1. About Investment & Business Structuring Law in Indonesia
Investment & business structuring law in Indonesia governs how both domestic and foreign entities establish, restructure, and operate businesses. The core framework centers on encouraging investment while ensuring regulatory oversight and compliance. The field blends corporate law, licensing, tax, and sector-specific rules.
Key business forms include the Perseroan Terbatas (PT) for both local and foreign investment, and the PMA model for foreign ownership with specific licensing requirements. Since the enactment of the Omnibus Law on Cipta Kerja, licensing and investment workflows have moved toward a digital, one-stop approach known as the Online Single Submission (OSS) system. This shift aims to simplify and standardize how businesses obtain permissions to operate.
Indonesia relies on a coordinated structure of regulators and portals to manage investment processes. The Indonesia Investment Coordinating Board (BKPM) and its successor governance for investment, the OSS platform, are central to licensing and registration. For regulated financial activities, the Financial Services Authority (OJK) provides sector-specific rules, while the Ministry of Law and Human Rights (Kemenkumham) handles legal entity formation and related filings.
Recent reforms under the Job Creation Act (UU Cipta Kerja) introduced the OSS platform and streamlined licensing, transforming how investments are initiated and monitored.
Sources for official guidance and regulatory texts include government portals such as BKPM, OSS, and the official regulation portal peraturan.go.id. See the official sites for current forms, fees, and process flows: BKPM, OSS, and peraturan.go.id.
2. Why You May Need a Lawyer
Engaging a lawyer for Investment & Business Structuring in Indonesia can prevent delays and costly missteps in complex transactions. Below are concrete, real-world scenarios where legal expertise is essential.
- Setting up a PMA with foreign ownership in a regulated sector requires navigating the OSS process, capital requirements, and sector-specific licenses. A lawyer helps prepare the necessary documents, align ownership structures with the Daftar Negatif Investasi (DNI) and NKD rules, and secure approvals efficiently.
- Restructuring a PT owned by foreign investors or changing share ownership, board composition, or capital structure. A legal professional ensures notary deeds, shareholder resolutions, and Kemenkumham filings are accurate and timely to avoid invalid corporate actions.
- Expanding into a new line of business or adding partners involves reclassifying licensed activities and potentially updating OSS registrations. A lawyer coordinates with notaries, BKPM, and OSS to update licenses without interrupting operations.
- Compliance for sector-specific investment rules such as local content requirements (TKDN) or capital adequacy standards. A lawyer helps interpret applicable thresholds, prepare documentation, and pursue exemptions or waivers if available.
- Cross-border licensing and repatriation issues including dividends, royalties, and transfer pricing. An attorney provides tax-structuring guidance and liaises with tax authorities to minimize risk.
- Due diligence and M&A involving Indonesian entities where accurate corporate records, regulatory compliance, and clearance timelines determine deal value and closing dates. A lawyer coordinates with auditors, regulators, and counterparties to close efficiently.
3. Local Laws Overview
The legal framework for Investment & Business Structuring in Indonesia is anchored by key national laws and regulations that shape how investments are formed, licensed, and governed. Below are two to three fundamental instruments commonly referenced in practice.
- Law No. 25 of 2007 on Investment (as amended by Law No. 11 of 2020 on Job Creation). This core statute governs investment activities, licensing, and protections for investors, and it has been significantly reshaped by the Omnibus Law to improve licensing efficiency and expand investment opportunities. The 2020 amendment introduced the OSS system and clarified foreign ownership rules in several sectors. Effective dates and transitional provisions vary by article.
- Presidential Regulation No. 91 of 2017 on Online Single Submission (OSS) System (as subsequently updated). OSS serves as the digital gateway for business licensing, registrations, and other investment-related approvals. It enables a single submission point for multiple regulatory requirements and is routinely updated to reflect policy changes under UU Cipta Kerja.
- Regulation and guidance portals, including peraturan.go.id, which hosts official Indonesian regulations and amendments, and BKPM for investment-related processes. These sources provide authoritative text and official implementations of investment law in Indonesia.
Recent trends include broader liberalization in several sectors via the DNI and ongoing enhancements to OSS for faster licensing, with digitization and transparency as ongoing goals. For practical rules and the latest changes, consult official sources such as BKPM and peraturan.go.id.
Official guidance emphasizes streamlined licensing through OSS and alignment with the 2020 Job Creation Act.
Sources and further reading:
4. Frequently Asked Questions
What is the main purpose of Indonesia's Investment Law in practice?
The Investment Law establishes the framework for setting up, operating, and reorganizing investments while defining licensing regimes and protections for investors. It guides which activities require permits, capital structure, and reporting obligations.
How do I start a PMA company under the OSS system?
You begin by preparing the required corporate documents, submit through OSS, and obtain the principal license (Izin Prinsip) and business license (Izin Usaha) together with the NIB. A lawyer helps ensure documents meet all sector-specific requirements.
When does the Job Creation Act apply to my investment project?
The Job Creation Act (UU Cipta Kerja) took effect in 2020 and introduced OSS, streamlined licensing, and expanded permissible ownership in many sectors. Transitional rules may apply during the implementation period.
Where can I find the official regulations governing Indonesian investment?
Official regulations are published on peraturan.go.id, Indonesia's government regulation portal. For investment-specific rules, BKPM and OSS portals also provide practical guidance and forms.
Why is the OSS portal essential for new investments?
Can foreign investors own 100 percent of a PT in Indonesia?
In many sectors, foreign ownership limits have been liberalized under the UU Cipta Kerja, but some activities remain restricted or require special approvals. Always verify the DNI for your sector before structuring a deal.
Should I hire a local lawyer for changes to a PT's ownership?
Yes. A lawyer ensures required notarial documents, shareholder resolutions, and filings with Kemenkumham are accurate and timely, avoiding invalid actions or delays.
Do I need a notary to finalize a PT share transfer or change in directors?
Yes. A notary public must execute the deed of share transfer or amendment of articles of association, followed by registration with Kemenkumham and, if applicable, BKPM and OSS updates.
Is the negative investment list still a factor for new investments?
Yes, the Daftar Negatif Investasi outlines restrictions and limitations on foreign participation in certain sectors. Ensure compliance before structuring ownership and licenses.
How long does it typically take to obtain an investment license via OSS?
Processing times vary by sector and regulator, but a typical range is 2 to 8 weeks after submission, assuming all documents are complete. A lawyer can help anticipate bottlenecks.
What costs should I expect when engaging an Investment & Business Structuring lawyer?
Expect a combination of fixed fees for document preparation, hourly rates for negotiations and filings, and potential out-of-pocket costs for notary and government services. Obtain a detailed engagement letter upfront.
What is TKDN and how does it affect foreign investment?
TKDN refers to indigenous component requirements used to promote domestic industry participation. Some sectors impose TKDN thresholds; a lawyer can help determine applicability and plan compliance or exemptions.
5. Additional Resources
- provides guidance on investment registration, licensing, and approvals through OSS. Official site: bkpm.go.id
- is the digital gateway for business licenses, registrations, and permit issuance. Official portal: oss.go.id
- is the official repository of Indonesian regulations and amendments, including laws governing investment. Official portal: peraturan.go.id
6. Next Steps
- Clarify your investment objectives and target timeline. Write down the sector, ownership structure, and preferred corporate form (PT vs PMA).
- Prepare a document checklist specific to your plan, including company documents, identity papers, and sector licenses. Gather every item before contacting counsel.
- Research and shortlist Investment & Business Structuring lawyers with Indonesia-focused practice and OSS experience. Check references and recent case outcomes.
- Schedule a consultation to explain your project, timeline, and budget. Bring a draft scope of work and any preferredEngagement terms.
- Request a written engagement letter outlining scope, fees, timelines, and deliverables. Confirm who will handle each regulatory interaction.
- Engage the lawyer, share documents securely, and establish a project plan with milestones aligned to OSS submission timelines.
- Monitor progress and maintain regular updates. If delays arise, discuss alternatives and adjust the plan promptly to avoid regulatory penalties.
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Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
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