Indonesia offers investors low wage costs, an increasingly attractive investment climate, a huge domestic market, and access to other ASEAN markets.
Indonesia recorded a 5.03 percent economic growth in 2024, slightly down from 5.05 percent in 2023 but still strong compared to many G20 nations, highlighting its economic resilience. The government has revised its 2025 growth forecast to 5.1–5.5 percent, slightly lower than the earlier 5.3–5.6 percent projection. The 2025 economic agenda, themed "the acceleration of inclusive and sustainable economic growth," marks the start of the 2025–2029 National Medium Term Development Plan (RPJMN), a key part of Indonesia's broader 2025–2045 strategy to achieve its "golden Indonesia" vision.
The country’s Positive Investment List allows foreign investment in over 200 business sectors, including transportation, energy, and telecommunication. Foreign investors can fully own a business in these sectors unless subject to specific limitations.
The positive investment list classifies business fields into four categories:
Business fields fully open to foreign investment
The following business fields are open to 100 percent foreign investment.
- Oil and gas construction;
- Onshore upstream oil installation;
- Onshore and offshore distribution pipelines;
- Onshore and offshore oil and gas drilling service;
- Oil and gas well maintenance service;
- Electricity generation;
- Construction of electricity installation;
- Geothermal electricity generation;
- Supermarkets (with areas less than 1,200 sqm);
- Department store (with areas between 400 – 2,000 sqm);
- Ports;
- Airport and airport supporting services;
- Maritime cargo handling;
- Telecommunications;
- E-commerce;
- Pharmaceutical industry; and
- Hospitals
Foreign investors may create a legal presence in Indonesia in one of two ways: a Limited Liability Company (PT PMA) or a Representative Office.
Priority sectors - 246 business lines open for investment
To classify as a priority sector, business enterprises must meet one or more of the following criteria:
- Must be labor-intensive;
- Must be capital intensive;
- Must be part of a national strategic program;
- Must be export-oriented;
- Must involve a pioneer industry (renewables, oil refining, metals, etc.);
- Must utilize advanced technologies; and
- Must implement research and development, and innovation
There are 246 business fields under this category that can be found under Exhibit 1 of the positive investment list. Moreover, businesses in priority sectors are eligible for a range of fiscal and non-fiscal incentives.
Fiscal incentives include a 50 percent corporate income tax reduction for investments between 100 billion rupiah (US$6.9 million) and 500 billion rupiah (US$34.8 million) for a period of five years and 100 CIT reduction for investments over 500 billion rupiah (US$34.8 million) for a period between five and 20 years.
In addition, there are tax allowances available in the form of a reduction in the taxable income of 30 percent of the total investment for six years, a special withholding tax rate on dividends of 10 percent, and tax losses carried forward for up to 10 years.
Examples of non-fiscal incentives are the provision of supporting infrastructure, simplified business licensing procedures, and guaranteed energy supply or raw materials. We explore a few examples of the prioritized business.
| Business Line | Incentive Type |
|---|---|
| Textile and garment industry | Tax allowance and investment allowance |
| Pharmaceutical industry | Tax allowance |
| Digital economy (hosting, data processing, etc.) | Tax holiday |
| Geothermal (exploring and drilling) | Tax allowance |
| Cooking palm oil industry | Tax allowance |
| Iron and steel industry | Tax allowance |
| Automotive industry | Tax allowance |
| Oil and gas refinery | Tax holiday |
| Cosmetics industry | Tax allowance |
| Coal gasification | Tax allowance |
Businesses open to 100 percent foreign investment
The following business fields are open to 100 percent foreign investment.
- Oil and gas construction;
- Onshore upstream oil installation;
- Onshore and offshore distribution pipelines;
- Onshore and offshore oil and gas drilling service;
- Oil and gas well maintenance service;
- Electricity generation;
- Construction of electricity installation;
- Geothermal electricity generation;
- Supermarkets (with areas less than 1,200 sqm);
- Department store (with areas between 400 – 2,000 sqm);
- Ports;
- Airport and airport supporting services;
- Maritime cargo handling;
- Telecommunications;
- E-commerce;
- Pharmaceutical industry; and
- Hospitals.
Business fields that stipulate specific requirements or limitations — 42 business lines open
| Business Field | Requirements |
|---|---|
| Publishing of newspapers, magazines (press) | 100% domestic capital required for establishment; up to 49% foreign ownership allowed for business development and expansion. |
| Private broadcasting agency | 100% domestic capital required for establishment; up to 20% foreign ownership allowed for business development and expansion. |
| Subscription-based broadcasting agency | 100% domestic capital required for establishment; up to 20% foreign ownership allowed for business development and expansion. |
| Community radio agency | 100% domestic capital required for establishment; up to 20% foreign ownership allowed for business development and expansion. |
| Community television agency | 100% domestic capital required for establishment; up to 20% foreign ownership allowed for business development and expansion. |
| Postal services | Maximum foreign ownership of 49%. |
| Domestic scheduled air transportation | Foreign ownership up to 49%; domestic ownership must remain the single majority. |
| Domestic non-scheduled air transportation | Foreign ownership up to 49%; domestic ownership must remain the single majority. |
| Air transport activities | Foreign ownership up to 49%; domestic ownership must remain the single majority. |
| Domestic passenger liner and tramp activities | Maximum foreign ownership of 49%. |
| Domestic sea transport for tourism | Maximum foreign ownership of 49%. |
| Domestic liner and tramp sea freight for goods | Maximum foreign ownership of 49%. |
| Domestic sea transportation for special goods | Maximum foreign ownership of 49%. |
| Pioneer domestic sea transportation of goods | Maximum foreign ownership of 49%. |
| Domestic sea transportation using public shipping | Maximum foreign ownership of 49%. |
| Overseas liner and tramp sea freight for goods | Maximum foreign ownership of 49%. |
| Overseas sea transportation for special goods | Maximum foreign ownership of 49%. |
| Interprovincial sea public transport | Maximum foreign ownership of 49%. |
| Interprovincial sea public transport (pioneering) | Maximum foreign ownership of 49%. |
| Interprovincial city/regency public transport | Maximum foreign ownership of 49%. |
| Interprovincial city/regency public transport (pioneering) | Maximum foreign ownership of 49%. |
| Inter-city and regency public transport | Maximum foreign ownership of 49%. |
| River and lake transportation with non-fixed and irregular routes | Maximum foreign ownership of 49%. |
| River and lake transportation with non-fixed and irregular routes for tourism | Maximum foreign ownership of 49%. |
| River and lake transportation for general goods and/or animals | Maximum foreign ownership of 49%. |
| River and lake transportation for special goods | Maximum foreign ownership of 49%. |
| River and lake transportation for dangerous goods | Maximum foreign ownership of 49%. |
| Weapons equipment industry | Capital ownership subject to approval from the Ministry of Defense. |
| Horticulture | Maximum foreign ownership of 30%. |
| Traditional medical products (for humans) | 100% domestic capital required. |
| Fish processing industry | 100% domestic capital required. |
| Wood-based building products | 100% domestic capital required. |
| Coffee processing industry | 100% domestic capital required. |
| Rendang industry | 100% domestic capital required. |
| Ship industry (outriggers and traditional vessels) | 100% domestic capital required. |
| Traditional handicrafts | 100% domestic capital required. |
| Traditional cosmetics | 100% domestic capital required. |
| Raw materials for traditional medicine (for humans) | 100% domestic capital required. |
| Batik industry | 100% domestic capital required. |
| Crackers and chips industry | 100% domestic capital required. |
| Hajj and Umrah activities | 100% domestic capital required; must be Muslim. |
Business fields open to large enterprises with compulsory partnerships
Business fields under this category are open to foreign investors or large-scale enterprises through a compulsory partnership agreement with an MSME. There are 106 business lines for this category, being:
- Business lines that do not use advanced technology;
- Are labor-intensive businesses, characterized by a special cultural heritage; or
- The capital for the business’ activities does not exceed 10 billion rupiah (US$701,000).
Further, they cover businesses that are commonly carried out by MSMEs and/or sectors that have the potential to enter the larger supply chain. The partnership arrangement can be in the form of operational cooperation, profit sharing, subcontracting, outsourcing, or distribution.
Further, there are fiscal and non-fiscal incentives available for priority sectors.
This article features major opportunities within Indonesian industries for foreign investment in the following sections.
Top sectors to watch for in Indonesia
Sector prioritization in this analysis is intentionally aligned with the investment mandate of Danantara (Badan Pengelola Investasi Daya Anagata Nusantara), Indonesia’s sovereign wealth fund officially launched in February 2025 under Law No. 1 of 2025. Danantara manages consolidated state assets exceeding US$900 billion and has an initial investment deployment target of US$5 billion in 2025 across 9 officially designated priority sectors:
- Industrial downstream (minerals, oil and gas, plantations)
- Upstream oil and gas
- Manufacturing (electric vehicles and renewables)
- Food security
- Digital infrastructure
- Water and waste management
- Energy security (renewable energy, power transmission, petrochemical refineries, bioenergy)
- Strategic real estate (sports complexes, industrial areas, infrastructure)
- New and emerging industries (AI computing, data centers, advanced semiconductor manufacturing)
These sectors reflect both Indonesia’s natural resource advantages and its strategic ambitions in the global value chain. The following sector profiles are structured accordingly. Source: Danantara CIO, Indonesia Business Post, April 2025.
Industrial Downstream — Basic Metals, Minerals, and EV Battery Supply Chain
In Q1 2025, the basic metal industry (excluding machinery and equipment) recorded a total gross value added of approximately US$4.2 billion, reflecting its steady and growing contribution to Indonesia’s manufacturing base. This segment covers the production of key raw and semi-finished metal products used across construction, infrastructure, transportation, and energy sectors.
Indonesia’s abundant mineral reserves — particularly nickel, bauxite, tin, and copper — underpin the upstream portion of this industry, while downstream expansion is accelerating in response to domestic demand and export market growth. The government’s progressive export ban on raw mineral ores, first introduced in 2014, has successfully redirected foreign investment toward in-country smelting and processing capacity. Nickel smelter and refining operations in Sulawesi, most notably within the Indonesia Morowali Industrial Park (IMIP), have become a central pillar of this transformation.
The sector’s strategic alignment with the global energy transition is of particular significance. Indonesia aims to become one of the world’s top three producers of EV batteries by 2027, leveraging its nickel reserves to integrate into global electric vehicle supply chains. Global EV manufacturers including BYD (China) are finalizing commitments to invest in Indonesia, while discussions with other major players remain ongoing. Complementary investments in lithium refining and anode material production are also underway to build out a comprehensive battery materials ecosystem.
With a population of 278 million, Indonesia also represents a substantial domestic EV market. The government has set a target of 2.5 million EV users by 2025, though consumer affordability and limited public charging infrastructure remain near-term constraints.
Danantara has explicitly identified industrial downstream — minerals, oil and gas, and plantations — as its first and highest-priority investment sector, reinforcing the long-term policy commitment to this segment.
Mining — Downstream Coal and Resource Processing
Indonesia is the world’s third-largest coal producer and the largest exporter of thermal coal globally. In 2022, the country produced 687 million tons of coal, of which 494 million tons were exported. Coal exports generate approximately US$3 billion in monthly revenue, with China, India, South Korea, and Japan collectively accounting for around 70 percent of export volumes. Vietnam and the Philippines are emerging as growth markets.
Beyond coal, Indonesia hosts the Grasberg mine in Papua — one of the world’s largest gold mines and the third-largest copper mine — with estimated reserves of 275 billion pounds of copper and 14.2 million troy ounces of gold. Mining broadly accounts for over one-tenth of Indonesia’s GDP.
Consistent with President Prabowo’s emphasis on downstreaming as a driver toward 8 percent GDP growth, the government is actively promoting investment in coal downstream processing across seven sub-sectors:
- Coal liquefaction
- Coal quality enhancement
- Coal gasification
- Coke manufacturing
- Underground coal gasification
- Briquette manufacturing
- Coal-water mixture production
Realizing this downstream strategy will require significant foreign investment, particularly in processing technology and supporting infrastructure. Danantara’s upstream and downstream oil and gas and industrial minerals mandates are directly relevant to attracting this capital.
Energy Security — Renewables, Power Infrastructure, and Bioenergy
Energy security is one of Danantara’s nine designated priority sectors, encompassing renewable energy, power generation and transmission, petrochemical refineries, and bioenergy. Indonesia has committed to expanding renewable energy capacity to 75 GW by 2040 under the Electricity Supply Business Plan (RUPTL 2025–2034), up from approximately 15 GW currently. Nuclear power (targeting 4.3 GW) is also being explored to address baseload requirements.
Danantara is positioned as the primary financing vehicle for large-scale energy transition projects. Global sovereign wealth funds — including Qatar’s QIA and Australia’s Future Fund — have already entered joint investment agreements with Danantara focused in part on renewable energy deployment, signaling strong international appetite for co-investment in this sector.
Transportation, Warehousing, and Digital Infrastructure
In Q1 2025, the transportation, warehousing, and telecommunications sector generated approximately US$4.16 billion in gross value added. Logistics demand continues to be driven by e-commerce growth, regional trade expansion, and industrial development linked to new Special Economic Zones. Ongoing investment in port infrastructure, inter-island shipping, and logistics hub development is progressively improving distribution efficiency across the archipelago.
Digital infrastructure has been separately designated as a Danantara priority sector in its own right. Rising mobile broadband penetration, government investment in 4G and 5G rollout to underserved regions, and rapid growth in fintech and digital services underpin sustained demand. Danantara has already secured Oracle’s commitment to invest in Indonesia, with discussions centering on AI-enabled data sovereignty and digital transformation at scale.
AI computing data centers and advanced semiconductor manufacturing have been explicitly named by Danantara CIO Pandu Patria Sjahrir as part of the “new and emerging industries” priority cluster, reflecting the government’s intention to position Indonesia as a regional technology hub alongside its resource-based industries.
Chemical, Pharmaceutical, and Healthcare Industries
Indonesia’s healthcare sector presents a structurally large and growing opportunity, underpinned by the universal health coverage program (BPJS Kesehatan), which now covers approximately 248 million people and ranks as the world’s largest single-payer program. All residents — including expatriates residing in-country for more than six months — are mandated to participate, with employer premium contributions required under law.
The medical devices market was valued at approximately US$4.5 billion in 2019, with US$2.8 billion derived from imports. Indonesia currently imports high-complexity equipment such as PET-CT scanners and ICU infrastructure while exporting lower-technology items including gloves and syringes — a gap that represents a clear domestic manufacturing opportunity. The pharmaceutical market is dominated by generics (approximately 70 percent), with BPJS procurement having materially boosted generic drug volumes, valued at more than US$700 million.
Danantara’s joint investment fund with QIA explicitly includes healthcare as one of three focal areas, alongside downstream industry and renewable energy, confirming sovereign-level prioritization of the sector.
Food Security and Agribusiness
Food security is one of Danantara’s nine designated priority sectors and a central plank of President Prabowo’s economic agenda. Indonesia is the world’s largest producer and exporter of palm oil and a significant exporter of rubber, manganese, and other agricultural commodities. The country’s large arable land base, favorable tropical climate, and established plantation infrastructure provide a durable competitive base.
Investment opportunities span the full agribusiness value chain: upstream plantation development, downstream processing (particularly palm oil refining and oleochemicals via KEK Sei Mangkei), food manufacturing, cold chain logistics, and retail distribution. With a domestic population exceeding 278 million, the food and beverage market also provides strong demand-side fundamentals independent of export dynamics.
Other Services
In Q1 2025, this category contributed approximately US$2.56 billion to Indonesia’s gross value added, encompassing personal services, professional and technical services, arts and entertainment, and social services. Growth in this segment is closely tied to urbanization, expanding middle-class consumption, and a structural shift toward experience-driven and digitally mediated services.
While not a Danantara primary priority sector, services benefit indirectly from the broader economic development agenda: expanding industrial zones generate demand for professional services; rising household incomes drive spending on wellness, education, and entertainment; and the creative economy is increasingly recognized as a soft-power and employment multiplier.
