside Java; able to achieve Resources, Ministry
3 BUMN: 111.4
Java and 31 economic growth of Industry, local
Private: 176
smelters targets outside Java governments,
KPBU: 14.3
business entities
(BUMN/private)
SOURCE: THE NATIONAL MEDIUM TERM DEVELOPMENT PLAN (RPJMN) 2020-2024
3.2 Priority Sectors
6 (enam) sektor prioritas telah ditetapkan untuk investasi, yaitu industri berorientasi ekspor
padat karya, energi terbarukan, infrastruktur dan industri pertambangan, yang dapat
menciptakan lebih banyak lapangan kerja dan meningkatkan sumber daya manusia dan
pembangunan infrastruktur di tengah pandemi COVID-19.
Mining Industry
Infrastructure
which will create added value
Renewable Energy Labour-Intenstive Manufacturing

• Pharmaceutical and Medical
Devices Industry
• Automotive Industry
• Electronic Industry
3.3 Economic Zone as Strategic Investment Location
Dalam beberapa tahun terakhir, Pemerintah telah mengembangkan zona ekonomi untuk
mendorong pembangunan ekonomi di seluruh wilayah. Dalam Undang-Undang Nomor 3
Tahun 2014 tentang Perindustrian, sebagaimana telah diubah dengan Undang-Undang
Cipta Kerja Nomor 11 Tahun 2020, dan Peraturan Pemerintah Nomor 28 Tahun 2021
tentang Penyelenggaraan Sektor Manufaktur, menyatakan bahwa setiap perusahaan
industri yang melakukan kegiatan industri harus berada di dalam Kawasan Industri.
Indonesia memiliki sejumlah lokasi investasi yang dapat dipertimbangkan ketika memilih
lokasi untuk investasi di Indonesia, seperti insentif pajak, infrastruktur dan logistik,
kedekatan dengan sumber daya, biaya tenaga kerja dan tingkat keterampilan. Saat ini,
terdapat 19 Kawasan Ekonomi Khusus (15 sudah ada dan 4 yang baru), 118 Kawasan
Industri, 4 Kawasan Perdagangan Bebas, 1.360 Kawasan Berikat, dan 91 Pusat Logistik
Berikat di 131 lokasi.
Indonesia Economic Zones
118 IEs
19 SEZs 4 FTZs (Industrial Estate) large scale
(Special Economic Zones) (Free Trade Zones) Total Area: 51,861.64 Ha
Total Area: 19,766.974 Ha Total Area: 127,472 Ha
As location for Direct
48 IEs
Construction Facility/KUK
1
Total Area: 15,201.65 Ha, in
2 12 provinces
5 21
4 9 8
3 13
7 11
10
12 14
6
16
15 20 18
19 17
1,360 BZs 91 BLCs 10 New Bali

(Bonded Zones) (Bonded Logistic Centers) (Priority Tourism Destinations)
Industrial Estates
Indonesia focuses on its programs to localize investments into economic zones spreading
across Indonesia’s islands. There are 118 industrial estates at present spread all across
Indonesia comprising 70 industrial estates in Java, 33 industrial estates in Sumatra, 10
industrial estates in Kalimantan and 5 industrial estates in Sulawesi.
The Government of Indonesia has

developed economic zones in order to
boost economic development throughout
the region.
Figure 10. List of Indonesia Industrial Estates

For detail location see the maps of Indonesia Economic Zone (page 15)
ACEH 1 BANGKA BELITUNG ISLANDS 7

Kawasan Industri Aceh Ladong Kawasan Industri Sadai
NORTH SUMATRA 2 EAST KALIMANTAN 8

• Kawasan Industri Medan
• Medan Star Industrial Estate
WEST SUMATRA 3 • Kaltim Industrial Estate

• Kawasan Industri Kariangau
WEST KALIMANTAN 9
Padang Industrial Park • Kawasan Industri Ketapang
• Kawasan Industri Ketapang Ecology and
RIAU 4 Agricul- ture Forestery
• Kawasan Industri Tanjung Buton

• Kawasan Industri Tenayan
SOUTH KALIMANTAN 10
• Kawasan Industri Dumai • Kawasan Industri Batulicin (APP)
• Kawasan Industri Batulicin (BCK)
RIAU ISLANDS 5 • Kawasan Industri Batulicin (SCL)
• Kawasan Industri Batulicin (TSB)
• Bintan Inti Industrial Estate • Kawasan Industri Batulicin (WCS)
• Kawasan Industri Wiraraja
• Batamindo Industrial Park
CENTRAL KALIMANTAN 11
• Panbil Industrial Estate
• Bintang Industrial Park Kawasan Industri Surya Borneo
• Latrade Industrial Park
• Puri Industrial Park 2000 12
SOUTH SULAWESI
• Tunas Industri Kabil
• Tunas Industrial Estate Kawasan Industri Makasar
• Union Industrial Park
• Kabil Integrated Industrial Park CENTRAL SULAWESI 13
• West Point Batam Industrial Park
• Kawasan Industri Morowali
• Executive Industrial Park
• Sarana Industrial Point • Kawasan Industri Anugrah Tambang Indo-
• Kawasan Industri Sekupang Makmur Abadi nesia
• Kawasan Industri Stardust Estate Investment
• Cammo Industrial Park
• Citra Buana Industrial Park SOUTHEAST SULAWESI 14
• Hijrah Industrial Park
• Indah Industrial Park Virtue Dragon Nickel Industrial Park
• Kara Industrial Park
• Kawasan Industri Malindo Cipta Perkasa
• Mega Cipta Industrial Park
• Taiwan International Park
LAMPUNG 6
• Kawasan Industri Waylaga Bizpark
• Kawasan Industri Lampung
BANTEN 15 WEST JAVA 20

• Krakatau Industrial Estate Cilegon • Kawasan Industri Marunda Center
• Kawasan Industri Panca Puri • Kawasan Industr`i Terpadu Indonesia China
• Kawasan Industri Nikomas Gemilang • Bekasi International Industrial Estate
• Modern Cikande Industrial Estate • MM2100 Industrial Town BFIE
• Kawasan Industri Terpadu MGM Cikande • MM2100 Industrial Town MMID
• Sumber Bina Sukses • Kawasan Industri Jababeka
• Millenium Industrial Estate • East Jakarta Industrial Park
• Kawasan Industri Pasar Kemis • Kawasan Industri Gobel
• Kawasan Industri & Pergudangan Cikupamas • Greenland International Industrial Center (GIIC)
• Kawasan Industri Purati Kencana Alam • Kawasan Industri Lippo Cikarang
• Griya Idola Industrial Park • Cibinong Center Industrial Estate
• Kawasan Industri Sumber Rezeki • Kawasan Industri Sentul
• Kawasan Industri dan Pergudangan Taman Tekno • Kawasan Industri Bogorindo Sukabumi
BSD • Pura Delta Industrial Estate
• Kawasan Industri Terpadu Wilmar • Karawang Jabar Industrial Estate
• Kawasan Industri Indotaisei (Kota Bukit Indah)
DKI JAKARTA 16 • Kawasan Industri Kujang Cikampek
• Kawasan Industri Mitrakarawang
• Jakarta Industrial Estate Pulogadung • Karawang International Industrial City
• Kawasan Berikat Nusantara • Suryacipta Industrial Estate
• Karawang New Industrial City
17 • Mandalapratama Permai Industrial Estate
EAST JAVA
• Podomoro Industrial Park
• Kawasan Industri Gresik • Kawasan Industri Artha Industrial Hill
• Maspion Industrial Estate • Kawasan Industri GT Tech Park
• Ngoro Industrial Park • Kawasan Industri Pertiwi Lestari
• Surabaya Industrial Estate Rungkut • Kota Bukit Indah Industrial City
• Sidoarjo Industrial Estate Berbek • Kawasan Industri Lion
• Pasuruan Industrial Estate Rembang • Kawasan Industri Sumber Karja International (SKI)
• Kawasan Industri Safe N Lock • Kawasan Industri Multi Optima Sentosa (MOS)
• Kawasan Industri Tuban • Kawasan Industri Subang Smartpolitan PT BAS
• Kawasan Industri SiRIE • Kawasan Industri Subang Smartpolitan PT SSI
• Kawasan Industri Subang Smartpolitan PT ABC
CENTRAL JAVA 18 • Kawasan Industri Subang Smartpolitan PT JSU
• Kawasan Industri Rancaekek
• Jawa Tengah Land Industrial Park Sayung • Kawasan Industri Kertajati Majalengka
• Kawasan Industri Wijayakusuma
• Tanjung Emas Export Processing Zone
• BSB Industrial Park NORTH MALUKU 21
• Kawasan Industri Terboyo Semarang • Kawasan Industri Weda Bay
• Kawasan Industri Emerald Ferrochromium Industry
SPECIAL REGION OF YOGYAKARTA 19
Kawasan Industri Piyungan Creative Economy Park
Batang Integrated Industrial Park

In facilitating companies relocating to Indonesia, President Jokowi has given Instruction to
prepare an Industrial Designated Area in Batang Regency covering an area of more
than 4,000 Ha located on PTPN IX’s land (Indonesia’s State-Owned Plantation Company).
Batang Integrated Industrial Park has series of excellence in terms of its strategic location
due to high accessibility and connectivity, land conformity, competitive land price and
built-in infrastructures. Moreover, labor wage in Central Java is still very competitive
compared to other regions.
Batang Integrated Industrial Park: Regional Perspective
Tanjung Priok Port
4 Hours Toll Road Access

Tanjung Mas Port
Tanjung Perak Port
Jakarta
Bandung
West Java
Central Java SemarangSurabaya 5 Hours Toll Road Acces
East Java
Yogyakarta
Total Area: 4,326 Ha Phase 1: 450 Ha
65 KM 4 hours
from Tanjung Mas Seaport from Jakarta
50 KM 1 hour
from Ahmad Yani International Airport from Semarang
Special Economic Zone (SEZ)

By definition, SEZ means an area with certain boundaries within the jurisdiction of the
Republic of Indonesia which has been determined to carry out economic functions and
obtain certain facilities. In order to complete the ecosystem within the SEZ, education and
health sectors are now included in the scope of business activities that are allowed to
operate in SEZ. Hence, the activities allowed within the SEZ encompass (a) production and
manufacturing;
(b) logistics and distribution; (c) technology development; (d) tourism; (e) education; (f)
health; (g) energy; and other economic purposes as set by the National Economic Council.
These activities will be implemented in accordance with the SEZ zoning plan. Currently
there are 19 SEZ (4 new SEZ are number 16 to 20 below) with a total area of 19,766.974
Ha.
19 SEZ (15 SEZ + 4 New SEZ)
1 ARUN LHOKSEUMAWE SEZ 2SEI MANGKEI SEZ 3

TANJUNG API-API SEZ
North Aceh, Kota Lhokseumawe, Aceh (2,622.5 Simalungun,
Ha) North Sumatra (2,022.8 Ha) Banyuasin, South Sumatra (2,030 Ha) 4 MALOY BATUTA TRANS KALIMANTAN SEZ
PT Patriot Nusantara Aceh PT KINRA (PTPN III) PT Sriwijaya Mandiri Sumsel

Export Processing, Logistic, Industry, Energy, and Tourism
Industry, Logistic, and Tourism Industry, Logistic, Export Processing, and EnergyEast Kutai, East Kalimantan (557.3 Ha)
Operating (14th Dec 2018) Operating (27th Jan 2015) Development Phase PT Maloy Batuta Trans Kalimantan
Industry, Logistic, and Export Processing
Operating (1st Apr 2019)
5 PALU SEZ 7SEZ TANJUNG LESUNG

Pandeglang, Banten (1,500 Ha)
Palu, Central Sulawesi (1,500 Ha) PT. Banten West Java TDC
PT. Bangun Palu Sulawesi Tengah INDONESIA Tourism
1
Industry, Logistic, and Export Processing
Operating (27th Sep 2017)
16 17 Operating (23rd Feb 2015)
2 8 14 11
4 6
5 12
3
6 718 1519
BITUNG SEZ
13 10 8 GALANG BATANG SEZ
Bitung, North Sulawesi (534 Ha)

PT. Membangun Sulut Hebat Bintan, Islands Riau (2,333.6 ha)
Industry, Logistic, and Export Processing PT Bintan Alumina Indonesia
Operating (1st Apr 2019) Export Processing, Industry, Logistic, dan Energy
Operating (8th Dec 2018)
Operating (12 SEZ)
Development Phase (7Tourism
SEZ) SEZ (8 SEZ)
9 TANJUNG KELAYANG SEZ 10 MANDALIKA SEZ 11 MOROTAI SEZ 12 SORONG SEZ
Belitung, Bangka Belitung (324.4 Ha) Central Lombok, West Nusa Tenggara (1,035.7
Morotai
Ha)Islands, North Maluku (1,101.8 Ha)Sorong, West Papua Barat (523.7 Ha)
PT. Belitung Pantai Intan PT. Indonesia Tourism Development CenterPT.
(ITDC)
Jabebeka Morotai PT. Malamoi Olom Wobok
Tourism Tourism Tourism, Industry, Export Processing, and Logistic
Industry, Export Processing, and Logistic
Operating (14th Mar 2018) Operating (20th Oct 2017) Operating(1st Apr 2019) Operating (1st Apr 2019)
13SINGHASARI SEZ 14
LIKUPANG SEZ 15
KENDAL SEZ 16NONGSA SEZ
Malang, East Java (120.3 Ha) North Minahasa, North Sulawesi (197.4 Ha)Kendal, Central Java (1,000 Ha) Batam, Riau Islands (166.5 Ha)
PT ITDC, PT Intelegensia Grahatama, PT Cakrawala
PT. Minahasa
Mandala
Permai
Nusantara
Resort Development (MPRD)
PT. Kendal Industrial Park (KIP) PT Taman Resor Internet (PT Tamarin)
Tourism and Digital Technology Tourism Export Processing, Logistic, and Industry IT Digital, Tourism
Development Phase Development Phase Development Phase Development Phase
17 BATAM AERO TECHNIC SEZ 18 LIDO SEZ 19 GRESIK SEZ

Batam, Islands Riau (30 Ha)
PT Batam Teknik (BAT) Bogor, West Java (1,040 Ha) Gresik, East Java (2,167 Ha)
Industri MRO (Maintenance, Repair, Overhaul) PT MNC Land Lido PT Berkah Kawasan Manyar Sejahtera
Not operated Tourism Metal Industry,Electronic Industry Elektronik, Chemical Industry, Energy Industry, Logistic
Not operated Not operated
Free Trade Zone and Free Port (FTZFP)

FTZFP is an area located in the jurisdiction of the Republic of Indonesia which is separated
from the customs area so that it is free from imposition of import duties, value added tax,
sales tax on luxury goods, and excise. In Indonesia, there are 4 (four) FTZFPs with a total
area of 127,472 ha which are oriented for export activities. Business activities in
FTZFP will be given facilities in the form of entry and release of goods, taxation, customs,
excise, immigration, prohibitions and restrictions, and other facilities.
The activities allowed within the FTZFP encompasses (a) marine and fisheries; (b) agriculture;
(c) forestry; (d) energy and mineral resources; (e) industry; (f) trading; (g) public works
and housing; (h) transportation; (i) health; (j) culture; (k) tourism; (l) telecommunication;
(m) logistic; (n) water resources; (o) waste and the environment.
Figure 11. Incentive in Economic Zones
Bonded Special
Industrial Bonded Free Trade
Logistic Economic
Estate Zone Zone
Center Zone
TH is applicable
on income
received or
obtained from
the carried out
Tax Holiday Applying general provisions of TH (18 pioneer industries) Main Activities
regulated in
PMK 237/2020
jo 33/2021 and
Perdenas KEK No.
1/2021
TA is applicable
for activities
Tax outside the Main
Applying general provisions of TA (certain sectors and locations) Activities of SEZ
Allowance regulated in PMK
237/2020 jo
33/2021
VAT or VAT and
Luxury Goods Tax
is not collected
on certain
Tangible Taxable
Goods from other
places within
VAT or VAT the Customs
and Luxury Area/TLDDP,
Goods Tax is free areas, and
VAT or VAT not collected Exemption of bonded storage
VAT or VAT General and (Entry comes VAT or VAT places to Business
and Luxury provision is Luxury Goods from and Luxury Entities and/or
Goods Tax applicable Tax is not PLB, TPB other Goods Business Actors;
collected than PLB, and Tax import of certain
other area Tangible Taxable
inside custom Goods to SEZ by
area) Business Entities
and/or Business
Actors; import of
Consumer Goods
to Tourism SEZ by
Business Entities
and/or Business
Actor; and so on
Bonded Special
Logistic Economic
Estate Zone Zone
Center Zone
• Exemption
of Import
Duty for the
construction or
development
of SEZ
• For SEZs that
have completed
• General construction
• Exemption of and
provision is
Import Duty development
applicable
• Master list is stages, import
• Master list is Deferred Deferred duties are
Custom decided by
decided by Import Duty Import Duty exempted
Minister of
Minister of for consumer
Investment/
Investment/ goods, and
Chairman of
Chairman of there is a
BKPM
BKPM suspension of
import duties
for business
fields in the SEZ
• For supervision,
part or all of
the SEZ can be
designated as a
Customs Area
Excise Exemption
for raw materials
Excise
or auxiliary
exemption (for
Applying materials in the
Excise consumption Excise
Excise excise’s
Exemption needs of Exemption
manufacturing of
provisions finished
people living
goods which are
in free zones)
not subject to
excise
• Not collected
on the import
of capital
goods for the
construction or
development
Income of SEZ
Tax Art 22 - Not collected Not collected Not collected
• Not collected
Import for SEZs that
have completed
the stage of
construction
and
development
Bonded Special
Logistic Economic
Estate Zone Zone
Center Zone
0% Import Duty
rate applies (Local
Inland FTA - Applicable - Applicable
content/TKDN
min 40%)
Provisions for Provisions Provisions for
the entry of for the entry the entry of
Provisions on
goods of goods goods Goods subject
prohibitions
prohibited from prohibited from prohibited from to provisions
and
Goods being imported being imported being imported on
restrictions on
Traffic and the export and the export and the export import and
imports and
of goods of goods of goods export restrictions
exports are
prohibited from prohibited from prohibited from can be given
applied
export are export are export are exemptions and/or
applied applied applied relaxation
10 New Bali (National Tourism Strategic Zone)
As part of the 10 new Bali’s that are being developed by the government to increase
the visits of foreign and domestic tourists, five (5) areas have been designated as Super
Priority Tourism Destinations which has several key tourism attractions in each area.
INDONESIA
1 7
5
8
6
2 10 4 3
5 Super Priority Tourism Desti
Danau Toba
Borobudur
1 2 3 Mandalika
Lake Toba BorobudurLabuan Bajo Labuan Bajo
Likupang
Managed by the Tourism Area Management Authority that has been established through a Pre
45 6 7
MandalikaLikupang Bangka Belitung Morotai
It has been designated as a Special Economic Zone (KEK)

through a Government Regulation
8 9 10
Raja Ampat
Wakatobi Bromo Tengger
Semeru
Designated as a National Tourism Strategic Area (KSPN)
through a Government Regulation
4. DEMOGRAPHY
As a country with the fourth largest population in the world, Indonesia’s population in 2020
is 270.2 million. The number increased by 32.6 million people compared to 2010 with
a population growth rate of 1.25% per year (2010-2020). About 70.72% or 191.9 million
people are in the productive age group (15-64 years) in 2020. This condition shows that
Indonesia is in the demographic bonus period. Labor Force Participation Rate in Indonesia
also increased to 68.08% in 2021 from 67.77% in 2020 according to trading economics.
The Indonesian middle class has been a major driver of economic growth as the
group’s consumption has grown at 12% annually since 2002 and now represents close to
half of all household consumption in Indonesia. Consumer confidence levels in Indonesia
have been slow to improve, but are on an upward trajectory. Latest recordings for May
2021 put the index at 104.4, a significant improvement from the 77.8 recorded in May
2020, according to Fitch Solutions.
Figure 12. Population Composition by Age Group (1971-2020)

(in %)
1971
1980
1990
2000
2010
2020
0 10 20 30 40 50 60 70 80 90 100
0-14 years old 15-64 years old 65+ years old
5.REGIONS IN INDONESIA
Indonesia consists of 34 provinces, and as an archipelagic country, it has several

major islands namely Sumatra, Java, Kalimantan, Bali, and Nusa Tenggara, as well as
Maluku and Papua. Investment realization, especially FDI, has for long been concentrated
in Java Island. To encourage a better distribution of investment that would eventually
contribute to the regional economy, government has done several efforts including
accelerating infrastructure development and providing investment incentives.
Figure 13. Top 10 Provinces by Regional GDP (PDRB) 2016-2020

(In IDR trillion)
Province 2016 2017 2018 2019 2020

DKI Jakarta 2,159.1 2,365.3 2,592.6 2,816.8 2,772.4
East Java 1,855.7 2,012.9 2,188.8 2,345.8 2,299.5
West Java 1,653.2 1,788.1 1,960.6 2,124 2,088
Central Java 1,087.3 1,172.8 1,268.3 1,361.6 1,348.6
North Sumatra 626.1 684.6 741.3 799.6 811.3
Riau 681.7 704.7 752.3 760.6 729.2
Banten 517.9 563.6 613.8 661.7 626.4
East Kalimantan 508.9 591.9 635.5 652.2 607.3
South Sulawesi 377.1 415.6 461.8 504.3 504.5
South Sumatra 353.9 382.9 419.4 453.6 458.4
Figure 14. Top 5 FDI by Location 2016-2020

(In USD Billion excl. upstream oil, gas, and financial sectors)
Province 2016 2017 2018 2019 2020

West Java 5.5 5.1 5.6 5.9 4.8
Jakarta 3.4 4.6 4.9 4.1 3.6
Banten 2.9 3 2.8 1.9 2.1
Central Java 1 2.4 2.4 2.7 1.4
East Java 1.9 1.6 1.3 0.9 1.6
SOURCE: MINISTRY OF INVESTMENT/ BKPM
6. LIVING IN INDONESIA
6.1 Business Culture
Although Indonesia has a diverse culture, the standard manner of greeting with everyone
present upon arrival and departure from a meeting is a handshake. This practice, however,
should be avoided due to COVID-19. ‘Bapak’ (Sir) for men and ‘Ibu’ (Madam) for woman is
the standard polite greeting, which should be spoken before their first name. Always keep
a supply of business cards on hand and handle other people’s cards with respect when you
receive them. Your right hand should be used to provide or offer your business card (or
any items). All names should be written in full when addressing letters to Indonesians.
Whatsapp and other online messaging systems are commonly used and the preferred
means of communication for businesses and government officials. It is worth checking with
your Indonesian counterparts which communication method they prefer. Companies
may not respond very quickly to emails, especially if the sender is not well known to them.
Invitations to business functions often state lounge suit/batik. Long-sleeved batik shirts are
considered as formal wear (equivalent to a business suit) and are commonly worn by both
Indonesians and foreign businesspeople in Indonesia. Trousers, shirts, and ties are
common business attires for men and women’s business attire is typically a two-piece
suit with a blazer, or a modest dress with sleeves.
Always allow plenty of travel time for meetings. When scheduling appointments, it’s
important to keep in mind that it’s customary to offer lunch or dinner between 11.30 a.m.
and 2.00 p.m. or 6.30 p.m. and 8.30 p.m. Friday afternoon appointments should be
avoided because it is a prayer day and businesses typically have longer lunch breaks.
Because 88% of Indonesia’s population are Muslim, alcohol and pork are not generally
consumed. Although Indonesians generally tolerate alcohol consumption, it is always a
good idea to ask whether the appointment venue serves alcohol or pork before ordering
beverages or food to show respect for their beliefs.
Personal contacts and networks are consequently vital in establishing business deals
because business relationships are built on trust and familiarity. Decisions are typically
made by consensus and attempting to force a decision will often result in a negative
outcome negotiation. The corporate culture of larger or more traditional organizations is
top-down, with ultimate decision-making frequently reserved for a small group of
executives. When meeting a new client, it’s critical to analyze these factors to ensure that
your engagements are as productive as possible.
6.2Housing and Living Cost
Indonesia has various types of places to live. In the context of buying property
(landed house), regulations in Indonesia still require the buyer to be an Indonesian citizen
(WNI). In 2020, foreigners are allowed to buy apartments through a 30-year lease
agreement with an extension of 20 years.
Job Creation Law in Article 144 paragraph (1) stipulates that ownership of apartment units
can be given to Indonesian citizens; Indonesian legal entities; foreign citizens who have a
license following the provisions of laws and regulations; foreign legal entities that
have representatives in Indonesia; or representatives of foreign countries and
international institutions that are located or have representatives in Indonesia.
Indonesia is currently the 42 nd most affordable nation out of 138 countries, with a cost-of-
living index of 37.44.
6.3Health and Education
The Indonesian healthcare system is divided between private insurance schemes and basic
state provision. In January 2014, the country launched a compulsory health insurance
scheme called Jaminan Kesehatan Nasional (JKN), which makes basic medical treatment
and facilities available to all citizens.
As a foreign professional working in Indonesia, your employers are obligated to

register you and your dependent family members in the BPJS scheme. To be eligible to
participate in the BPJS scheme, you must be working in Indonesia for at least 6 months.
Afterwards, you and your family members will receive BPJS cards that you will need to
bring every time you visit public hospitals, clinics, or Puskesmas (state-owned community
health clinics).
Getting private health insurance will also give you more options, including private
healthcare facilities, hospitals, and clinics. These private medical facilities usually have
superior amenities and service quality. Moreover, they are also more likely to have
English-speaking staff to help you get better medical services.
The Ministry of Education, Culture, Research and Technology administers the

education system in Indonesia. There are nine years of compulsory education consisting
of six years at elementary level and three in secondary level. Within the Indonesian
education system, parents can send their children to public, or private international
schools.
Most foreigners in Indonesia send their children to international schools, which offers
a foreign curriculum and are officially accredited by relevant authorities in their home
country. There is a wide range of international schools in Indonesia, with schools offering
the national curriculum of a number of countries, including the United Kingdom, the
USA, France, Germany, India, Japan, South Korea, New Zealand, Russia, and Singapore.
Many of these schools also offer IB programme. Admission and enrollment procedures
vary from school to school. Space is often limited and preference may be given to students
based on nationality. Tuition tends to be expensive based on local standards, but
offers high standards of learning, boast smaller class sizes, first-rate facilities, and
extracurricular. Boarding facilities are available at some schools, but most only provide day
classes.
Indonesia launched a compulsory health

insurance scheme called Jaminan Kesehatan
Nasional (JKN), which makes basic medical
treatment and facilities available to all citizens.
II
INVESTMENT
PROCEDURES
31 Investment Procedures
Following the issuance of Law No. 11 Year 2020 on Job Creation that introduces risk-based
business licensing, the government has issued Government Regulation No. 5 Year 2021
(GR 5/2021) concerning the Implementation of Risk-Based Business Licensing on February
2nd, 2021.
1. STARTING A BUSINESS
In general, steps to start a business in Indonesia are as follows:
1.1 Ensure Your Business Classification
The Indonesia Standard Industrial Classifications (Klasifikasi Baku Lapangan Usaha

Indonesia/KBLI) 2020
• To establish a foreign direct investment company (Perseroan Terbatas Penanaman

Modal Asing/ PT PMA) in Indonesia, it is important to first understand what KBLI
your business falls under. Under the Risk-Based Approach, the government will
determine whether a business activity (as described by its five-digits KBLI
code) should be considered low, medium low, medium high, or high risk, as
stated in Attachment I and II of GR 5/2021. This will help to determine
whether a company must only obtain Business Identification Number (Nomor
Induk Berusaha/NIB) and a standard certification, or whether it must also obtain
business licenses.
• The KBLI code is also being used as a reference for other important matters such
as the eligibility basis for fiscal incentives and/or non-fiscal incentives, as stated in
Attachment I of Presidential Regulation No. 49 Year 2021 on Investment Business
Fields.
• The Statistics Indonesia Regulation No. 2 Year 2020 on the Indonesia Standard
Industrial Classifications 2020 contains 216 new business classifications and the
removal of six business classifications of the previous KBLI.
The KBLI list can be accessed through OSS website at https://oss.go.id/informa
1.2 Ensure the Foreign Share Ownership of Your Business Activities
Investment in Indonesia was subject to the Negative Investment List (Daftar Negatif
Investasi/ DNI), a list of business fields that sets out the corresponding maximum amount
allowed for foreign ownership. As the government aims to bring a more positive image, the
DNI is now promoted as the “Priority Investment List” through Presidential Regulation No.
10 Year 2021 (PR 10/2021) on Investment Business Fields and its amendment, Presidential
Regulation No. 49 Year 2021 (PR 49/2021). In essence, all business lines that are
commercial by nature (except those that are closed or reserved for the Central
Government) are open for investment.
Investment Procedures 32
Relaxation for Foreign Investment
DNI 2016
Investment Business Activities
(President Regulation No 44/2016)
(President Regulation No 49/2021)
List of Closed Business Fields for

Investment List of Priority Business Fields
20 business fields 246 business fields
List of Reserved Business Fields or

List of Reserved Business Fields
Partnerships with K-UMKM
or Partnerships with K-UMKM
145 business fields
106 business fields
List of Business Fields Opened

% List of Business Fields Opened
with Certain Requirements %
with Certain Requirements
350 business fields
37 business fields
Business Fields Closed for Investment
There are seven business fields which are now closed for investment:
1. Class 1 narcotic cultivation and industry;

2. All forms of gambling and/or casino activities;
3. Fish catching for species listed in Attachment I of the Convention on International
Trade in Endangered Species of Wild Fauna and Flora (CITES);
4. Coral and sea rock utilization or harvesting as material for building/calcium,
aquariums, and souvenirs/jewelry, as well living and recent death coral;
5. Chemical weapon industries;
6. Industrial chemical substances and ozone depleting substances industry; and
7. Alcoholic Beverage Industry (KBLI 11010), Wine Industry (KBLI 11020), and
Beverages Containing Malt Industry (KBLI 11031).
Business Fields Open for Investment
The Priority Investment List reclassifies business fields that are open to investment into four
broad categories and introduced a new concept of “prioritized sectors”:
a. Priority Business Fields

For a business field to be defined as a ‘priority’, it must meet the following criteria:
1. National strategic project/program;
2. Capital intensive;
3. Labor intensive;
4. Utilizing advanced technologies;

5. Pioneer industries;
6. Export oriented; and/or
7. Orientation towards research and development, and other innovative activities.
A total of 246 business fields are listed as priority sectors in Attachment I of PR
49/2021.
Benefits of Investing in Priority Sectors

Businesses investing in priority business fields will be eligible to receive fiscal incentives
such as tax holidays, tax allowances, investment allowances and import duty
exemptions, and/or non-fiscal incentives in the form of business licensing, provision
of supporting infrastructure, guaranteed availability of energy, raw materials,
immigration, employment and other conveniences available under the applicable laws
and regulations.
b. Business Fields Allocated for/or Require Partnership with Cooperatives and Micro,
Small, and Medium Enterprises (MSMEs)
• Business fields that are allocated to cooperatives and MSMEs, and business fields
that are open for large-scale business with requirement of partnership with
cooperatives and MSMEs are decided based on the following criteria:
Classification Criteria
1. Business activities which do not use technology or use simple technology;
2. Business activities which have a process specificity, labour intensive and
Allocated for Cooperatives
have special and hereditary cultural heritage; and/or
and MSME
3. Capital that shall not exceed IDR 10 billion excluding the land and
building.
1. Business activities that are mostly undertaken by cooperatives and
Require Partnership with MSMEs; and/or
Cooperatives and MSME
2. Business activities with scale-up purpose to enter the supply chain.
• The implementation of this provision will have to also consider provisions

under Government Regulation No. 7 Year 2021 on Easiness, Protection and
Empowerment of Cooperatives and MSME (GR 7/2021). Under GR 7/2021,
definition of MSMEs is determined based on capital or annual turnover as follows:
MSME Criteria based on Capital

Business Criteria Before Job Creation Law After Job Creation Law
Micro ≤ Rp 50 Million ≤ Rp 1 Billion
Small Rp 50 < x ≤ 500 Billion Rp 1 < x ≤ 5 Billion
Medium Rp 500 Million < x ≤ 10 Billion Rp 5 < x ≤ 10 Billion
Large > Rp 10 Billion > Rp 10 Billion
GR 7/2021 also sets out forms of partnership with cooperatives and MSMEs that include
core-plasma, subcontract, franchise, general trade, distribution and agency, supply
chain, profit sharing, operational cooperation, joint ventures, and outsourcing.
c. Business Fields that Are Open with Certain Requirements

The government offers a more relaxation on this list, from previously 350 to 37 business
fields. This provides a larger window of opportunities as more business fields are
open for foreign investment. Only 12 business fields are reserved for domestic
investors and 25 business fields having a maximum foreign ownership. Furthermore,
to support development of the Special Economic Zone (SEZ), the restrictions on
business fields that are open with certain requirements does not apply for investment in
SEZ.
d. Business Fields Outside the Above Classifications

Business fields that do not fall into any of the above categories are open to all investors
without restrictions. However, it is advisable to check implementing regulations that may
be issued by relevant ministries for each business field to understand if there are
any additional requirements imposed.
Special Business Fields (Single Purpose and Single Majority)
• Single purpose refers to business fields that can be carried out on the condition
that business actors do not carry out other business fields. Business fields that
cannot be combined are categorized as follows:
1. Health Sector: Hospital;
2. Transportation Sector: Sea Transportation, Port Facility Providers, Airport Services,
Loading and Unloading Services, Multimodal Transportation, Transportation
Management Services, Salvage Services and/or Underwater Works; and
3. Communication and Information Technology sector: Private Broadcasting
Institutions, Community Broadcasting Institutions, Subscription Broadcasting
Institutions.
• Single majority refers to business fields in which owners of the national capital
must remain larger than the total owners of foreign capital. The list includes
transportation sector of air freight for passengers and for cargo.
1.3 Establish the Right Legal Entity
In principle, all business actors carrying out business activities in the territory of Indonesia
can apply for business licenses. Types of business actors include:
a. Individual, shall be an Indonesian citizen and is categorized into domestic

investment (Penanaman Modal Dalam Negeri/PMDN).
b. Business Entity, shall be in the form of either legal entity or not legal entity
which is established in Indonesia, and conducts business and/or activity in
certain field. Investment conducted by this business entity shall be categorized
into PMDN or foreign investment (Penanaman Modal Asing/PMA).
c. Representative Office, shall be an Indonesian or foreign citizen, or a
representative business entity from overseas with approval on office
establishment in Indonesia territory.
d. Foreign Business Entity, shall be a foreign business entity established outside
Indonesia territory and conducts business and/or activity in certain field in
Indonesia.
Business Actors in Indonesia
Business Entity:
Corporation or Partnership
Individual Foundation
Limited Liability Company
SME
Limited Partnership
Business Entity Other Legal Body
General Partnership
Limited Liability Partnership
Cooperative
OSS Public Company
Individual
Representative Office:
Foreign Representative Office (KPPA)
Business Entity Foreign Electricity Supporting Services Representative Offic
Foreign Trade Company Representative Office (KP3A)
Non SME KP3A in PMSE sector
Foreign Construction Services Business Entity Representat
Representative Office
Foreign Business Entity
Foreign Business Entity:

Franchisor
Futures Trading
Foreign Electronic System Provider (PSE)
Permanent Business Establishment
Foreign Investment Limited Liability Company (Perseroan Terbatas Penanaman Modal

Asing/PT PMA)
The legal entity of the FDI Company should be a Limited Liability Company or Ltd.
(Perseroan Terbatas or PT). The establishment of a PT PMA is regulated by Law No.
40 Year 2007 regarding Limited Liability Companies (Company Law). PT PMA shall be
categorized as a large business and shall comply with the minimum investment value
requirement, except otherwise stipulated by prevailing laws and regulations.
Requirements for Setting up a PT PMA

a. The ‘PT’ company should be owned by minimum 2 shareholders. Those can be
individuals or legal entities, or a combination of both.
b. The amount of investment required for PT PMA is more than IDR 10 billion
(excluding lands and buildings) for every five-digits of KBLI per project location,
with the minimum paid-up capital of IDR 10 billion. Representative Offices and
Foreign Business Entities are exempted from these requirements.
Furthermore, the required investment amount of IDR 10 billion are exempted for a
few business fields as follows:
Business Fields Minimum Investment

IDR 10 billion (excluding lands and buildings) for
Wholesale Trade
every 4 first-digit code of KBLI
IDR 10 billion (excluding lands and buildings) for
Food & Beverage Services
every 2 first-digit code of KBLI on one same location
Construction Services (consultation services, IDR 10 billion in one project (excluding lands and
construction works, or integrated construction works) buildings) for every 4 first-digit code of KBLI
Industry services that produce several different
products categorized in different five-digits KBLI IDR 10 billion (excluding lands and buildings)
code in one production line
Property Construction and Business with property unit types, including:
a. A whole building or integrated residential

IDR 10 billion (including lands and buildings)
complex
b. A unit not as a whole building or integrated
IDR 10 billion (excluding lands and buildings)
residential complex
While foreign investment in technology-based start-ups in SEZ, allows an investment value

of less than the minimum investment value requirement for foreign investment of IDR 10
billion (excluding lands and buildings).
Procedures for Setting up a PT PMA in Indonesia

1. Getting a Deed of Establishment
To set up a PT PMA, the shareholders must present a deed of establishment legalized
by a local public notary. After the Articles of Association is signed by all of the
shareholders in the presence of a notary, it then will be submitted by the notary to
the Ministry of Justice and Human Rights for approval. The Ministry will ratify the
Deed of Establishment by issuing a Decision Letter/Decree (SK Menteri Hukum dan
HAM) that signifies that the company has been registered as a legal entity.
2. Getting a Company Tax Identification Number (Nomor Pokok Wajib Pajak/NPWP)

After acquiring the Deed of Establishment, the company needs to apply for a tax
ID. This can be done online or through a tax office. Some provinces in Indonesia
however might still require to apply for the tax ID through the local tax office. After
completed, the tax ID will be sent directly to the company.
Divestment Obligations
A PMA company which has a divestment requirement included in its approval and/or
business license prior to the enactment of BKPM Regulation No.4 Year 2021, must still
comply with the requirement within the time limit stated in its approval or business
license. In order to comply with this requirement, a PMA company may only divest to an
Indonesian national or to a 100% Indonesian-owned business entity through a direct sale
of shares with the agreement of the parties and/or through the Indonesian capital market.
The value of shares to be divested for Indonesian citizens or Indonesian business entities
should at least equal IDR 10 million for each receiving shareholder. Furthermore, the
shares divested can be sold back upon the approval of the Ministry of Law and Human
Rights to any Indonesian or foreign nationals – both, individuals and business entities.
A PMA company may not implement this obligation, if the applicable provisions do not
require divestment and the shareholders agreed and stipulated in the company’s deed as
follows:
a. For a PMA company which is not 100% owned by foreign shareholders, the
Indonesian shareholders states that he/she/it does not want/demand share from
the divestment obligation in the approval and/or business license; or
b. For PMA company whose shares are 100% owned by foreign shareholders, the
shareholders states that they have no commitment/agreement with any Indonesian
party to sell it shares.
Merger and Acquisition

PT PMA can also be established by acquiring an existing PT PMA or an existing Perseroan
Terbatas (PT). Regarding the latter, if the PT is a local limited liability company, it needs to
be converted into a PT PMA after acquisition.
PR 10/2021 includes a grandfather clause provision, where an existing PMA companies

change the capital ownership arising out of a merger, acquisition, or consolidation that
engages in the same business fields, the following provisions shall apply:
a. The capital ownership of foreign Investors in the surviving company shall be

limited to that as set forth in the business license of that company.
b. The capital ownership of foreign Investors in the acquired company shall be limited
to that set forth in the business license of that company; or
c. The capital ownership of foreign Investors in a newly consolidated company shall

be limited in accordance with the provisions of legislations at the time the
newly consolidated company is established.
Representative Offices (Kantor Perwakilan Perusahaan Asing/KPPA)

Foreign Representative Office is an office incorporated by an overseas company to
represent themselves in Indonesia. Opening a KPPA is a suitable option for companies
wishing to do market research or conduct feasibility studies in Indonesia. Representative
offices regulated under Government Regulation No. 5 Year 2021 and BKPM Regulation No.
4 Year 2021 are as follows:
a. Foreign Trade Based on Ministry of Trade (MoT) Regulation No. 10 Year 2006,
Company KP3A is prohibited from engaging in trading activities and sales
Representative
transactions from the beginning until the end, such as filing
Office (Kantor
tender, signing contract, and settling claims. It can only act as a
Perwakilan
selling and/ or manufactures and/or buying agent.
Perusahaan
Perdagangan To establish a KP3A, the business actors must have a NIB and
Asing /KP3A) apply for a KP3A Business License (Surat Izin Usaha Perwakilan
Perusahaan Perdagangan Asing/SIUP3A) or a KP3A Business
License in the Trade Sector through Electronic System (Surat Izin
Usaha Perwakilan Perusahaan Perdagangan Asing Bidang
Perdagangan Melalui Sistem Elektronik/SIUP3A Bidang PMSE).
KP3A can be established in the capital city of a province and
any district or regency within Indonesia.
As a holder of SIUP3A, there are several obligations that must

be complied before KP3A’s commencement of business activities:
1. KP3A’s import business activities must be carried out by a

national company holding business license and/or foreign
investment companies holding a general import identification
number (Angka Pengenal Importir Umum or API-U);
2. KP3A must appoint a national company as an agent for the
promoted goods;
3. Each of KP3A and its branch offices must have a SIUP3A;
4. In the event that the appointed Head of KP3A is a foreigner
and/ or employs foreign workers, the foreign company
representative must employ Indonesian workers in
accordance with the provisions of the legislations.
Foreign PPMSE Foreign PPMSE’s are required to appoint a Foreign Trade

(Penyelenggara Company Representative Office in the field of Trade through
Perdagangan Electronic System (Kantor Perwakilan Perusahaan Perdagangan
melalui Sistem Asing di bidang Perdagangan melalui Sistem Elektronik/ KP3A
Elektronik/ bidang PMSE) upon the fulfillment of certain criteria. A foreign
E-Commerce PPMSE with the following criteria is obliged to appoint a
Organizers) representative based in Indonesia to act on behalf of the PPMSE:
a. Having transactions for more than 1,000 (one thousand)
customers within a period of 1 (one) year; and/or
b. Already delivered packages for more than 1,000 (one thousand)
packages for customers within a period of 1 (one) year.
In regard to those criteria, MoT created a team to assess the

compliance of the criteria and the appointed representative
with the provision of Foreign Trade Company Representative
Office in PMSE sector.
KP3A as mentioned above is located in Indonesia and only allowed

to represent 1 (one) Foreign PPMSE, based on the consent
from represented Foreign PPMSE. KP3A is obliged to obtain
SIUP3A through Online Single Submission (OSS), with
requirements set below:
a. Proof of the appointment of KP3A at PMSE sector as the

representative of the Foreign PPMSE, legalized by notary and
Letter of Recommendation from Trade Attaché of the
Republic of Indonesia;
b. Copy of Articles of Association of the Foreign PPMSE (in
Indonesian language);
c. Proof from the head of KP3A at PMSE sector;
d. Letter of a statement stating the number of employee and
employment letter;
e. Reporting the website address and/or name of the app of the
represented Foreign PPMSE; and
f. Reporting the phone number and/or email address of the
customer call center from the represented Foreign PPMSE.
SIUP3, as mentioned above, is applicable for the business
license of the Foreign PPMSE branch office that is represented
and will remain valid as long as the KP3A is still in operation.
b. Foreign The risk-based business licensing of KPPA shall be classified as a

Representative low risk-based business, which only requires an NIB submitted
Office (Kantor through the OSS system. A KPPA is chaired by a chief of
Perwakilan representative office who must reside in Indonesia, does not carry
Perusahaan out activities outside the KPPA activities, and does not hold
Asing/KPPA); concurrent positions as head of the company and/or for more
than 1 (one) representative office.
If the head of KPPA is a foreigner and/or employs foreign workers,

KPPA is required to employ Indonesian workers in accordance with
the provisions of the legislations.
KPPA’s activities are limited to:

a. Acting as a supervisor, liaison, coordinator and taking care of
the company’s or the affiliated companies interests;
b. Preparing the establishment and business expansion of a foreign
investment company in Indonesia or in other countries and
Indonesia;
c. Having its offices in an office building in the capital city of a
province;
d. Not seeking for revenues from Indonesia including the
prohibition from engaging in selling and purchasing
agreements/transactions for commercial goods or services
with local companies or individuals; and
e. Not participating in the management of any company, subsidiary
company, or company’s branch in Indonesia.
c. Representative
Office of Like a construction company, BUJKA will be required to obtain
Foreign an NIB as its business license, and obtain certification in the
Construction form of a Business Entity Certificate (Sertifikasi Usaha
Services Konstruksi/SBU) as its commercial license. The requirement for
Business BUJKA to form a joint operation is still regulated under the
Entity (Kantor previous laws and regulations. In carrying out its business in
Perwakilan Indonesia, BUJKA must:
Badan Usaha 1. Fulfill Business Licensing;
Jasa Konstruksi 2. Be in the form of a business entity with qualifications equivalent
Asing /BUJKA); to a large scale qualification;
3. Hire Indonesian citizens as the head of BUJKA representative
office;
4. Establish a joint operation (Kerja Sama Operasi/KSO) with a
local construction services company that meet the KSO
technical criteria;
5. Prioritizing the use of local construction materials and technology;
6. Have a high, sophisticated, efficient, environmentally friendly

technology, and pay attention to local wisdom;
7. Carry out transfer of technology;
8. Employ more Indonesia workers than foreign workers on expert
level; and
9. Carry out other obligations in accordance with the provisions of
the legislations.
d. Representative Pursuant to Government Regulation No. 25 Year 2021 (GR

Office of 25/2021), JPTLA is one of the private business entities that carry
Foreign out business activities in the field of electricity supporting
Electricity services, that must obtain a business license and Business
Supporting Entity Certificate for the electric power support services business
Services (SBU untuk badan usaha JPTLA/SBU BUJPTLA). JPTLA’s business
(Kantor licensing shall be granted to the following types of business:
Perwakilan
a. Consultation in the field of electricity installation;
Jasa Penunjang
Tenaga Listrik b. Construction and setting of electricity installation; and
c. Maintenance of electricity installation.
Asing /JPTLA).
JPTLA may only be permitted in carrying out high-cost
electricity supporting services works with the following threshold:
a. Construction and electricity installation setting, at least of
IDR 100 billion;
b. Consultation in the field of electricity installation or maintenance
of electricity installation, at least IDR 10 billion.
JPTLA must fulfill the minimum requirements pursuant to GR

25/2021 as follows:
a. Having a large qualification;
b. Forming an operation cooperation with a domestic electricity
supporting services company;
c. Hiring more Indonesian workers compared to foreign workers;
d. Appointing Indonesian citizen as the person in charge of JPTLA;
e. Prioritizing domestic products utilization;
f. Possessing high, sophisticated, efficient, environmentally friendly
technology, as well as paying attention to the local wisdom;
g. Conducting transfer of technology; and
h. Complying with other obligations pursuant to the prevailing laws
and regulations. Those who fail to comply with the above
requirements shall be subject to certain administrative sanctions
and a fine.
2.GETTING LICENSE
Risk-Based Business Licensing
2.1 Concept of Risk-Based Business Licensing
The Risk-Based Business Licensing is based on (i) the determination of the risk level; and
(ii) the rating scale of business activities, including micro, small, and medium enterprises
(Usaha Mikro Kecil dan Menengah/MSMEs) and/or large-scale business.
The risk level is determined by risk analysis results conducted by the government with
considerations of:
a. Identification of business activities;
b. Hazard level assessment;
c. Assessment of potential hazards;
d. Determination of risk level and business scale rating; and
e. Determination of the business licensing type.
Risk level and types of business licensing required for conducting each business activity are
determined based on the risk analysis.
2.2 Provisions of Risk-Based Business Licensing Services
When starting and conducting business activities, all businesses must comply with:
a. Basic requirements of business licensing which include: (i) spatial conformity
(kesesuaian kegiatan pemanfaatan ruang); (ii) environmental approval; (iii)
building approval (persetujuan bangunan gedung); and (iv) certificate of
proper building functioning (sertifikat laik fungsi); and
b. Risk-based business licensing, which is divided into low-risk, medium-low risk,
medium-high and high risk.
Basic Requirement of Business Licensing
Spatial Conformity Environmental Building Approval (PBG) and

(KKPR) Approval (PL) Certificate of Proper Building
Functioning (SLF)
4 Law 2 Law
15 Articles 36 Articles
Utilization of space must obtain Confirmation/

EveryApproval/
business plan
Recommendation
and/or activityofthat
Spatial
has Conformity
an impact (important/
(KKPR), based
not on
important
Detaile
If located in coastal waters, territorial waters
Environmental
and jurisdictions,
approval/
it is PL
mandatory
is an approval
to obtain
for:Marine
KKLH (Decision
KKPR Approval
of Environmental
(KKPRL).
If located in a forest area, it is mandatoryDetails
to obtain
refer
a Forest
to GR 22
Areaof Use
2021Approval
concerning
(P2KH).
the Implementation of
Details refer to GR 21 of 2021 concerningEnvironmental
the Protection and Management.
Implementation of Spatial Planning and GR No 23
of 2021 concerning the Implementation of Forestry.
The Risk-Based Business Licensing is further determined by the following:

a. KBLI codes/references, KBLI titles, the scope of activities, risk parameters, risk
levels, business licensing, time periods, validity periods, and business licensing
authorities, which can be found in Attachment I of GR 5/2021;
b. Risk-Based Business Licensing requirements and/or obligations, which can be
found in Attachment II of GR 5/2021;
c. Risk-Based Business Licensing guidelines, which can be found in Attachment III of
GR 5/2021; and
d. Business activity standards and/or products standards, that will be further
promulgated by the minister and/or head of agency for the respective sectors.
The implementation of Risk-Based Business Licensing covers the following business fields:
1. Maritime Affairs and Fisheries 9. Transportation
2. Agriculture 10. Health, Drugs, and Food
3. Environment and Forestry 11. Education and Culture
4. Energy and Mineral 12. Tourism

Resources
13. Religion
5. Nuclear Power
14. Post, Telecommunications,
6. Manufacturing Broadcasting and Electronic
System and Transaction
7. Trade
15. Defense and Security
8. Public Works and Public
Housing 16. Manpower
2.3 Procedures for Risk-Based Business Licensing
1. The first stage of the Risk-Based Licensing procedure is to obtain a Business

Identification Number (NIB) through the OSS system (https://oss.go.id/). A
NIB is a proof of registration of business actor to carry out business activities. NIB
also serves as:
b. Import identification number (Angka Pengenal Impor/API);
c. Custom and duties access right;
d. Registration for health and labor social security (BPJS); and
e. Mandatory labor report for the first period.
2. After gaining access to the OSS system, business actors must complete
business actor data (company profile and capital structure) and general plan of
business activity (five-digits KBLI code, proposed business location, number of
employees, product/services).
3. The OSS system shall issue the NIB as an identity and legality to carry out business
preparations based on: (i) data entry of business actor and general plan of
business activity; (ii) examination result of spatial conformity; and (iii) data entry of
business activity.
4. Then the OSS system will automatically send a notification of NIB issuance to
ministries/agencies, provincial Office of Investment and One-Stop Integrated
Service (Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu/DPMPTSP),
regency/ city DPMPTSP, Special Economic Zone (SEZ) administrators, and Free
Trade and Free Port Zone (FTFPZ) authority.
5. In issuing NIB, the risk level validating process for the business fields will be
carried out. The risk level set must follow norms, standards, procedure and
criteria of ministries/ agencies, and is automatically verified by the OSS system.
Risk Level Business Licensing

• Business actors must submit a Commitment Letter for Implementation of
Environmental Management and Monitoring (Surat Pernyataan Kesanggupan
Low risk NIB Pengelolaan dan Pemantauan Lingkungan Hidup/SPPL).
• Low risk business activities will only require an NIB, which shall also serve as
SPPL, to carry out the preparation, operational, and commercial stages.
• Business actors must submit Standard Certificate in the form of self-
declaration to meet business activity standards.
• If the business activity is required to fulfill Environment Management Efforts
and Environment Monitoring Efforts (Upaya Pengelolaan Lingkungan Hidup
NIB and dan Upaya Pemantauan Lingkungan Hidup or UKL-UPL), the business
Medium-low
Standard actor shall fill out UKL-UPL form along with Statement of
risk
Certificates Capability of Environment Management (Pernyataan Kesanggupan
Pengelolaan
Lingkungan Hidup/ PKPLH) in the OSS system to obtain NIB and Standard
Certificate.
Risk Level Business Licensing

• If the business activity is not required to fulfill UKL-UPL, the business actor
shall fill out SPPL form in the OSS system to obtain NIB and Standard
Certificate.
NIB and • The NIB and Standard Certificate shall be the legal basis for the business
Medium-low
Standard actors to conduct business activities, in the preparation, operation and/or
risk
Certificates commercial stages.
• Supervision is carried out by the government to ensure that business actors
meet the business standards.
Preparation Stage:
• Business actors must submit the Standard Certificate in the form of self-
declaration to meet business activity standards.
• If the business activity is required to fulfill UKL-UPL, the business actor shall
fill out the UKL-UPL form along with the PKPLH in the OSS system to
obtain NIB and an unverified Standard Certificate.
• If the business activity is not required to fulfill UKL-UPL, the business actor
shall fill out the SPPL form in the OSS system to obtain NIB and an unverified
Standard Certificate.
• NIB and an unverified Standard Certificate shall be the legal basis to conduct
NIB and business activity in the preparation stage.
Medium-high
Standard
risk
Certificates
Operational and Commercial Stage:
• The Ministry of Environment and Forestry shall verify the UKL-UPL form
and PKPLH above. If it is approved, the OSS system shall issue approval on
PKPLH UKL-UPL.
• The business actors shall then fulfill standard business activity through OSS
system within period of time in accordance with norm, standard, procedure
and criteria stipulated by relevant ministry/agency.
• The Standard Certificate which has been verified shall be the legal basis to
conduct operational and/or commercial business activity. If it is necessary
and/or required, in addition to NIB and Standard Certificate, business actors
have to obtain certificate of goods and/or services.
• If the business activity is required to fulfill Environmental Impact Assesment
(Analisis Mengenai Dampak Lingkungan or AMDAL), business actors shall
obtain Environmental Approval in the form of Environmental Feasibility
Decree before submitting license application. The decree shall be the
requirement for the issuance of license.
• If the business activity is required to fulfill UKL-UPL, the business actor shall
NIB, fill in UKL-UPL form along with the PKPLH in the OSS system.
High risk
Licenses
• The Ministry of Environment and Forestry shall verify the UKL-UPL form and
the PKPLH above. If it is approved, the OSS system shall issue an approval of
PKPLH.
• To obtain license, business actors shall fulfill license requirement through the
OSS system within certain period of time in accordance with norm, standard,
procedure and criteria stipulated by relevant ministry/agency.
PREPARATION COMMERCIAL
Indonesian Personal
ID or NIK (Ind: OPERATIONAL
Nomor Induk
Kependudukan) or
Passport Number
and other data LOW
LO
Individual
W
INVESTOR MEDIUM
LOW
To identify
MEDIUM
Indonesian LOW
Business
Activity Code www.oss.go.id OSS
(KBLI), and OSS account Online
it’s maximum (user ID and Single
password) Submission
foreign share
ownership
A. NEW
M
INVESTOR AHU MEDIUM MEDIU
(New (Ministry of HIGH HIGH
Registration) Law & Human
Rights)
B. EXISTING
INVESTOR (Re-
MEDIUM
registration) HIGH Submit
Deed of MEDIUM Investment
Establishment’s HIGH Facility
Registration
Number
Establishing
Indonesian
Entity : HIGH HIGH HIGH HIGH HIGH
Notary RISK RISK RISK RISK RISK
1. PT (for FDI)
2. CV, Firm
3. Cooperative • Company
Name’s Submit
Reservation Investment
Facility
• Articles of
Association
(AoA)
All business activities are divided into two stages. The NIB allows the business to conduct
activities from ‘preparation to the ‘commercial stage’.
Preparation stage Operational & Commercial stage

• The procurement of tools or facilities; • The production of goods/services;
• Land acquisition; • Distribution of goods/services;
• Recruitment of manpower; • Marketing of goods/services; and
• Feasibility studies; • Other commercial activities.
• Financing operations for the construction phase.
• Building construction*
* May only commence after the Environmental license has been issued, for high-risk business activities for
which an environmental impact analysis is required.
2.4Validity Period of Risk-Based Business License
NIB will be valid as long as business actors carry out their business activities. Standard
certificates, permits, and/or business license to support business activities will also be valid
as long as business actors run their business, or in accordance with the period stipulated in
the provisions of law and regulation.
In the event that the validity period of standard certificates, permits, and/or business
license to support business activities is regulated, application for renewal is made through
the OSS System no later than 30 (thirty) days before the validity period expires, or as
stipulated in the provisions of the law and regulation.
Fictitious Positive Provision

The principle of fictitious positive in the OSS means that the OSS system will automatically
issue the business licenses and permit if the Ministries/Agencies and DPMPTSP fails to
process the fulfillment submitted by the business actor through the OSS system within the
duration stipulated in Attachment 1 of GR 5/2021.
3.INVESTMENT SUPERVISION
The Government of Indonesia has responsibilities to oversee and assist all investment
projects that have entered the preparation and construction stages to be realized
according to plan. Under the Risk-Based Approach, the government will perform
inspections to supervise businesses, and make sure that companies are complying
with the necessary business standards in conducting their business.
Supervision Mechanism
GR 5/2021 and BKPM Regulation No. 5 Year 2021 set the method for supervising the
business activities by the government, which consists of routine supervision and incidental
supervision. Routine supervision consists of (i) reports from business actors; and (ii) field
inspections, while incidental supervision is a type of supervision that is carried out without
being scheduled in advance.
The Risk-Based Business Licensing Supervision above is carried out in an integrated

and coordinated manner between ministries/agencies, provincial/local governments,
district/ city local governments, Special Economic Zone (SEZ) administrators, and/or
Free Trade Zone Free Port (FTZFP) through the OSS’ supervision subsystem.
1. Routine supervision
Routine supervision will be carried out periodically based on the risk level of the relevant
business activities with due consideration of the level of compliance by the business.
1.1 Business Actors Report

The reports of business actors are to be submitted to ministries/agencies, provincial/local
governments, district/city local government, SEZ administrators, and/or FTZFP which
contain the compliance of Business Actors for:
1. The standards and/or obligations for the implementation of business activities; and
2. The progress of investment realization, as well as the provision of facilities,
incentives and conveniences for investment and/or obligations for partnerships.
Supervision stated in point (1) above will be carried out by technical ministries/agencies
with standard mechanisms and procedures (SOP) in accordance with the provisions of
related technical ministries, while supervision related to point (2) is carried out by the
Ministry of Investment/BKPM with the provisions as stipulated in BKPM Regulation No. 5
Year 2021.
BKPM Regulation No. 5 Year 2021 emphasizes the requirement for PT PMA to submit
the Investment Realization Report (Laporan Kegiatan Penanaman Modal/LKPM) to the
Ministry of Investment/BKPM. The report includes report on investment realization and, if
any, issues that are faced by the company in implementing its investments. The
government will then provide facilitation services for problem solving (debottlenecking)
to find solutions to obstacles/problems encountered. The submission of LKPM is carried
out with the following provisions:
• Businesses are obligated to submit:
a. A quarterly report on the investment and manpower realization at the construction
and commercial stages; and
b. An annual report on the realization of production, corporate social responsibility,
partnership, training, and technology transfer at the commercial stages.
• Reporting period:
a. For medium and large business actors, LKPM is submitted every 3 months (quarterly).
b. Reports on the activities of the representative office are submitted as follows:
• KP3A and KPPA are required to submit reports every 6 months;
• The BUJKA Representative Office is required to submit a report once a year; and
• The Foreign Electricity Supporting Representative Office is required to submit
a report once a year.
• LKPM for each line of business and/or location, will be made through the OSS system
that is now also integrated with the system of the relevant governmental institutions
(e.g. ministries/agencies, local governments, or SEZ administrators).
• The LKPM consist of (1) LKPM in the construction/preparation stage for business
activities that are not yet in production and/or commercial stages, which includes: a)
land procurement, both inside and outside the industrial area, b) construction of
buildings,
c) procurement of capital goods and supporting goods, and d) import of
machinery; and (2) LKPM for operational and/or commercial stages for business
activities that are already producing and/or operating commercially.
1.2 Field Inspection

This measure shall be conducted by government agencies through direct or virtual
field inspection. The relevant government agency will carry out field inspection, which may
include administrative and/or physical examination, testing, and/or mentoring and
counselling. Each business will be subject to at least once-a-year field inspection for each
of its business locations, but medium-high risk and high-risk businesses will be subject to
field inspection twice a year. Suppose a low-risk or medium-low risk business is declared
as “compliant” by the inspector, such business may be exempted from a field
inspection in the subsequent year (or only one inspection for medium-high risk and high-
risk businesses).
2. Incidental supervision, which will be carried out by ministries/agencies,

provincial/local government, districts/city local governments, SEZ administrators, and/or
FTZFP on an ad hoc basis. Incidental supervision will be conducted through field or virtual
inspections.
4. ONE STOP SERVICE CENTER (PTSP)
One Stop Service Center (PTSP Pusat) is established at BKPM to provide a simple,
fast, transparent and integrated service for starting business in Indonesia. At PTSP Pusat,
there are representative officers from 22 ministries and government institutions that
provide consultation and accept application for business licenses that are not included in
the OSS.
Services offered by PTSP Pusat including:

1. Serving information and consultation on investment policies in specific sectors;
2. Serving business license applications that are not regulated in GR 5/2021;
3. Clarifying the procedure of business licensing application through the OSS system
(Layanan Berbantuan);
4. Facilitating the problems faced by investors in realizing their investment in
Indonesia; and
5. Synchronizing and coordinating with related ministries/agencies including with
provincial/local governments, district/city local governments, SEZ administrators,
and FTZFP.
III
LEGAL
OVERVIEW
FOR FOREIGN
INVESTOR
53 Legal Overview for Foreign Investor
1. EMPLOYMENT
1.1 Employment of Foreign Workers
Following the enactment of Government Regulation No. 34 Year 2021, the Minister of
Manpower (MoM) has issued MoM Regulation No. 8 Year 2021 regarding
Implementing Regulation for Government Regulation No. 34 Year 2021 regarding Foreign
Worker Utilization (MOM Reg. 8/2021).
Work Permit for Foreign Workers

Employers in Indonesia are required to obtain a work permit for foreign workers (Tenaga
Kerja Asing/TKA) called RPTKA Legalization (Pengesahan RPTKA), issued by the
Ministry of Manpower. The RPTKA Legalization is exempted for:
a. Board of directors and commissioners with certain share of stock ownership, or
shareholders in accordance with provisions of legislation;
b. Diplomatic and consular staff at representative offices of foreign countries; or
c. TKA required by employer related to production activity that has ceased due to
emergencies; vocational activities; technology-based startups; business visits; and
research for a certain period of time.
Specifically for tech-based startups and vocational activities, the exemption lasts for
no more than three months. The employers then need to apply for RPTKA Legalization
for their foreign workers. The application must be submitted at least two weeks
before the expiration of the work period stated in the foreign worker employment
statement letter issued in place of the RPTKA Legalization.
Those that can employ foreign workers include:

a. Government institutions, representatives for foreign countries, and
international agencies;
b. Representative offices of foreign trade, representative offices of foreign companies,
and foreign news offices conducting activities in Indonesia;
c. Foreign private companies conducting business in Indonesia;
d. Legal entities in the form of limited liability companies or foundations which
established under Indonesian law or foreign business entities registered in the
authorized institution;
e. Social, religious, educational and cultural institutions;
f. Impresario service business; and
g. Business entities as long as not prohibited by the law to utilize TKA.
Legal Overview for Foreign Investor 54
An exception applies to a limited liability company in the form of an individual legal

entity, which under MoM Reg. 8/2021 is not allowed to employ foreign workers.
Employers must apply for work and immigration permit through the TKA Online sy
Application Stages
1. RPTK Submit an application and upload documents needed through the
A TKA Online system addressed to the Director of Foreign
Documents Manpower Utilization Management (Direktur Pengendalian
Submission Penggunaan Tenaga Kerja Asing) if fewer than 50 foreign workers
are to be employed. Otherwise, it is addressed to the Director
General of Manpower Placement Guidance and Expansion of
Work Opportunity (Direktur Jenderal Pembinaan Penempatan
Tenaga Kerja dan Perluasan Kesempatan Kerja).
If the application is declared complete and correct, the Ministry

2.RPTKA of Manpower will then conduct a feasibility assessment of the
Appropriatenes application for Legalization of the RPTKA submitted by the
s Assessment employer. The assessment will be conducted online. If the
assessment concludes that all requirements have been met, the
Ministry of Manpower will issue results of the feasibility assessment
no later than 2 working days after the employer is deemed feasible
based on the assessment.
The employer is required to submit the data and documents of

3.Submission of TKA candidates once the assessment result is issued or
Foreign Worker simultaneously with the submission of RPTKA documents
Personal Data through the TKA online system. These data and documents will
be verified within no more than 2 working days.
If the information and documents are declared complete and

4. DKPTKA correct, the Ministry of Manpower will issue a payment notification
Payment letter for the Compensation Fund for the TKA Utilization (Dana
and RPTKA Kompensasi Penggunaan Tenaga Kerja Asing/DKPTKA). The
Legalization amount of payment is USD 100 for each position per person
monthly and shall be made to a bank appointed by the Ministry of
Finance or the local government. Payment of DKPTKA is waived
for (i) government institutions, (ii) representatives of foreign
countries, (iii) international agencies, (iv) social institutions, (v)
religious institutions, and (vi) certain positions in educational
institutions.
Once the employer has made the DKPTKA payment, the Ministry of Manpower will
issue the RPTKA Legalization and send the data online to the Ministry of Law and
Human Rights for further processing the visa and stay permit. The Legalization of
RPTKA is used as a recommendation to obtain visa and stay permit for the foreign
workers.
Types of RPTKA Legalization and Validity Period
RPTKA Types Validity

Temporary work (production quality control, filming Maximum period of 6 months and cannot be
work, installation of machines, and so forth) extended
Work for more than 6 months Maximum period of 2 years and can be extended
Employment that does not require payment to the
Maximum period of 2 years and can be extended
Foreign Worker Utilization Compensation Fund
Maximum period of 5 years and can be extended. For
SEZ RPTKA for board of directors or commissioners
Employment in Special Economic Zones (SEZ)
is given once and is valid as the TKA still working as
board of directors or commissioners.
Note: the RPTKA Legalization to be extended at least 30 days prior to its expiration.
Amendment of RPTKA Legalization

Employers may apply for amendment to RPTKA Legalization before the expiration of
the validity period. MoM Reg. 8/2021 provides that the amendment to the RPTKA
Legalization will be issued in no more than 2 working days if the submitted information
and documents are declared complete and correct. In this case, no appropriateness
assessment is needed.
1.2 Fixed Term Employment
Fixed Term Employment Contracts (Perjanjian Kerja Waktu Tertentu/PKWT)

PKWT is an employment agreement between the employee and the employer to establish
a working relationship for a specific time or works. PKWT cannot require a
probationary period. Further, the PKWT must be registered at the Ministry of Manpower
by the employer through online registration.
PKWT based on time period and completion of works are used for the following:
a. PKWT based on time period which is categorized into: i) works with a short
completion period (a maximum of years); (ii) seasonal works; or (iii) works related
to new products, new activities, or an additional product that is still in the
experimental or try-out phase. Time-based PKWT may be determined and
extended based on the agreement between the employer and employee. However,
the PKWT is restricted to no more than 5 years since the starting or effective date
of the PKWT.
b. PKWT based on completion of works which is categorized into: (i) one time
completion works, or (ii) temporary works. The employment contract for PKWT
based on completion of works must include, among others, (i) scope of works and
(ii) terms for the completion of works. The time period for the completion of
works shall be the time period that such works is completed.
Compensation
At the end of the PKWT period, employers have to provide compensation to the workers.
Compensation is given to workers who have worked continuously at least 1 month, with
the following conditions:
a. PKWT with a time period of 12 consecutive months shall receive 1 month wage;
b. PKWT with a time period between 1 month and less than 12 months is calculated
proportionally (working period/12 x 1 month of wage);
c. PKWT with a time period of more than 12 months is calculated proportionally
(working period/12 x 1 month wage).
Wages generally consist of basic salary and fixed allowances. If a wage does not include
fix allowances, then the compensation shall not include additional allowances. If a wage
consists of basic salary and non-fixed allowance, then the compensation shall only
include basic salary. The compensation mentioned above shall not apply to PKWT for
foreign workers.
1.3 Outsourcing
Outsourcing is a working relationship between an outsourcing company with employees

who are employed based on PKWT or permanent employment contract (Perjanjian Kerja
Waktu Tidak Tertentu/PKWTT). Matters regarding protection of workers, wages, welfare,
working conditions, and disputes are conducted pursuant to laws and regulation and
shall be the responsibility of the outsourcing company. These shall be regulated under an
employment contract, company regulation or a collective employment contract. An
outsourcing company must be in the form of legal entity and is required to fulfill
business license issued by the central government.
1.4 Working Hours
Employers are obligated to implement working hours pursuant to the employment

contract, company regulation, or collective working contract.
Standard Working Hours Less than Standard Working Hours

a. 7 hours each working day and 40 hours per week Companies in certain business sectors or works that
(6 working days per week) with 1 weekly rest apply less than “standard” working time, meet the
day; or following criteria:
b. 8 hours each working day or 40 hours per week (5 a. Completion of work less than 7 hours each day
working days per week) with 2 weekly rest days. and less than 35 hours each week;
b. Flexible working hours;
c. Work that can be carried out outside of the
working location.
Overtime may only be implemented for a maximum of 4 hours each day or 18 hours each
week, excluding works conducted on weekly rest days and/or national holidays. Employers
have to pay for overtime pursuant to the following calculations:
(i) For the first overtime hour: 1.5 x 1 hour salary;
(ii) For each subsequent hours: 2 x 1 hour salary.
1.5 Termination
Termination of Employment (Pemutusan Hubungan Kerja/PHK) is the termination of a

working relationship due to certain matters which resulted in the termination of rights
and obligations between workers/labors and the employer. In the event of
employment termination, the employer shall be obligated to pay severance and/or
service pay, and compensation pay to the employee in accordance with Government
Regulation No. 35 Year 2021.
Termination Reason Rights due to termination

Severance pay amounting to 0.5 times the
a. Acquisition of the company resulting in changes
stipulation, reward for service pay of 1 time the
of working conditions and workers are not
stipulation, and compensation pay for rights in
willing to continue the employment relationship;
accordance with the stipulation.
b. Termination due to efficiency because the
company experiences losses;
c. The company is liquidated due to losses for 2
years continuously or not continuously;
d. The company is liquidated due to force majeure;
e. The company is in a state of postponement of its
debt payment obligations due to losses;
f. The company went bankrupt;
g. The worker violates the work agreement,
company regulations, or collective labor
agreement after previously provided a warning
letter.
Severance pay amounting to 1.75 times the
stipulation, reward for service pay of 1 time the
Retirement
stipulation, and compensation pay for rights in
accordance with the stipulation
Prolonged illness or disability due to work accidents Severance pay of 2 times the stipulation, reward
and can not carry out his/her job after exceeding the for service pay of 1 time the provision, and the
12 month limit; and death compensation for rights.
1.6 Wages
Under Government Regulation No. 36 Year 2021 (GR 36/2021), the provincial minimum
wage will be the main benchmark for businesses. Governor may also impose a
regency/ city minimum wage if that regency/city’s economic growth is higher than the
province’s for the last three years. Although the sectoral minimum wage has been
abolished, all sectoral minimum wage decrees issued before GR 36/2021 will continue
until their expiration date.
Minimum Wage Calculation

Calculations for monthly minimum wage are carried out by the provincial or district wage
council. The local government will determine the minimum wage based on economic and
employment conditions. These comprise of the following variables:
a. Purchasing power parity;

b. Manpower absorption levels; and
c. Median wage variables (the margin between the 50% of the highest wages and
50% from the lowest 50% of the lowest wages from employees in the same
position).
These variables were assessed based on existing data from the last 3 years. In addition,
the wage council also takes into account economic growth or rate inflation provision,
as well as per capita consumption of working household members.
The minimum wage applies to all workers with less than 1 year of working in the company.
After 1 year, the employee is eligible to be paid in accordance with the wage scale in
the particular company, if they wish to do so. Moreover, businesses are no longer
permitted to postpone the payment of the minimum wage for their workers like before,
unless they are classified as micro or small businesses.
1.7 Social Security Programs
Based on Law No. 24 Year 2011 (Law 24/2011), employer will have to contribute a certain
share based on employee monthly wage into the social security programme. The
programme will provide economic assurance for every employee’s wellbeing. The Social
Security Agency for Workers and/or Health (Badan Penyelenggara Jaminan Sosial untuk
Ketenagakerjaan dan/ atau Kesehatan or BPJS-TK and BPJS-KS) will continue to ensure
that employer takes part in the mandatory social security programmes such as Pension
Guarantee, Senior Insurance Program, Life Insurance, and Work Accident Insurance.
With the Job Creation Law, it amends a few provisions in Law 24/2011 and adds the
unemployment insurance program (Jaminan Kehilangan Pekerjaan/JKP Program). Under
Government Regulation No. 37 Year 2021, the JKP Program will give employees access to
job openings, training, and cash payments that is capped at six months’ salary, with
IDR 5 million (approximately USD 350) as the maximum monthly salary should they lose
their jobs. The requirements for the employee to be registered under JKP is that the
employee shall be an Indonesian nationality, has not reached the age of 54 during
registration, and has an employment relationship with the company. All employees already
enrolled with the Manpower BPJS system are automatically registered for JKP program.
2.VISA AND IMMIGRATION
Different types of visas and stay permits allow different types of activities. As part of
the government’s goal to make Indonesia more investment friendly through the enactment
of the Job Creation Law, Government Regulation No. 48 Year 2021 (GR 48/2021) on
Immigration was issued.
2.1 Type of Visas
a. Visitor Visa (B211A, B211B, B211C)

This type of visa cannot be used to work in Indonesia. Foreigners with this visa can
carry out activities including: Tourism; Family; Social; Arts and culture; Duties of
government; Non-commercial sports; Comparative studies, short courses and short
training; Pre- investment activities; Conduct business talks; Make purchases of goods;
Giving lectures or attending seminars; Participate in international exhibitions;
Participate in meetings held with the head office or representatives in Indonesia;
Continuing to travel to other countries; and Join the transportation means in the
Indonesian Territory.
GR 48/2021 adds a new eligibility category for both single and multiple-entry visit visas
which is the pre-investment activities. These are activities in conjunction with starting a
business such as activities related to field surveys and feasibility studies.
ities of during their stay in Indonesia, and for reporting any change in the civil status, immigration
s, the full amount of the payment shall be returned to the foreigners once their stay permit expires.
b. Temporary Stay Visa/VITAS

This type of visa can carry out activities including: a professional or expert; who
joins to work on ships, on vessels, or installations operating in the Indonesian maritime
zone, territorial sea, continental shelf, and Indonesian Exclusive Economic Zone; whose
job is quality control of goods or products; who conducts workplace inspections
and audit; whose work with an aftersales service; who installs and repairs
machine; with a non- permanent work in constructions; with a probationary period for
skilled works; a foreign Investment; a family reunion; retirement travel.
GR 48/2021 adds 2 requirements for a VITAS application, namely:

a. A statement letter of good standing from the relevant authorities or the
embassy or consulate of the foreigner’s country of origin; and
b. A health examination letter stating that the foreigner is free from any
contagious disease that could endanger public health.
2.2. Stay Permits
The principal provisions relating to the presence of foreigners in Indonesia under the
previous laws and regulations are remain in force, while GR 48/2021 introduces some
significant changes.
Visit Stay Permits

• A visit stay permit issued based on entry to Indonesia under a single-entry visit
visa, such visit stay permit is valid for a maximum period of 180 days and is
non- extendable.
• A visit stay permit issued based on entry under a multiple-entry visit visa is granted
for a maximum period of 180 days and is extendable up to an aggregate stay of no
more than 12 months in Indonesia.
• The validity period of stay permits issued based on entry under a visit visa on
arrival is no more than 30 days and is non-extendable.
Limited Stay Permit (Izin Tinggal Terbatas/ITAS)

• An ITAS is valid for a maximum of five years and can be extended under the
condition that the aggregate stay of the foreigner in Indonesia does not exceed 10
years.
• An ITAS for work purposes that is valid for no more than 90 days can be extended
under the condition that the aggregate stay of the foreigner in Indonesia does not
exceed 180 days.
• Now, a foreigners can apply by themselves to the relevant head of immigration
office or appointed immigration official for the conversion of a visit stay permit to
an ITAS, or an ITAS to a permanent stay permit (ITAP), that previously only
guarantors could submit these applications.
Updated information on entering Indonesia can be found at
Conversion of Stay Permit

The Ministry of Law and Human Rights provide ease of services and/or licensing on
immigration facilities for foreign investment (PMA). Under BKPM Regulation No. 4 Year
2021, the ease of services and/or licensing are given for a conversion of stay permit after
getting a letter recommendation from the Ministry of Investment/BKPM. Stay permit
subjected to status conversion includes:
1. Visit Stay Permit converted to Limited Stay Permit; and

2. Limited Stay Permit converted to Permanent Stay Permit.
The recommendation for status conversion of a stay permit is given to 1) foreigners

as shareholders and as directors or commissioners; and 2) foreigners as shareholders but
are not in position as directors or commissioners. The shareholders must meet the
following criteria:
a. If they are directors or commissioners, both status conversions require having
a share ownership of at least IDR 1 billion or its equivalent in USD as stated in the
deed;
b. If they are not directors or commissioners, status conversion from Visit Stay Permit
to Limited Stay Permit requires having a share ownership of at least IDR
1,125,000,000 or its equivalent in USD, while Limited Stay Permit to Permanent
Stay Permit status conversion requires at least IDR 10 billion or its equivalent in
USD, as stated in the deed.
The recommendation letter application is to be submitted to the Ministry of

Investment/ BKPM through [email protected]. If a foreign shareholder, either as a
director or a commissioner does not meet the criteria above, the application to use foreign
workers shall be submitted to the MoM for:
63
a. Granting approval to change the status of a visit stay permit into a limited stay
permit or extension of a limited stay permit; and
b. Granting approval to change the status of a limited stay permit into a
permanent residence permit or extension of a permanent residence permit
3. LAND AND ENVIRONMENT
3.1 Land Title
Land ownership in Indonesia is regulated under Law No. 5 Year 1960 on Basic
Agrarian Law. The Job Creation Law and Government Regulation No. 18 Year 2021 (GR
18/2021) on Right to Manage, Right over Land, Stacked Units and Land Registration (Hak
Pengelolaan, Hak atas Tanah, Satuan Rumah Susun dan Pendaftaran Tanah) has
expanded some of its aspects e.g., the concept of right of management, space above and
beneath the land, and electronic land-related documents.
In general, the types of land title allowed are as follows:
1. Right of Ownership (Hak Milik/HM)

Hak Milik is the right that gives the holder the fullest right a person can possess
over a land in Indonesia. It allows an unlimited period of ownership, and it is
transferrable, though it may be encumbered for security reasons. The title is
available only to (i) Indonesian citizens, (ii) certain religious and social
organizations, (iii) government bodies in Indonesia, and (iv) a very limited
number of Indonesian legal entities allowed by the government.
2. Right to Build (Hak Guna Bangunan/HGB)
HGB title is the right to build and to own buildings on land which is not ones
property. It can be given to (i) Indonesian citizens and (ii) legal entities (whether
Indonesian or foreign owned) that are incorporated under Indonesian law and
domiciled in Indonesia. The title can be granted over state land, Right of
Management (Hak Pengelolaan) land, and Right to Own (Hak Milik) land. The
maximum term of grant of HGB is 30 years, and may be extended for 20 years and
renewal of a maximum for 30 years. Applications for extension of Right to Build
can be submitted after the land has been utilized in accordance with the purpose
or before the expiration date of the land title. While for the renewal of Right to
Build can be submitted at the latest 2 years after the expiration date of the land
title.
3. Right to Cultivate (Hak Guna Usaha/HGU)
HGU is a title granting the right to cultivate state land and the Right of
Management land, or to use it for other agricultural purposes in a certain period of
time. It can be given to (i) Indonesian citizens and (ii) legal entities (whether
Indonesian or foreign
owned) that are incorporated under Indonesian law and domiciled in Indonesia.
The maximum term of grant of HGU is 35 years, with the option of extension
for a maximum of 25 years and a renewal of a maximum of 35 years. The
application for extension of a Right to Cultivate can be submitted after the
business carried out on the land is effective. As for the renewal, the applications
can be submitted at the latest 2 years after the expiration date of the land title.
4. Right to Use (Hak Pakai)
Hak Pakai is the right to utilize land or to collect products from such land. The title
can be granted for a definite or indefinite term, as long as the land is used for
a specific purpose. GR 18/2021 divides Right to Use into two types:
a. Right to Use for a certain period of time can be given to Indonesian
citizens, legal entities established under Indonesian laws and domiciled in
Indonesia, foreigners domiciled in Indonesia, and foreign legal entities having
representatives in Indonesia. This Right to Use can be granted over state land,
Right to Own land, and Right of Management land.
The Right to Use over state land and Right of Management land can be
granted for a maximum of 30 years, which can be extended by 20 years. After
the term of the extension expires, the land title can be renewed for a
maximum of 30 years. While the Right to Use over Right to Own land, can be
granted for a maximum of 30 years and can be renewed with the granting
Right to Use over Right to Own land deed.
b. Right to Use for an unspecified period of time can be given to central
government agencies, regional governments, local governments, religious and
social institutions, representatives of foreign countries and representatives of
international agencies. This land title can be granted over state land and Right
of Management land.
5. Right of Management (Hak Pengelolaan)
Hak Pengelolaan is a right to manage state land, including to use such state land,
that may be granted by the central government to a government authority or
agency, including a local government or state enterprise, which may in turn sub-
grant the right to use the land to a third party. The application for extension and
renewal of Right of Management land title granted over Right to Cultivate and
Right to Build can be submitted after the land has been utilized in accordance
with the purpose.
Priority for Ex-Land Title Holder

After the period of grant, extension or renewal ends, the Ministry of Agrarian Affairs
and Spatial Planning (ATR)/National Land Agency (BPN) has the authority to
reorganize the utilization and ownership of the land. Ex-holders of Right to Build, Right
to Use and Right to Cultivate have a priority to utilize the land if the ex-land titleholder
is still eligible to own and utilize the land.
Land Registration
In line with the Government’s efforts to digitalize land administration throughout
Indonesia, the land registration activities in Indonesia will be conducted electronically
on a gradual basis. To provide certainty, the electronic data and information, or
printouts thereof, are admissible as evidence in court, provided that they are validated by
an authorized official. Deeds produced by a land conveyancer (Pejabat Pembuat Akta
Tanah) may be created electronically. The requisite period for the announcement of land
registration (to allow for objections) are 14 to 30 days. It also provides for the publication
of land registration data on the Ministry of ATR/BPN website.
3.2 Spatial Conformity
Under Government Regulation No. 21 Year 2021 (GR 21/2021), business actors are
required to obtain a Confirmation/ Approval/ Recommendation Spatial Conformity
(Kesesuaian Kegiatan Pemanfaatan Ruang/ KKPR) for utilization a space through the OSS
system before they can apply for a business license and operate commercially. A KKPR
requirement also applies to business activities located in coastal water or water areas.
The KKPR will be issued if the business activities and location conform to the Detailed
Zoning Plan (Rencana Detil Tata Ruang/RDTR).
The procedure for the Confirmation of KKPR to be issued through the OSS system consists
of the following steps:
a. Registration, which includes some information on the location geographical
coordinates, total land area, control/ownership over the land, the intended
business, the planned number of floors, and planned area of the building;
b. An assessment of the intended activities document to RDTR; and
c. Issuance of the Confirmation of KKPR. The KKPR will be issued through the
OSS system within 1 business day of registration or after payment of the non-tax
state revenue and will be valid for 3 years.
If the RDTR for the intended location of the planned activity are not yet available, an
Approval of KKPR will be given. These Approval of KKPR also applies in the coastal waters,
territorial waters, and jurisdiction. The procedure for the Approval of KKPR consists of the
following steps:
a. Registration;
b. An assessment of the intended activities document to the Spatial Plan
(Rencana Tata Ruang/RTR), National Strategic Areas Zoning Plan (Rencana Zonasi
Kawasan Strategis Nasional Tertentu/RZ KSNT), and Interregional Zoning Plans
(Rencana Zonasi Kawasan Antarwilayah/RZ KAW); and
c. Issuance of the Approval of KKPR.
An Approval of KKPR in the industrial estates and tourism area which already has a
business license in accordance with the provisions of the legislation; and Special
Economic Zones which has been designated in accordance with the provisions of the
legislation, do not require an assessment as point b above.
3.3 Building
Building Approval
The Job Creation Law replaces the building construction permit (Izin Mendirikan
Bangunan/IMB) with building approval (Persetujuan Bangunan Gedung/PBG). Under
Government Regulation No. 16 Year 2021 (GR 16/2021), PBG is a license granted to
building owner to build new, change, expand, reduce, and/or maintain building in
accordance with the technical standards of building. However, an IMB issued prior to the
enactment of GR 16/2021 remain valid until it expires.
PBG must be obtained before construction or alteration of a building begins. The

procedure of PBG issuance includes:
Consultation on the construction plan, which consist the following steps:
a. Registration.
The Owner of the Building or Applicant must submit registration through the
Building Management Information System (Sistem Informasi Manajemen
Bangunan Gedung/ SIMBG). Documents that need to be included for the
registration are 1) Applicant data; 2) Building data; and 3) Technical plan
document.
b. Inspection of compliance with Technical Standards; and
c. Statement of compliance with Technical Standards.
The relevant Technical Agency in the area will issue a recommendation for the
issuance of a written statement of compliance, if the document fulfills all technical
requirements. The recommendation will also determine the mandatory costs to be
paid by PBG applicant, in issuing the PBG.
The issuance of the PBG, consist the following process:
a. Determination of the value of regional levy;
b. Payment of regional levy; and
c. PBG Issuance. DPMPTSP will issue a PBG if it has received proof of retribution
payment by the applicant. Issued PBG consists of PBG documents and PBG
attachments.
Certificate of Proper Building Functioning (Sertifikat Laik Fungsi)

A building can only be utilized after the issuance of certificate of proper building
functioning (SLF) by the Technical Agency. After the Technical Agency receives a written
statement of proper building functioning (surat pernyataan kelaikan fungsi) from the
supervisory service provider/construction management service provider/overseer (penilik)
upon completion of
the final inspection and commissioning test of the building, the SLF will be issued through
the SIMBG. An SLF consists of (i) SLF documents, (ii) attachments to the SLF documents,
and (ii) the SLF label. Furthermore, if several buildings are constructed in one area under
the same technical plan, then the SLF will be issued for each of the building. The SLF
should be extended for a certain period of time as follows: (i) 20 years for single and row
residential houses; and (ii) 5 years for other kinds of buildings.
3.4Environmental
Environmental Approvals
Pursuant to Government Regulation No. 22 Year 2021, an environmental approval must be
obtained prior to obtaining a business licence. Any plan of business and/or activity that has
negative impact on the environment must obtain:
a. Environmental Impact Assesment (Analisis Mengenai Dampak Lingkungan/ AMDAL);
• AMDAL is mandatory for any type of business plans and/or activities that
may have a significant impact on the environment, in which: (1) its scale is
mandatory for AMDAL; and/or (2) it is located within and/or directly adjacent
to a protected area.
• Business actors must prepare AMDAL documents which consists: (1) Terms of
Reference Form (Formulir Kerangka Acuan); (2) AMDAL; (3) Environmental
Management Plan and Environmental Monitoring Plan (RKL-RPL). These AMDAL
documents will be reviewed by the Environmental Feasibility Assessment Team.
The relevant Assessment Team will then issue a recommendation, which
will be considered by the Minister of Environment and Forestry before issuing
the Environmental Eligibility or Non-eligibility Decree.
b. Environment Management Efforts and Environment Monitoring Efforts (Upaya
Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan Hidup/UKL-
UPL); or
• UKL-UPL is mandatory for any type of business activities that: (1) has no
significant impact on the environment; (2) is located outside and/or not directly
adjacent to a protected area; and (3) is exempted from AMDAL obligation.
• Business actors must prepare a UKL-UPL Form, which then will be reviewed
and issued by the authorized Minister, governor, or regent/mayor.
c. Commitment Letter for Implementation of Environmental Management and
Monitoring (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan
Lingkungan Hidup/SPPL), as a substitution of UKL-UPL document if the
business has no significant impact or effect on the environment.
• SPPL is mandatory for any type of business plans and/or activities that: (1) has
no significant impact on the environment; (2) is a micro or small enterprise
having no significant Impact on the environment; and/or is exempted from
UKL-UPL obligation.
• Business actors must prepare a UKL-UPL Form, which then will be reviewed
and issued by the authorized Minister, governor, or regent/mayor.
• The SPPL for businesses engaging in certain fields is now integrated into
the company’s NIB. Consequently, businesses that are required to submit the
SPPL can now start their business activities immediately once they obtain their
NIB.
All Environmental Approvals shall remain valid as long as the business and/or activity takes
place and no changes are made.
4. LOGISTICS
4.1 National Logistic Ecosystem (NLE)
The NLE was introduced through Presidential Instruction No. 5 of 2020 (Inpres
5/2020) regarding Arrangement of National Logistic Ecosystem. Under Inpres 5/2020,
Minister of Finance was instructed to launch the NLE which is conducted through the
Indonesia National Single Window/INSW. The NLE aims to simplify the previous
import/export activities where notifications/documents should be submitted through
multiple platforms e.g., to INSW and Sistem Informasi Manajemen Lalu Lintas Angkutan
Laut “SIMLALA” online system of the Directorate General of Sea Transportation.
In reference to various recent regulations on import/export activities, relevant parties

involved in the activities are encouraged to connect or utilize the NLE, for instance (i)
warehouse enterprises must connect Container Delivery System electronically to NLE in
case the warehouse is located at the Port, and (ii) the application to obtain an approval
license for discharging imported goods outside Customs Area may be submitted
through the NLE.
Shipping Shipping
Departure Port Arrival Port
Clearance Clearance
Collaborating the process from the ship/plane arrival to end customer

Trucking Trucking
Warehouse Warehouse
UPSTREAM DOWNSTREAM
OUTBOND DOMESTIC FREE TRADE ZONE INDBOUND

4.2Indonesia Seaport
There are several main hubs in Indonesia as the main facilities for international trade. This
hub connects logistics activities from Sabang to Merauke. The major international ports in
Indonesia are located at Tanjung Priok, Jakarta and Tanjung Perak, Surabaya.
Container Ship
No Major International Hub in Indonesia Location
Capacity (TEUs)
1. TPK Belawan North Sumatra 434,576
2. Tanjung Priok DKI Jakarta 1,832,887
3. Tanjung Perak East Java 2,272,691
4. TPK Makassar South Sulawesi 649,889
5. Terminal Balikpapan West Kalimantan 202,231
6. TPK Bitung North Sulawesi 297,168
7. Pelabuhan Jayapura Papua 97,000
8. Terminal Sorong West Papua 60,708
SOURCE: PT. PELINDO III (PERSERO)
An illustration of international logistics activities in Indonesia can be seen from the import
illustration in the following scheme:
Logistics Cost Compositions

(Import Case from FOB Busan Port to Madiun) Cost Composition
4%
36% Total cost of 53%

Busan a 20 ft container
(Busan-Madiun)
Freight Cost ± IDR 13.3
IDR 7.3 milion million
Busan Port
12% Port fees

contribute only
Other Cost 12% of the total
• Container cleaning IDR 225,000
cost disbursed
• Document fee* IDR 100,000
• Import service IDR 200,000 by cargo owner
• Total IDR 525,000
*Green line import assumption
Madiun
Port Cost Transportation Cost Product owner’s

• THC IDR 1.2 million • Trucking IDR 4.4 million warehouse in Madiun
• Storage Free • Stripping IDR 400,000
• Lift on/off IDR 286,000
• Total IDR 1,5 million
SOURCE: PT. PELINDO III

(PERSERO)
5. INFRASTRUCTURE
Under the current Medium-Term National Development Plan 2020-2024, the government
key targets are to reach the average GDP growth of 6% and allocate IDR 6,445 trillion or
about 6,2% of GDP for infrastructure spending. In contrary, government funding capacity
is only able to fund IDR 2,385 trillion or about 37% of the total required investment. This
funding gap forces the government to maximize creative financing and encourge the
participation of society and business entities through Public Private Partnership (PPP)
scheme.
Public Private Partnership (PPP)

To bridge the interest of private sectors in finding profitable investment and providing
better infrastructure for the people, the government is offering the Public-Private
Partnership (PPP) scheme in developing infrastructure projects. This scheme is provided
through the Presidential Regulation Number 38 Year 2015 (PR 38/2015) alongside other
regulations.
19 types of infrastructure project, including social infrastructure, are covered by PPP scheme:
URBAN SOCIAL
CONNECTIVITY INFRASTRUCTURE INFRASTRUCTURE
Road
Toll roads Water supply
Toll brdiges
Roads
Waste management system
Transportation
Seaports
Airports Water resource & irrigation
Railways
Road transportation Localized waste water management
Electricity Centralized waste water manageme

Power plants
Transmission
Energy conservation
Street lighting
Oil, gas, and renewable energy

Public housing
Telecomunication & informatics

Fiber optics
Urban facility
E-government
Traditional market
Satellite
Sports, art & culture facilities
Health
Zone/ estates
Penintentiary
Based on PR 38/2015, there are two PPP project proposal schemes namely Solicited
and Unsolicited. Solicited Proposal is initiated by the Government, while the Unsolicited
Project is initiated by the private sectors.
Project Pipeline for Solicited Proposals
PLANNING PREPARATION TRANSACTION IMPLEMENTATION

CONSTRUCTION
OBC FBCRiquest for Proposal Agreement Signing OPERATION

Prequalification
ProjectPreliminary Bid Award Operation End of Transfer of
IdentificationStudy Construction Contract Assets
OPTION
Pre-Feasibility
Study
For Solicited Proposals, the PPP scheme consists of four stages: planning, preparation,
transaction, and implementation. PPP projects that are under preparation are those in the
pre-feasibility study stage, while projects under the transaction are those in the
procurement process. Every year Ministry of National Development Planning/National
Development Planning Agency (Bappenas) stipulates a list of PPP plans compiled in a PPP
Book. In PPP Book, the projects are organized into two categories based on their readiness
level, namely ready to offer projects and under preparation projects. The book also
provides information related to projects in tender process (under transaction) and
projects that have become success story for PPP development in Indonesia.
6. TRADE
6.1 Trade Agreement
Indonesia has signed and implemented a number of free trade agreements with countries
and regions around the world with its status as an independent market as well as a
member state of the Association of South East Asian Nations (ASEAN). As an ASEAN
member, Indonesia implements the ASEAN Free Trade Area (AFTA) policy. AFTA
regulates intra-regional trade through the Common Effective Preferential Tariff (CEPT)
scheme with applied tariff range between 0-5% for ASEAN member countries, except
for products specified on exclusion lists. Indonesia does not only implement a free
market policy between ASEAN, but also with other countries including ASEAN-
Australia-New Zealand, ASEAN-China, ASEAN-South Korea, ASEAN-India, and Indonesia-
Japan (IJ-EPA).
6.2Import and Export
Under Government Regulation No. 29 Year 2021 (GR 29/2021) an exporter or importer
must hold an NIB, and is prohibited from importing or exporting prohibited goods that
relate to
(i) public health, flora and fauna, and the environment; (ii) national security and the public
interest, including social and cultural heritage and public morality; or (iii) protected
wild plant or animal species.
For importers, NIB also acts as a General Importer Identification Number (API-U) or
Producer Importer Identification Number (API-P). The imported products must be brand
new, unless the MoF explicitly approves the importation of second-hand items. To import
certain types of goods, importers must hold a business license issued by the Ministry of
Trade (MoT), which consist:
a. An importer registration license;
b. An import approval license for producer importers (companies that import raw
materials and capital goods for its own use); and/or
c. A general import approval license.
While businesses exporting certain types of goods will require an additional export license
from the MoT, which consist:
a. An export registration license; and/or
b. An export approval license.
The government of Indonesia has established the SINSW, integrating related ministries
and institution in import and export licensing process. This system supports a single
submission of data and information, offers single and synchronous processing of data and
information, and decision making on a single basis for the granting of customs clearance
and release of goods.
To obtain business license in the export and import activities, the exporter and impo
to the Minister of Trade through the Indonesia National Single Window System (SIN
Importing to Indonesia
Businesses should check the Indonesian Harmonization System (HS) Code, which is used
to classify every category of products, before importing or exporting it. This is due to the
fact that some items may require additional licenses or registration. In addition, the HS
code is one of the criteria that determines the tax and customs duties, as well as any
unique import/ export restrictions for that goods.
Exporting goods from Indonesia

The export process normally begins with a sales contract between exporters and
importers, with payment done by letter of credit (L/C) or other non-L/C means. Only
Indonesian legal entities (Limited liability companies, public companies, and
cooperatives) can export commodities from the country.
6.3Distribution of Goods
In general, the distribution of goods to consumers can be divided into 2 (two) sections i.e.,
indirect and direct distribution.
a. Indirect Distribution of Goods

Indirect distribution of goods carry out by a distributor company must be
accompanied by a written agreement, appointment and/or other transaction
documentation. It may be undertaken through the following types of arrangement:
1. A distributor and its network (distributor, wholesaler, and retail);
2. An agent and its network (agent, wholesaler, and retail); or
3. A franchise;
Distributor: A distributor must have an NIB and Distributor Business License issued by
the OSS system. The distributor must own or control a registered warehouse. In the event
that a manufacturer appoints a sole distributor, then it is not permitted to appoint another
distributor of the same products. The appointment of a sole distributor by a manufacturer
must be valid for at least for 5 years and must be extended at least once. A distributor
cannot distribute directly to consumers.
Furthermore, some of the provisions under the Ministry of Trade Regulation No. 24 Year
2021 (MoT Reg. 24/2021) on Agreements for Distribution of Goods by Distributors or
Agents are:
• Types of business actors classified to carry out distribution activities, consist of (i)
distributors; (ii) sole distributors; (iii) agents; and (iv) sole agents. Distributors and
sole distributors may appoint sub-distributors while agents and sole agents
may appoint sub-agents.
• A foreign investment PMA trading companies must appoint domestic
investment (PMDN) trading companies as distributors, sole distributors, agents, or
sole agents.
• Companies distributing health products and medicines are exempted from the
provisions of MoT Reg. 24/2021. The distribution of health products or medicines
shall be carried out based on the relevant laws and regulations in the health sector.
Agent: An agent must have an NIB and Agent Business License, and is paid on a
commission basis by the appointing party. Should the manufacturer appoint a sole agent, it
is not permitted to appoint another agent to distribute the same products. The agent
cannot transfer rights over products owned or controlled by the manufacturer, supplier, or
importer that appointed him, as they only act for and on behalf of the producer, supplier
or importer in marketing the goods.
Wholesaler: A wholesaler must have an NIB and Wholesaler Business License, and is
prohibited from distributing goods directly to consumers.
Retailer: A retailer must have an NIB and Retailer Business License, and is prohibited
from importing goods. Retailers distribute their wares through shops and other types of
outlets. They may also sell online and engage in itinerant trading (where retailer goes
from place to place selling its wares).
Indirect Distribution Flowchart
Manufacturer/ Producer Wholesaler (Grosir) producer, distributor, wholesale
Local Distributor/ Agent Wholesaler agent (perkulakan)

Manufacturer/ Producer Sub Distributor/ Agent
Foreign Investment Company Distributor

Wholesaler (Grosir) End Consumer
Importer* Retail
Wholesaler agent (perkulakan)
Retail
*If the importer has also a distributor license, it may sells goods directly to retail
b. Direct Distribution of Goods

Direct distribution of goods may be conducted on a single-level or multi-level
basis. A company engaged in direct goods distribution must have a business
license and meet the following criteria:
1. Holds an exclusive distribution right to the products;
2. Has adopted a marketing plan;
3. Has adopted a code of conduct;
4. Recruits direct sellers via networking; and
5. Sells products directly to consumers via a marketing network developed
directly by sellers.
Direct sellers are paid on a commission basis, and their aggregate commissions must not
account for more than 60% of turnover.
7. INVESTMENT PROTECTION
Law No. 25/2007 gives legal certainty to foreign investors that their investment shall
be protected and shall receive equal treatment from regardless their country of origin.
Protection measures include:
1. Foreign Exchange Regime

The swap system to avoid exchange risks caused by the depreciation of the
Rupiah is available.
2. Expropriation and Compensation
• Based on the law, there are several principles concerning expropriation, as
follows:
• The government will not undertake any nationalization action or take over the
ownership rights of the investor, unless by law.
• In the event the government takes action to nationalize or takes over
ownership rights as mentioned in paragraph (1), then the government shall
grant compensation, the amount which will be specified based on the market
value.
• If there is no consensus on the amount of compensation among the parties as
stipulated in paragraph (2), the dispute shall be settled through arbitration.
3. Beside nationalization, the law also provides guarantees on non-discriminatory
treatment of foreign investors compared to treatment against domestic investors
(National Treatment); unfair treatment discriminatory against foreign investors
from one country compared to treatment against foreign investors from other
countries (Most-Favored Nation Treatment); guarantees for investors to be able
to make transfers and repatriations; and the mechanism for resolving disputes
between the state and investors (Investor-State Dispute Settlement).
As of 2021, Indonesia overall has had 56 Bilateral Investment Treaties (BITs) whose
statuses are as follows:
a. 21 BITs are still in force;
b. 26 BITs have been terminated; and
c. 9 FTA/CEPA still in force.
IV
TAXATION
79 Taxation
A company in Indonesia is considered as a tax resident if the company is incorporated

or domiciled in Indonesia. A foreign company conducting business activities through a
permanent establishment (PE) is subject to the same tax rates as resident taxpayers with
additional Branch Profit Tax obligation.
The tax system that applies in Indonesia is self-assessment. It means that taxpayers are
required to calculate, pay, and report their personal taxes. With an exemption on
certain types of taxes, official assessment and withholding tax mechanisms apply. In
running the tax administration system, each individual and company must have a Taxpayer
Identification Number (NPWP), an official identity issued by the Directorate General of
Taxes (DGT).
1. CORPORATE INCOME TAX
1.1 Tax Rate and Period
The corporate income tax (CIT) rate in Indonesia is 22% and onwards. Public companies
that have a minimum listing requirement of 40% and other specific conditions are eligible
to a 3% cut off from the standard CIT rate. The most common tax year in Indonesia is the
same as the calendar year, which is January 1 to December 31. However, the tax year will
follow the company’s financial year as stated on the article of association.
1.2 Tax Incentive
The Government of Indonesia provide a variety of fiscal incentives in terms of taxes

(i.e tax allowances, tax holiday, investment allowance, super tax deduction) and import
duty exemption. Business actors may choose to apply for either a tax holiday or a tax
allowance provided that they fulfill the criteria for the selected income tax facility. The
details of facility coverage, facility-receiving objects, provisions on the granting of
facilities, as well as procedures are outlined in Chapter V of BKPM Regulation No. 4/2021.
a. Tax Holiday
Through Minister of Finance Regulation No. 130/PMK.010/2020 (“PMK-130”) on tax
holiday, a company that makes a new capital investment in a Pioneer Industry is eligible to
obtain a reduction on its CIT for income earned from its Main Business Activities. The
application for tax holiday incentive must be submitted before entering commercial
production.
Taxation 80
Under PMK-130, a company that can obtain Tax Holiday incentive must meet the following
criteria:
1. It is a Pioneer Industry;
2. Having status as Indonesian legal entity;
3. Is making a new capital investment which has not been issued with any prior
approval or rejection on an application to obtain: a) Tax Holiday; b) Tax Allowance;
c) Income tax incentive for labor intensive industry (Investment Allowance);
and d) Income tax incentive on the Special Economic Zone;
4. It has new capital investment plan with a minimum value of IDR 100 billion;
5. It meets the Debt to Equity Ratio requirement for tax purposes (which is currently
4:1 stated in MoF Regulation No 169/2015 ); and
6. It commits to start realizing its capital investment plan within a year after the
issuance of Tax Holiday approval.
7. It meets tax clearance certificate (SKF) requirement for its local taxpayer
shareholders.
Companies may still apply for the tax holiday even if it is engaged in an industry that is not
listed as pioneer industry if the companies:
1. Meets the five criteria to obtain Tax Holiday incentive as stated in item 2 to 6 above;
2. Reaches a score of at least 80 on the Pioneer Industry quantitative criteria (as
shown in Attachment A of PMK-130); and
3. Meets tax clearance certificate (SKF) requirement for its local taxpayer shareholders.
List of Pioneer Industry

The list of pioneer industry under PMK-130 covers the following:
1. Upstream basic metal;
2. Oil and gas refinery;
3. Petrochemicals from oil, gas, or coal;
4. Organic basic chemicals from agriculture, plantation, or forestry products;
5. Inorganic basic chemicals;
6. Pharmaceutical raw materials;
7. Irradiation, electro medical, or electrotherapy equipment;
8. Main components of electronics or telematics equipment;
9. Machinery and main components of machinery;
10. Robotics components that support the creation of manufacturing machinery;
11. Main components of power plant machinery;
12. Motor vehicles and main components of motor vehicles;
13. Main components of vessels;
81 Taxation
14. Main components of trains;

15. Main components of aircraft and activities supporting the aerospace industry;
16. Agricultural, plantation, or forestry-based processing that produce pulp;
17. Economic infrastructure; and
18. Digital economy which includes data processing, hosting, and related activities.
The details of the above pioneer industry scope are listed in Attachment 1 of BKPM
Regulation No. 7 Year 2020 concerning Details of Business Sectors and Type of Production
of Pioneer Industries and Procedures for the Granting of Corporate Income Tax Reduction
Facilities. Referring to the attachment, there are 185 business sectors (of the
Indonesia Standard Business Classification/KBLI) entitled to tax holiday.
Category New Capital investment Tax holiday period

IDR Year/%
Mini Tax Holiday (50%) 100 billion – 500 billlion 5 years – 50%
Tax Holiday I 500 billion up to less than 1 trillion 5 years– 100%
Tax Holiday II 1 trillion up to less than 5 trillion 7 years– 100%
Tax Holiday III 5 trillion to less than 15 trillion 10 years– 100%
Tax Holiday IV 15 trillion to less than 30 trillion 15 years– 100%
Tax Holiday V 30 trillion and greater 20 years–100%
The income tax reduction period of the Tax Holiday is as follows:

a. 50% reduction in CIT payable for 5 fiscal years for new capital investment with
a minimum amount of IDR 100 billion up to less than IDR 500 billion; and
b. 100% reduction in CIT payable for the following periods for new capital investment
with a minimum amount of IDR 500 billion:
Additional period of CIT reduction for two more fiscal years is also offered following the
expiration of the above tax holiday for:
a. 25% of CIT payable for the new capital investment with a minimum amount of IDR
100 billion up to less than IDR 500 billion; and
b. 50% of CIT payable for the new capital investment with a minimum amount of IDR
500 billion.
Taxation 82
b. Tax Allowance
The Government issued Regulation No. 78 Year 2019 (GR 78/2019) on 12 November 2019.
GR 78/2019 represents an amendment to the regulations on the tax allowances available
for companies that invest in certain business sectors and/or regions. These companies are
eligible for tax allowance in the form of the following benefits:
• A reduction in net income of 30% of the actual amount invested in tangible
fixed assets including land, allocated over the six years of commercial
production after receiving the tax allowance approval (at a rate of 5% per year);
• Accelerated depreciation and/or amortization of eligible fixed assets and
intangible assets;
• A 10% reduced withholding tax rate on dividends distributed to nonresidents (or a
lower rate under a relevant tax treaty); and
• An enhanced tax loss carries forward period of greater than 5 years but no longer
than 10 years under certain conditions.
Criteria for obtaining tax allowance include:

• Has a high investment or is export-oriented
• Has a large workforce
• Has high local content
Companies are eligible to apply for this relief through OSS. Currently, there are 183
businesses that have been provisioned by the government as companies that are entitled
to this relief.
c. Research and Development (R&D) and Vocational Tax Facility (Super Tax Deduction)
and Labor Intensive Tax Facility (Investment Allowance)
Government Regulation No. 45 Year 2019 provides new tax incentives to
Indonesian corporations to: (i) encourage investment in labor intensive industries; (ii)
support job creation and employment in Indonesia; (iii) encourage involvement of
business and industry sectors to develop high quality human resources; (iv) increase
competitiveness; and (v) encourage businesses to conduct research and development
(R&D) activities.
83 Taxation
1. Research and Development (R&D) and Vocational Tax Facility (Super Tax Deduction)
Description Qualification standards

The R&D Tax Facility refers to
A reduction in gross income Regulation of Minister of Finance
of up to 300% is available on No. 153/PMK.010/2020, which is
Research & Development (R&D)
expenditure incurred for certain eligible for domestic tax payers,
R&D activities in Indonesia who are involve in R&D activities,
and hold R&D proposal.
Focus theme of R&D activities are
as follows: 1) food, 2) pharmacy,
cosmetics, and medical devices,
3) textile, leather, footwear and
anything, 4) transportation, 5)
information and communication
technology, 6) energy, 7) capital
goods, components, and auxiliary
materials, 8) agroindustry, 9) base
metals and non-metallic minerals,
10) oil & gas and coal base
chemistry, 11) defense.
Vocational (Working Program
and Internship) Tax Facility refers
A reduction in gross income to Regulation of Minister of
of up to 200% is available on Finance No. 128/PMK.010/2019, is
Working Program and Internship expenditure incurred for human eligible for domestic tax payers,
(Vocational) development (apprenticeship, who involve in practical work
internship, and/or learning activities, apprenticeship, and/or
activities). specific competency-based
learning, hold cooperation
agreement, and not in a condition
of fiscal loss.
All companies are eligible to
obtain a reduction in gross income
of 100% of the total costs incurred
for human development. An
additional reduction for 100%
of these costs will be granted to
companies that conduct human
development activities in relation
to certain competencies listed in
Appendix A of MoF Regulation
No. 128/ PMK.010/2019.
Taxation 84
2.Labor intensive Tax Facilities (Investment Allowance)
Description Qualification standards

Domestic taxpayers with main
business activities listed in
Appendix A of MoF Regulation
No. 16/PMK.010/2020 and
employing a minimum of 300 local
employees are eligible for the
super tax deduction for labor
intensive industries/ sectors
(investment allowance).
Listed labor intensive industries

A reduction in net income of 60% in the Attachment A of MOF
of investments in tangible fixed Regulation No. 16/PMK.010/2020
assets and land used for main are as follows: 1) fisheries, 2)
business activities is available food, 3) textile and apparel,
Labor Intensive Industries
for labor-intensive industries, 4) leather goods, 5) footwear,
prorated over six years from the 6) paper and tissue, 7) goods
start of commercial production industry from rubber and plastic,
(at 10% per year) 8) rubber asphalt, 9) tableware
or kitchenware from metals, 10)
nails, nuts, and bolts, 11) computer
and electronics, 12) controlling
equipment, electricity distribution,
and household electricity
appliances, 13) stove, refrigerator,
compressor, air conditioner, and
cold storage, 14) agricultural
tractors assembly and rice milling
unit, 15) wooden, rattan, and
bamboo furniture, 16) jewelries
from precious metal, 17) kid toys.
d. Import Duty Exemptions on Imports

This facility is applicable on:
1. Import duty exemptions for the import of capital goods.
◊ Companies at the stage of development, expansion or renovation/regeneration are
eligible for this facility.
◊ Eligible sectors for this facility are industries that manufacture goods and/or certain
service industries, e.g. tourism and culture, public transportation, healthcare
services, mining, construction, telecommunications and ports.
◊ Eligible goods:
a. Goods that are not produced in Indonesia.
b. Goods that are produced in Indonesia but do not meet the required
specifications.
c. Goods that are produced in Indonesia but not in sufficient quantity.
85 Taxation
◊ Period of facility:
• 2 (two) years and may be extended for 2 (two) years, except for the import of
machinery for development with the purpose of modernization, rehabilitation
and/or restructuring.
• The extension of the period may be added with the following provisions:
a. For an investment plan of at least IDR 500 billion and less than IDR 1
trillion, an additional of 1 (one) year extension may be given based on the
results of the field inspection.
b. For an investment plan of at least IDR 1 trillion and less than IDR 5 trillion,
may be given a 2 (two) times extension for a period of 1 (one) year based
on the results of the field inspection.
c. For an investment plan of more than IDR 5 trillion, an additional maximum
of 5 (five) years may be granted based on the results of the field
inspection.
2.Import duty exemptions for the import of raw materials for production
◊ Companies at production stage (have obtained business license to operate).

◊ Eligible sectors: Industries that produce goods.
◊ Period of facility:
• For companies with at least 30% of the capacity of business
licenses/expansion permits and/or Risk-Based Business Licensing and
completed industrial development: 2 (two) years and can obtain a one-time
extension for a period of 1 year.
• For companies with at least 30% local content and carry out construction and
development: 4 (four) years and can obtain a one-time extension for a period
of 1 year.
3.Import duty exemptions for the import of capital goods used by companies engaged
in the construction and development of power plants for public use
◊ This facility is eligible for PT PLN (the national power company) or/and holders
of electricity power supplier business licenses.
◊ The business actors mention above are required to have:
a. Business area;
b. Power purchase agreement (PPA) with PT PLN (Persero);
c. Finance lease agreement (FLA) with PT PLN (Persero); or
d. Power purchase agreement with the holder of a power plant business license
(IUPTL) owning a business area.
◊ Period of facility: 2 years and can be extended a one-time period of 1 year.
Taxation 86
4. Import duty exemptions or reductions and value added tax (VAT) exemptions or
deferral for the import of capital goods used by companies with mining contract
of works (KK/PKB2B).
◊ This facility is eligible for companies holding mining contract of works with the
government (KK/PKB2B).
◊ Conditions of facility: Subject to the terms of the contract of works. The application
can be requested by attaching recommendation letters from Directorate
General of Mineral and Coal, Ministry of Energy and Mineral Resources of the
Republic of Indonesia.
◊ Period of facility: Subject to the terms of the contract of works. Generally it is given
annually and will expire every 31st December of each year. Extensions of
period will be subject to recommendation from the Director General of Mineral and
Coal.
1.3 Tax Administration
Companies in Indonesia have to pay CIT by the end of the fourth month after the year-
end and must file the CIT returns by the end of the fourth month after the end of the
reported tax year.
The tax payment can be made through a tax-payment bank to the State Treasury bank. A
copy of the tax payment receipt should be attached with the annual tax returns.
Extensions may apply for a maximum of two months if you submit a written notice to the
DGT before the tax return deadline.
One of the noteworthy elements in tax administration is note taking and bookkeeping
or creating financial statements. Thus, the company ought to calculate tax obligations and
fill out annual notices adequately in order to minimize disputes in the future.
The company is obliged to keep its financial statements for at least the next 10 years. It is
to anticipate a future discrepancy in calculations between companies and tax authorities.
Financial statements must be made using the Latin font, Bahasa Indonesia, and use Rupiah
units of currency. For certain companies such as Foreign Investment Companies (PMA),
PE, Taxpayers listed on the Foreign Stock Exchange, Overseas Subsidiaries and certain
Collective Investment Contracts (KIK), are welcome to use foreign languages and
currencies other than rupiah, if approved by the DGT.
87
Taxation 88
1.4 Withholding Taxes
In addition to implementing a self-assessment tax collection mechanism, Indonesia

also implements a withholding tax collection scheme, which is applied to several types of
Income Tax (Pajak Penghasilan/PPh) namely:
Tax Types Elaboration

Deducted from income received by a person or individual in the form of salary,
PPh 21
wages, honorarium, benefits, and other payments of any name or form
Taxes levied by:
• The government Treasurer related to the payment for the delivery of goods
derived from the National Budget (APBN) fund;
PPh 22 • Certain corporate related to income from activities in the field of imports or
business activities in other fields; and
• WP (Taxpayers) of specific corporate related to payments from buyers for
the sale of goods that are classified as very luxurious.
Deducted from domestic WP and PE income elicited from:
• Capital utilization (dividends, interest, and royalties)
PPh 23 • Service delivery (rent, service payment)
• Implementation of activities such as prizes, awards, and bonuses (other than
those deducted from Article 21 PPh)
Deducted finally from overseas WP income on income that is not elicited from PE
PPh 26
in Indonesia
Deducted from closing of earnings namely:
• Interest on deposits and savings/current account services, discounts on
Bank Indonesia Certificates
• Transaction of sale of shares on the stock exchange
PPh Article 4 (2)-final
income tax (PPh Final) • Interest and discount bonds sold on the capital market
• Land or buildings rents
• Transfer of land or building rights
• Business income of construction services and so on
Collected toward the companies engaged in specific industries, such as:
• International cruise or flight
• Overseas insurance companies
PPh
Article 15 • Oil, gas and geothermal drilling companies
• Foreign trading companies
• Companies creating investments in the form of build-to-hand (build,
operate, and transfer)
89 Taxation
1.5 Transfer Pricing
Each company is eligible to organize transfer pricing practices as long as it corresponds

to the business principles of fairness and prevalence or arm’s length principle. Thus, any
transaction between affiliated parties is comparable to a transaction made with an
unaffiliated party.
To ensure transfer pricing activities are exerted as a way to avoid corporate conducting tax
avoidance, the Indonesian government has adopted the OECD’s Base Erosion and
Profit Shifting (BEPS) Action Plans.
It is conducted by requiring companies that arrange transactions with affiliated

parties, both at home and abroad, to develop transfer pricing documentation or
Transfer Pricing Document (TP Doc), which comprises three subjects namely, master file,
local file and country by country report (CBCR).
2.INDIVIDUAL INCOME TAX
Any income or additional economic capabilities received by individual taxpayers

(WPOP), whether from Indonesia or other countries, are entitled as tax objects. Individual
taxpayers who are employees are subject to Income Tax (PPh) Article 21 which tax
deduction is conducted by the company they work for. As for individual taxpayers who
establish independent business activities or are not bound by employment relationships as
employees, it is mandatory to calculate, pay and report their own PPh, in accordance with
the principle of self-assessment.
2.1 Tax Rate
The following details the PPh rate level of individuals is based on Law No. 7 Year
2021, namely:
Taxable Income Tariff

IDR 0 > IDR 60 million 5%
IDR 60 million > IDR 250 million 15%
IDR 250 million > IDR 500 million 25%
IDR 500 million > IDR 5 billion 30%
More than IDR 5 billion 35%
Taxation 90
Non-Taxable Income (PTKP)
The amount of non-taxable income for each individual is diverse depending on the number
of dependents the individual taxpayer has, and on whether the husband and wife’s NPWP
(Taxpayer Identification Number) are combined or not.
The following table lists the amount of non-taxable income:
Males/Females Not Married Married Male Spousal Combined NPWP

TK/0 IDR 54,000,000 K/0 IDR 58,500,000 K/I/0 IDR 112,500,000
TK/1 IDR 58,500,000 K/1 IDR 63,000,000 K/I/1 IDR 117,000,000
TK/2 IDR 63,000,000 K/2 IDR 67,500,000 K/I/2 IDR 121,500,000
TK/3 IDR 67,500,000 K/3 IDR 72,000,000 K/I/3 IDR 126,000,000
Through Law No. 7 Year 2021 (Law 7/2021), the Government of Indonesia stipulates
a threshold on the non-taxable gross turnover in the amount of IDR 500 million. Thus,
individual entrepreneurs who calculates their income tax with a final rate of 0.5% and has
a gross turnover of up to IDR 500 million/year will not be subject to income tax.
2.2 Tax Administration
Individual taxpayers are required to submit an annual income tax notice, no later than
3 months after the tax year ends, or on March 31 in the following tax year.
Individual taxpayer tax returns (SPT) could be submitted manually or electronically

through an e-filing application. If the submission of the Annual Tax Return of personal
persons is overdue, there will be a fine of IDR 100,000.
3.VALUE-ADDED TAX AND LUXURY-GOODS SALES TAX
3.1 Value-Added Tax
In terms of VAT (PPN) charges, the principle of withholding tax applied. It is where
the producer or seller will collect taxes paid by consumers during the transaction, to
then be deposited. Currently, the imposition of VAT in Indonesia adheres to a single
tariff system of 10% of the selling value of goods. With the enactment of Law 7/2021, the
VAT rate will increase to 11% (eleven percent) on 1 April 2022; and will be increased to
12% (twelve percent) as per 1 January 2025.
Basically, VAT is entitled on all taxable goods (Barang Kena Pajak/BKP) and taxable
services (Jasa Kena Pajak/JKP). However, the government provides exceptions for the VAT
charges against the submission of certain BKP and JKP such as:
91 Taxation
• Food and beverage of which are served in the hotel, restaurant, food shop,
shop, or the similar is desired, including dine in and take out food, including
food and beverage of which are presented by catering company; and
• Money, gold bullion, and securities.
In addition, the government also excludes the VAT charges on the submission of
certain JKP, including:
• Religious services
• Arts and entertainment services
• Hospitality services
• Services provided by the government
• Parking services
• Culinary or catering services
Digital VAT
Since July 1 2020, the Government of Indonesia has regulated the VAT charges on the use
of intangible goods or services originating from other countries through electronic systems
or trading activities (PMSE).
The PMSE VAT collection is carried out by an application provider company appointed
by the government. This policy was issued in response to the increasing use of intangible
goods or services in digital form, such as streaming services and other digital product
transactions.
VAT Income Tax Credit

When levying VAT, sellers of BKP and JKP are obliged to issue proof of collection or
tax invoice that can be used as income tax by the buyer. The input tax can be
credited as an output tax at each of the same tax periods.
3.2 Luxury-goods Sales Tax
Sales Tax on Luxury Goods (PPnBM) is a tax imposed on goods classified as luxury to
producers to produce or import goods in their business activities or work. PPnBM is
only charged once, at the time of delivery of goods by the manufacturer or at the import
of such Luxury Taxable Goods.
PPnBM rates vary between 10% to 200%, depending on the type of luxury goods. If a
businessman exports Taxable Goods classified as luxury goods, it is subject to 0%
VAT. Luxury goods criteria comprise:
Taxation 92
• Goods that are not essential commodities

• Goods consumed by a particular group
• Goods consumed by high-income people
• Goods consumed only to indicate status or social class
The PPnBM charge should be reported at each tax period combined with VAT
reporting using the VAT Period Tax Return form 1111. The reporting deadline is at the end
of each subsequent month after the date the invoice was created.
4. OTHER TAXES
4.1 Land and Building Tax
Land and Building Tax (PBB) is a levy on land and building that provide economic and
social benefits to an individual or corporation. PBB is generally classified into urban
and rural sectors (PBB P2) and PBB for mining, forestry and plantation (P3B) sectors.
The PBB P2 collection activity has become the responsibility of the local government
of either the Regency or Municipality. The PBB P3 collection is organized by the authority
of the central government, through the DGT.
The owed-PBB calculation refers to the taxable selling value (NJKP), which is between 20%
to 100% of the selling value of the tax object (NJOP), multiplied by the applied rate of
0.5%. The amount of NJOP is determined by the Minister of Finance every three years.
Taxpayers are required to register the land and/or buildings ownership to Tax Office (KPP),
Tax Services, Dissemination and Consultation Office (KP2KP) based on the location of the
taxable PBB object.
4.2Stamp Duty
Starting in 2021, based on Law No. 10 Year 2020, stamp duty will be subject to a single
tariff of IDR 10,000. The new law introduces a new form of electronic stamp duty for
electronic documents. The new electronic stamp will contain unique codes and specific
descriptions. The use of electronic stamp duty will be regulated in a new MoF
Regulation. Several new documents now require stamp duty under the New Stamp Duty
Law, among others:
• Securities transaction documents, including securities trading confirmations.
However, the DGT has clarified that an implementing regulation will be issued
on securities trading confirmations;
• Auction documents;
93 Taxation
• Any document mentioning a value exceeding IDR 5 million, which may take the
form of a receipt of payment or acknowledgement of a debt payment or
settlement, whether entirely or partially; and
• Other documents to be stipulated in a government regulation.
5.STATUTE OF LIMITATION
The DGT can issue an underpaid tax assessment letter within five years upon the tax due
date or the end of a tax period, part of a tax year, or a tax year. In order to provide
legal certainty, the Job Creation Law stipulates the Statute of Limitation (SoL) for the
issuance of a Tax Collection Letter (Surat Tagihan Pajak/STP), except for:
a. An STP on late payment of tax decisions may be issued at the latest by the
SoL to collect the relevant decisions (i.e. SKPKB, or Additional Tax Underpaid
Assessment Letter (Surat Ketetapan Pajak Kurang Bayar Tambahan/SKPKBT), or
Decision on Amendment, Tax Objection, Tax Appeal, or Judicial Review) which
trigger the tax underpayment;
b. An STP on the 50% penalty for a taxpayer losing their case at the tax objection
level may be issued at the latest five years from the issuance of the Objection
Decision if the taxpayer did not file for Tax Appeal; and
c. An STP on the 100% penalty for a taxpayer losing their case at the tax appeal level
may be issued at the latest five years from pronouncement of the Tax Appeal
Decision by the judges.
The issuance of STP is one of the efforts to ensure taxpayer compliance, which begins with
an examination process and results in the form of Notice of Tax Assessment (SKP). Issuing
SKP will usually result in taxes owed to be underpaid, overpaid or naught.
Contact Us 94
CONTACT US
NEW YORK
P : +1 646 885 6600
E : [email protected]
LONDON
P : +44 (0)20 3440 3830
+44 (0)20 3440 3831
E : [email protected], iipc.
[email protected]
Further information about BKPM overseas office

(Indonesia Investment Promotion Center)
95 Contact Us
SEOUL
P : +82 2 6137 9455
TOKYO
P : +81 3 3500 3878
TAIPEI
P : +886 2 8752 6170
E : [email protected];
[email protected]
SINGAPORE
P : +65 6334 4410 INDONESIA
E : [email protected] P : +62 21 5252 008
ABU DHABI
P : +971 2659 4274
E : [email protected] SYDNEY
P : +61 2 9252 0091
E : [email protected],
[email protected]
Jl. Jend. Gatot Subroto No. 44, Jakarta 12190
P. +6221 525 2008 (Hunting)
F. +6221 525 4945
C. 169 (Contact Center)
www.bkpm.go.id
@bkpmindonesia
@bkpm
@bkpm_id
BKPM TV-Invest Indonesia

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What are some of the structural reforms mentioned in the foreword?

What are some of the structural reforms mentioned in the foreword?

INDONESIA

To implement the Job Creation Law, Indonesian Government has launched

Against this backdrop, the Ministry of Investment/Investment Coordinating

Finally, I am honored to invite you to explore the opportunities Indonesia offers

II. INVESTMENT PROCEDURES 30

III. LEGAL OVERVIEW FOR FOREIGN INVESTOR 53

2. Visa and Immigration 60

1. ECONOMIC AND POLITICAL OVERVIEW

1.1 Economic Overview

SOURCE: IMF – WORLD ECONOMIC OUTLOOK DATABASE, APRIL 2021

Moreover, to respond to the COVID-19 crisis, the government implemented

Indonesia Vision 2045

Figure 2. Economic Growth Scenario in Indonesia’s Vision 2045

Figure 3. Investment Target

SOURCE: BKPM STRATEGIC PLAN 2020-2024

Indonesia is still an attractive destination for

Figure 4. FDI Trend 2016-2020 by Sector

Sector 2016 2017 2018 2019 2020

SOURCE: MINISTRY OF INVESTMENT/BKPM

Figure 5. Top 10 FDI 2016-2020 by Country of Origin

British Virgin Islands

1.2 Political Overview

The politics of Indonesia take place in the framework of a presidential representative

Figure 6. Indonesia Democracy Index 2015-2019

2015 2016 2017 2018 2019

SOURCE: STATISTICS INDONESIA (BPS)

The Indonesian government continues to strive to create economic stability and an

Figure 7. Indonesia’s Sovereign Credit Rating

Rating Agency Rate Outlook

According to IMD's World Competitiveness Center, Indonesia improved its overall

Figure 8. Ranking Ease of Doing Business Indonesia DB 2020 Report

SOURCE: DOING BUSINESS REPORT INDONESIA 2020

3.1 Strategic Priority Projects (Major Projects)

Untuk melaksanakan RPJMN (Rencana Pembangunan Jangka Menengah Nasional) 2020-

Figure 9. List of Strategic Priority Projects (Major Projects)

Funding Indications Implementing

3.2 Priority Sectors

Renewable Energy Labour-Intenstive Manufacturing

3.3 Economic Zone as Strategic Investment Location

Indonesia Economic Zones

1,360 BZs 91 BLCs 10 New Bali

The Government of Indonesia has

Figure 10. List of Indonesia Industrial Estates

ACEH 1 BANGKA BELITUNG ISLANDS 7

NORTH SUMATRA 2 EAST KALIMANTAN 8

WEST SUMATRA 3 • Kaltim Industrial Estate

• Kawasan Industri Tanjung Buton

BANTEN 15 WEST JAVA 20

Batang Integrated Industrial Park

Batang Integrated Industrial Park: Regional Perspective

Tanjung Priok Port

4 Hours Toll Road Access

Total Area: 4,326 Ha Phase 1: 450 Ha

Special Economic Zone (SEZ)

19 SEZ (15 SEZ + 4 New SEZ)

1 ARUN LHOKSEUMAWE SEZ 2SEI MANGKEI SEZ 3