Foreign Ownership Rules for Buying an Indonesian Business

A foreign buyer can own 100 per cent of an Indonesian company in most sectors. Presidential Regulation 10/2021, amended by Presidential Regulation 49/2021, replaced the old negative list with a positive one, and the rule it set is that every business line is open to full foreign ownership unless the regulation says otherwise. Only six activities are closed outright, to Indonesians and foreigners alike. What you cannot do is buy the shares of an ordinary Indonesian PT and carry on as before: the moment a foreign shareholder appears on the register, the company becomes a PT Penanaman Modal Asing (PT PMA) and a different set of capital, licensing and reporting rules applies to it from that day.

The ownership percentage is rarely what kills an Indonesian deal. What kills deals is a licence in the Online Single Submission (OSS) system that does not match what the business actually does, an investment commitment of more than IDR 10 billion per business code that the buyer never priced, and a nominee arrangement somewhere in the company's history that Article 33 of the Investment Law treats as void. The rules below are those in force in September 2026, and Indonesian investment regulation moves fast: the paid-up capital floor changed in October 2025 and the licensing regulation was replaced in June 2025. Indonesian counsel has to confirm the detail against the target's own business codes before you sign.

Can a foreigner own 100 per cent of an Indonesian business?

In most sectors, yes. The unit of analysis is not the industry as you describe it but the five-digit KBLI code, Indonesia's standard business classification. A company that calls itself a logistics business may hold four KBLI codes, three open to full foreign ownership and one capped at 49 per cent, and the capped one governs how you can structure the purchase. Pull the target's Nomor Induk Berusaha (NIB) and its KBLI list before anything else.

Six business fields are closed to all investors. Norton Rose Fulbright's December 2025 briefing on Indonesian foreign direct investment lists them as cultivation and processing of controlled narcotics, gambling and casinos, fishing of species in Appendix I of the CITES convention, taking coral for building material or aquariums, chemical weapons manufacturing, and industrial chemicals that damage the ozone layer. A further group of activities is reserved to the central government on defence and security grounds. Around 46 business fields carry conditions such as an equity cap or a specific ministerial licence.

One point surprises buyers coming from Australia or the EU, and the same Norton Rose Fulbright briefing makes it: Indonesian foreign investment is not subject to general screening or prior approval. There is no equivalent of FIRB or CFIUS sitting over the deal. You register, and the conditions bite through licensing rather than through a veto.

What changes in the company once a foreign buyer arrives?

Conversion to PT PMA is the part sellers underestimate. The articles of association have to be amended and approved by the Ministry of Law, the shareholder deed notarised, and the company re-registered through OSS so that a new NIB and the risk-based licences are issued against the foreign-invested status. Two capital rules then apply, and they are commonly confused with each other:

• Investment value. A PT PMA must plan and realise more than IDR 10 billion per five-digit KBLI code per project location, excluding land and buildings. A company with three codes across two cities is looking at a much larger number than IDR 10 billion.
• Paid-up capital. This is the cash the shareholders actually put in at the outset. BKPM Regulation 5/2025, promulgated on 2 October 2025, cut the floor from IDR 10 billion to IDR 2.5 billion per company, and the reduction is not retroactive: a company renewing or expanding an activity it is already licensed for stays on the capital rules its existing licence was issued under. ATD Law in association with Mori Hamada's note on BKPM Regulation 5/2025 also records a 12-month lock-up on the deposited capital, lifted only where the money goes into asset purchases, construction or business operations, with sanctions up to licence revocation for breach.

The licensing regime behind all of this was rewritten last year. SSEK Law Firm's update on Government Regulation 28/2025 records that it took force on 5 June 2025, revoked Government Regulation 5/2021, runs to 552 articles, and moved most assessment and verification functions to central government. For a buyer that cuts both ways: the process is better documented, and every legacy licence issued under the old rules now has to be rechecked.

Which sectors are capped, reserved or conditional?

Financial services sit outside the Positive Investment List. Insurance is the clearest example: Government Regulation 14/2018 capped foreign ownership of Indonesian insurers at 80 per cent from April 2018, Government Regulation 3/2020 relaxed it for listed insurers from January 2020, and holdings already above 80 per cent were grandfathered. If you are buying anything OJK regulates, OJK decides both the equity question and the fit-and-proper question.

Why nominee shareholdings are the first thing to check

Article 33(1) of Law 25/2007 on Investment prohibits an investor from entering into an agreement or statement that shares in a limited liability company are held for and on behalf of another person. Article 33(2) makes any such arrangement null and void. There is no grandfathering and no cure by long use. Indonesian law recognises the registered owner, so a foreign party sitting behind an Indonesian nominee has no ownership the courts will enforce and no standing to sue over it.

If the target's shares are partly held by a former employee, a relative or a corporate service provider under a side letter, you are not buying a clean cap table. You are buying a dispute that has not happened yet, plus the possibility that past licences and tax filings rested on a false ownership picture. Unwinding it means a real share transfer at a real price with the transfer tax paid, before completion rather than after, and the seller will resist because the unwind creates the tax bill the nominee structure was built to avoid. That negotiation belongs in the price. The wider pattern of what surfaces in an Asian data room is covered in our note on what buyers look for in due diligence.

Which regulators have to clear the deal, and when?

There is no single approval. The list depends on what the target does:

• OJK for banks, insurers, multifinance companies and securities firms. Approval is prior, personal to the acquirer, and the fit-and-proper test applies to the ultimate controlling shareholder, not the holding company on the signature page.
• Komdigi, the Ministry of Communications and Digital (renamed from Kominfo in 2024), for telecommunications, broadcasting and electronic system operators.
• Ministry of Health for hospitals, clinics and pharmaceutical manufacturing, where facility licences are site-specific and do not travel with a share sale as smoothly as buyers assume.
• ESDM for mining, where a change of control over a licence holder needs ministry approval and divestment obligations to Indonesian parties run on a statutory schedule the new owner inherits.

Competition clearance is separate and, unusually, comes after closing. ABNR's analysis of KPPU Regulation 3/2023 sets out the regime that has applied since 31 March 2023. Notification to KPPU is mandatory within 30 working days of the transaction taking legal effect where the merged group's Indonesian assets exceed IDR 2.5 trillion or its Indonesian turnover exceeds IDR 5 trillion, with a IDR 20 trillion asset threshold for banks. KPPU has fined companies for late filing more than once, so the calendar needs a named owner on day one of the post-closing plan, not day thirty.

Land is the other constraint people forget. A PT PMA cannot hold freehold title (Hak Milik). It holds Hak Guna Bangunan, the right to build, which under Government Regulation 18/2021 runs for 30 years, extendable by 20 and renewable for a further 30. Extension is not automatic; the land agency assesses whether the land has been used productively. If the target's factory sits on a title expiring in four years, that is a price issue.

How buyers usually structure an Indonesian acquisition

On tax, one number is worth knowing before you negotiate. Where a non-resident sells shares in an unlisted Indonesian company, Indonesia applies Article 26 withholding at 20 per cent on a deemed net income of 25 per cent of the sale price, an effective 5 per cent of gross proceeds. PwC's Indonesia tax summary records the same mechanic. Treaty relief can reduce or remove it, but only where the electronic certificate of domicile is in place before payment; otherwise the payer withholds at the domestic rate. Whether the treaty helps you depends on where the seller sits and how the holding chain is built, which is a question for a tax adviser with the actual structure in front of them rather than something this article can answer. The same caution applies to any cross-border structure, as we set out in our guide to cross-border M&A in Asia.

What to do, depending on where you are

• Screening targets. Ask for the NIB and the KBLI list before the first valuation conversation. Two hours of checking codes will tell you whether a deal is even legal in the shape you imagined.
• Under an LOI. Model the investment value requirement across every code and every location, and put the number in your funds flow. Buyers who discover it at signing renegotiate or walk.
• In diligence. Trace every shareholder back to a natural person, ask directly about nominee agreements, side letters and pledged shares, and put a specific indemnity in the sale and purchase agreement.
• Selling to a foreign buyer. Fix the licence and shareholding problems before you go to market, not halfway through an exclusivity period. The sequencing is the one described in our guide to selling a business in Indonesia.

If you are weighing an Indonesian acquisition or preparing a company for a foreign buyer, you can start a confidential, no-obligation conversation about what your business looks like to a buyer. Buyers new to acquiring in the region may also want our practical walkthrough of how to acquire a company.

Frequently Asked Questions

Does a foreign buyer need government approval to acquire an Indonesian company?

There is no general foreign investment screening in Indonesia. Registration runs through the OSS system rather than an approval committee, though sector regulators such as OJK, Komdigi, the Ministry of Health and ESDM approve changes of control in the industries they supervise. Competition filing to KPPU is separate and falls due within 30 working days after closing if the asset or turnover thresholds are met.

How much capital does a PT PMA need in 2026?

Paid-up capital of at least IDR 2.5 billion per company, following BKPM Regulation 5/2025, promulgated on 2 October 2025, which replaced the earlier IDR 10 billion floor set by BKPM Regulation 4/2021. Separately, the company must plan and realise investment of more than IDR 10 billion per five-digit KBLI code per location, excluding land and buildings. The two figures are often reported as if they were one rule; they are not.

What happens if the target has used a nominee shareholder?

Article 33 of Law 25/2007 makes the arrangement void, so the foreign beneficial owner has no ownership Indonesian courts will recognise. For a buyer the practical effect is a defective cap table, potential tax exposure on the unwind, and the risk that a nominee asserts a claim later. The arrangement needs to be unwound by a genuine, taxed share transfer before completion.

Can a foreign-owned Indonesian company own land?

Not freehold. A PT PMA holds Hak Guna Bangunan, granted for 30 years under Government Regulation 18/2021, extendable by 20 years and renewable for another 30, subject to the land agency being satisfied the land has been used productively. Check the remaining term on every site the target operates from before you agree a price.