Foreign Ownership Limits in Indonesia — Is 100% Ownership Possible?

Whether 100 percent ownership is possible in Indonesia depends on the exact business line. Many activities are fully open, while others carry equity caps or are reserved for Indonesians. The most costly mistakes often result from choosing the wrong KBLI. In the OSS system, this code defines the business line and sets ownership limits and licensing steps. The path involves determining the correct KBLI, confirming eligibility under the Positive Investment List, selecting an appropriate entry route, planning cash repatriation, and mapping the first-year compliance cadence.

Rules that shape foreign ownership

Foreign investment is regulated through the Investment Law and the online single submission — risk-based approach system. In 2021, the Positive Investment List replaced the older Negative List, which shifted the framework to open unless restricted and liberalized many service and technology lines. The list groups activities into four families that include priority sectors, fields with specific requirements, fields that require partnerships with MSMEs or cooperatives, and fields that are fully open to foreign investment.

Once the overall framework is clear, attention can turn to mapping the intended activity to the precise KBLI that controls ownership and licensing.

Mapping a business to the rules

KBLI is the activity code that defines the exact business line in the OSS system, and it drives ownership limits and licensing steps. The intended activity should be matched to the KBLI that reflects actual operations, since KBLI sets the risk tier and the licenses required, and whether the line is fully open, capped, or reserved. OSS can be used to confirm KBLI status and to preview the license path and evidence requirements before incorporation.

Correct mapping keeps filings on track while errors often stall applications and force rework. With the right KBLI in place, the next question is how that activity sits on the openness spectrum.

Sector at a glance — ownership status and typical hurdles

Ownership status and execution hurdles vary by line. The examples below illustrate how liberalization has expanded access while leaving practical conditions that affect timing and cost.

Business Line (Illustrative KBLI Family)	Foreign Ownership Today	Practical Hurdle To Budget For
Data centers and digital platforms	Up to 100% for many TMT lines after 2021 reforms	Significant capital and technical requirements before commercialization
Telecom towers and providers	Generally open post reform, confirm sector rules for the exact line	Local permitting and site aggregation extend timelines
Retail (modern formats)	Many modern retail formats are open to 100% (confirm by KBLI)	Zoning and premises approvals before a trading license
Wholesale distribution (non-integrated)	Largely liberalized, prior caps broadly removed (confirm by KBLI)	Warehouse and minimum capital or area proofs in practice
Postal and courier	Courier activities KBLI 53201 capped at 49%	Cooperation with domestic operators and service level approvals
Airports and airport services	Now open to 100% foreign investment under conditions	Concession or tendering processes and operator approval
Air transport (selected lines)	Selected lines capped at 49% or require a domestic majority	Multiple regulator approvals and fleet or airworthiness sequencing

These patterns help investors understand what to expect in terms of control and licensing. If a sector is fully open, a company can usually be set up with 100 percent foreign ownership. If caps remain, the structure of the deal becomes more important to get the right balance of ownership and control.

When 100% ownership is possible

If the KBLI falls in a fully open sector, a PT PMA (foreign-owned company) can be set up with 100 percent foreign ownership and full control. This still requires meeting Indonesia’s capital and technical rules, as well as obtaining any sector permits.

Foreign-owned companies must have at least 10 billion rupiah (US$700,000) in issued and paid-up capital. Separately, the investment plan must show at least 10 billion rupiah per five-digit KBLI per project, not counting land and buildings. Both requirements should be checked in the OSS system for the relevant KBLI before finalizing the capital structure.

Company registration and the NIB (business ID number) can be completed within weeks. Tax and sector accounts allow invoicing soon after, but industry licenses may take one to three extra months. Where the sector is not fully open, other entry routes may be needed.

Options when full ownership is restricted — structure picker

Capped sectors still allow workable entry structures. The choice depends on control, speed, cost, and scalability, and the selection influences governance and compliance across the first year.

Entry Route	Typical Use Case	Control	Speed To Operate	First Year Cost Load	Scalability
PT PMA 100% where open	Services, trading, and digital when the Positive List is fully open	Full	Medium	Medium	High
PT PMA joint venture to cap	Capped sectors, such as courier or certain transport lines	Shared per JV terms	Medium	Medium	High
Representative office	Market development without invoicing	None	Fast	Low	Limited
Distributor or franchise agreement	Quick access without equity	Contractual	Fast	Low to Medium royalties or marketing	Medium

Designing control in a joint venture

In capped sectors, control comes from clear rules agreed at the start. The joint venture agreement should set out who sits on the board, who appoints them, and how many must be present for decisions. It should also list which major actions need approval from both partners. These usually include the annual budget, big spending above a set amount, new loans, issuing shares, licensing or transferring IP, related party contracts, buying or selling key assets, and hiring or firing senior managers.

Both sides should have access to records and the right to review the books. The agreement should explain how new funding will work and give protection against dilution. It should also include promises not to compete or poach staff. Finally, it needs a plan for what happens if the partners cannot agree, ending with buyout rights and a straightforward way to set the price, so progress does not stall

Getting profits out

Outbound cash can take several forms, and each path carries its own documentation and withholding profile. Selecting a route early aligns finance processes and treaty positions. 

Route	Core Docs	Indicative WHT To Non Residents*	Operational Notes
Dividends	AGM minutes, dividend list, bank memo, DGT 1 or 2 where treaty relief applies	20% domestic, often 5 to 15% with treaty	Requires distributable profits with attention to solvency and retained losses
Service fees	Intercompany agreement, invoices, proof of services	Often 20%, check treaty, PE and PIT interactions	Substantiation and transfer pricing alignment are essential
Interest shareholder loan	Loan agreement, board or AGM approvals, bank proofs	20% domestic, 10 to 15% common with treaty	Thin cap and interest limitation rules can cap deductibility
Royalties	License and IP registry evidence where relevant	20% domestic, 10 to 15% common with treaty	Economic substance is scrutinized, meaning where the IP is developed, enhanced, managed, protected, and exploited

*Illustrative only — current treaty rates and domestic rules should be verified before execution.

Your first-year compliance calendar

In the first year, obligations follow a regular pattern. Capital injections are made according to the investment plan and bank requirements. LKPM reports are filed through the OSS system every quarter, with deadlines announced — and sometimes extended — by the portal. Annual duties include preparing financial statements, completing audits if required, and renewing sector licenses.

Getting into this rhythm early makes dealings with auditors, banks, partners, and authorities smoother and less stressful.

Period	What To File	Usual Timing	Notes
Capital injection milestone	Paid-up capital per investment plan	As set in the OSS plan and company resolutions	Align with bank KYC and any sectoral minimums
LKPM investment activity report	OSS submission for PMA companies	Quarterly within the OSS window	Submission proof should be retained; windows are occasionally extended
Annual corporate obligations	Financial statements and, where applicable, audit	Year-end plus statutory deadlines	Coordinate with tax filings and sector renewals

 

Scenario planning if rules shift

Indonesia is gradually opening digital and service sectors, while keeping limits in areas like logistics, transport, and businesses tied to MSMEs. To reduce risk, it helps to keep the structure flexible. New business lines can be placed under separate KBLI codes, and capital can be invested in stages to match milestones.

Joint venture agreements can include buy or sell options that are triggered if rules change, so ownership can adjust smoothly. If a restructure is ever needed, plan in advance whether it’s better to transfer assets or transfer shares — whichever best protects licenses, tax positions, and customer contracts. Having documents ready makes the process faster and cleaner if the rules shift.

Case study A — 100% ownership in a digital service

A regional SaaS provider matched its offer to a fully open KBLI and confirmed the path in OSS, which cleared the way to establish a 100 percent PT PMA. With incorporation complete, the focus turned to regulatory setup. Tax registration and the data processing registration proceeded in parallel, while a local data center service agreement was finalized to meet infrastructure needs. This sequencing allowed incorporation to close in week three, sector registration to finish by week eight, and invoicing to begin in week ten once the e-Faktur account went live. Capitalization was aligned with the KBLI risk tier and bank KYC, which prevented mid-year amendments and kept the launch on schedule.

Case study B — capped line solved with a JV

A courier company faced a 49 percent foreign ownership limit and solved it by forming a 49:51 joint venture. The partners agreed that big decisions like budgets, large spending, loans, IP rights, related party deals, and senior hires would always need approval from both sides. Board rules were set so that neither partner could push through key choices alone, giving effective control even with minority equity.

To support operations, a small shareholder loan covered working capital while a service fee paid for regional expertise. Cash flows were planned across dividends, fees, and interest, using tax treaty relief where possible. A call option allowed the foreign stake to rise to the maximum limit if the rules were later relaxed.

Key takeaways and next steps

A simple sequence keeps work moving. It starts with KBLI, continues with confirmation of Positive List status, then selects the entry route, shapes the repatriation plan, and locks the LKPM calendar.

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