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
Basic metal industry, metal goods, excluding machinery and equipment
In Q1 2025, the sector recorded a total gross value added of approximately USD 4.2 billion, reflecting its steady contribution to the broader manufacturing landscape.
This segment includes the production of key raw and semi-finished metal products used across construction, infrastructure, transportation, and energy sectors. Indonesia's abundant mineral resources, particularly nickel and bauxite, fuel the upstream portion of this industry, while downstream expansion is being spurred by growing demand from domestic and export markets.
In particular, the strategic alignment of this sector with the global energy transition, including its integration into electric vehicle (EV) supply chains, positions Indonesia as a significant player in supplying refined metals and components. The government's ongoing investment incentives and infrastructure development further reinforce the sector’s growth trajectory.
Mining
Downstream mining
As Southeast Asia’s largest economy, our current’s presidency emphasizes on downstreaming to push economic growth up to 8 percent.
In 2014, the Indonesia government began banning the export of raw mineral ores to encourage foreign investments in the downstream mining sector and development of local smelters besides boosting exports of higher-value processed commodities as well as increasing government revenue.
Indonesia has a large and unprospected variety of mineral deposits and is the world’s biggest exporter of tin, palm oil, and thermal coal, as well as a major exporter of nickel, copper, bauxite, rubber, manganese, zinc, and lead, among other resources. Mining roughly accounts for over one-tenth of Indonesia’s GDP and has been integral to its economic growth.
The country is also home to the Grasberg mine – one of the biggest gold mines, and third-largest copper mine in the world – which is estimated to have 275 billion ounces of copper and 14.2 million troy ounces of gold reserves.
Coal
Indonesia is the world’s third-largest exporter of coal after China and India and the world’s biggest thermal coal exporter. Indonesia produced 687 million tons of coal in 2022 of which 494 million tons was exported and the remainder for domestic use. Coal exports earn the country roughly US$3 billion per month with China, India, South Korea, and Japan accounting for 70 percent of exports. Vietnam and the Philippines are growing export markets for Indonesian coal.
As with other commodities, the government is eager to develop Indonesia’s downstream coal industry, specifically surrounding the below seven subsectors:
- Coal liquefaction;
- Coal quality enhancement;
- Coal gasification;
- Coke manufacturing;
- Underground coal gasification;
- Briquette manufacturing;
- Coal-water mixture production.
This strategy will need immense foreign investment, particularly in infrastructure and technology.
Electric vehicle batteries supply chain
Indonesia’s nickel reserves are making the country indispensable to the global EV industry with the country aiming to be a global EV hub. Global electric vehicle (EV) manufacturers, including Tesla from the United States (still under discussion) and BYD from China (finalizing Memorandums of Understanding), are considering investments in Indonesia. Indonesia aims to be one of the top three producers of EV batteries in the world by 2027.
Nickel mining and smelter operations in Sulawesi, such as those in the Indonesia Morowali Industrial Park, are also experiencing growth to support the electric vehicle (EV) battery supply chain.
Moreover, to complement its nickel-based battery industry, the country is also developing lithium refineries and anode material production facilities.
With its 278 million population, Indonesia also presents opportunities for the sale of EV vehicles ranging from motorbikes to cars. Formidable challenges and opportunities for investors include consumer affordability and the lack of public charging infrastructure. The government has an ambitious target of having 2.5 million EV users by 2025.
Transportation, warehousing, and telecommunications
In Q1 2025, Indonesia’s transportation, warehousing, and telecommunications sector generated approximately USD 4.16 billion in gross value added.
The transportation and warehousing segments are benefiting from increased logistics demand, driven by the growth of e-commerce, regional trade, and industrial expansion, including the establishment of new Special Economic Zones (SEZs). Investments in port infrastructure, inter-island shipping routes, and logistics hubs continue to improve efficiency and distribution networks across the archipelago.
Meanwhile, the telecommunications industry maintains strong performance, bolstered by rising digital adoption, mobile broadband penetration, and government efforts to expand 4G and 5G infrastructure to underserved regions. The digital economy’s rapid growth, including fintech, online services, and digital startups, further amplifies the sector’s significance in Indonesia’s economic transformation.
Chemical and pharmaceuticals industry
Given its large market size, Indonesia’s healthcare sector presents a lucrative opportunity for foreign investors.
The government’s annual spending on healthcare has skyrocketed since the implementation of the universal healthcare program (BPJS) in 2014, which has now grown to be the world’s largest, covering some 248 million people. Every citizen and the expatriates, living in the country for more than 6 months, are mandated to join. Companies must also register their employees for the program, paying a percentage of the premiums.
Increasing spending on healthcare will impact important sub-sectors, such as the medical devices industry, which was valued at US$4.5 billion in 2019. The majority of this, US$2.8 billion, was from imports. Indonesia mainly imports sophisticated medical instruments, such as PET-CT scanners and ICU equipment, and exports low-tech equipment, such as gloves and syringes.
The pharmaceutical industry is dominated by generic drugs (70 percent) with the remainder from over the counter (OTC) drugs. The BPJS program has boosted sales of generic drugs in the country, valued at more than US$700 million.
Other services
In Q1 2025, this category contributed approximately USD 2.56 billion to Indonesia’s gross value added. This diverse sector includes a range of activities such as personal services, professional and technical services, arts and entertainment, and social services.
While smaller in scale compared to industrial or infrastructure-based sectors, these services play an essential role in supporting both household consumption and business operations. Growth in this segment is increasingly tied to urbanization, rising middle-class demand, and shifts in consumer behavior toward experience-driven and digital-based services.
Additionally, as Indonesia strengthens its human capital and service-oriented enterprises, the "Other Services" sector is poised to gain further momentum—particularly in creative industries, education, and healthcare-related offerings.
