Foreign Ownership in Indonesia: Which Businesses Can Be 100% Foreign-Owned?

Key Takeaways

• Indonesia generally permits 100% foreign ownership where the exact commercial activity is open and no specific foreign-shareholding condition applies.
• The Presidential Regulation on investment business fields is a screening framework, not a short universal list of “allowed foreign businesses.”
• Ownership is assessed activity by activity using the applicable KBLI classification and sector rules.
• A 100% ownership position does not remove business licensing, minimum investment, product, import, location or operational requirements.
• Registering one restricted activity can change the ownership analysis for the proposed entity even when its other activities are open.
• Indonesia’s KBLI 2025 transition makes current code mapping an essential part of a 2026 ownership review.

The Short Answer: When Is 100% Foreign Ownership Possible?

A PT PMA can generally be wholly foreign-owned when its precise commercial activity is not closed and is not subject to a domestic ownership cap, domestic-only allocation, mandatory partnership or another special investment condition. Presidential Regulation No. 49 of 2021, which amended Presidential Regulation No. 10 of 2021, states that commercial business fields are open to investment except fields declared closed or activities that can only be carried out by the central government.

This approach is often called the Positive Investment List. The practical benefit is that many ordinary commercial fields can be open to full foreign investment. The practical risk is assuming that a broad label proves eligibility. “Software,” “manufacturing,” “consulting,” “hospitality” and “distribution” each cover multiple possible activities. The ownership conclusion should be tied to the exact scope and code, not a marketing description.

Business Categories Commonly Screened for Full Foreign Ownership

The following categories are useful starting points for investors. They are not blanket guarantees. A specific activity within a category may have its own restriction, sector rule, licensing standard or classification boundary.

The safe interpretation is “potentially eligible after activity-level screening,” not “automatically allowed.” Investors can start with IndoGateway’s Indonesia business setup overview and then validate the exact activities before incorporating or acquiring shares.

How Indonesia’s Investment List Works

The investment framework separates business fields into several practical groups. Understanding these groups helps a foreign investor decide whether to use a wholly owned PT PMA, a joint venture, a partnership arrangement, a different operating model or no local operating entity for that activity.

Open Business Fields

If a commercial business field is not closed and has no specific investment requirement, it may generally be open to foreign investment, including up to 100% foreign ownership. Licensing and sector requirements still apply.

Priority Business Fields

Certain fields are identified as priorities and may be associated with fiscal or non-fiscal facilities when the applicable criteria are met. Priority status should not be confused with automatic incentive eligibility or automatic licensing approval.

Fields Allocated to Cooperatives and MSMEs or Requiring Partnership

Some activities are allocated to cooperatives and micro, small and medium enterprises, or are open to larger investors subject to a partnership requirement. The precise structure and implementation should be reviewed rather than handled through a nominee shareholder.

Fields Open With Specific Requirements

Some activities carry conditions such as a maximum foreign ownership percentage, a special permit, a location restriction, a domestic-capital requirement or another sector-specific condition. The applicable annex and any more specific sector legislation must be read together.

Closed or Government-Only Activities

Closed fields and activities reserved to the central government cannot be made eligible simply by choosing a similar-sounding code or inserting an Indonesian nominee. The business model itself must remain within a lawful, accurately classified scope.

A Six-Step Foreign Ownership Test

1. Map the real activities. Write down what the Indonesian company will do, earn revenue from, import, manufacture, distribute, operate and contract for.
2. Identify the current KBLI classifications. Match each activity to its full description and exclusions, not only its title. BPS published KBLI 2025 as the current national classification, with implementation supported by a conversion framework.
3. Check the investment list. Determine whether the activity is open, allocated, partnership-based, restricted, closed or government-only.
4. Check sector-specific rules. Financial services, transport, telecommunications, health, construction and other regulated fields can involve more specific laws and regulators.
5. Test the combined scope. Confirm whether all activities can coexist under the proposed ownership. One problematic code should not be hidden among several open codes.
6. Document the conclusion. Maintain a screening table with the activity, KBLI, legal basis, permitted ownership, conditions, licence route and review date.

Why KBLI 2025 Matters for Ownership Reviews

The Indonesian Standard Industrial Classification is the common language connecting corporate purposes, investment screening and OSS licensing. BPS Regulation No. 7 of 2025 replaced KBLI 2020 with KBLI 2025. In April 2026, BPS explained that a conversion table was issued to preserve correspondence and support implementation. It also stated that the transition did not itself require existing businesses to obtain entirely new licences.

Nevertheless, a conversion can split, combine or redefine activities. A company should not assume that an old code and its apparent successor have identical investment and licensing treatment. Review the underlying activity wording and the live OSS implementation. For a new PT PMA, use the classification currently accepted by the relevant systems and ensure that the deed and OSS record remain aligned.

100% Ownership Does Not Mean No Conditions

Full foreign ownership answers a shareholder eligibility question. It does not answer whether the business is licensed, adequately capitalised or ready to operate. A wholly foreign-owned PT PMA generally remains subject to the foreign-investment framework, including the minimum investment planning rules applicable to the activity and project. Under the current implementing regulation, a PT PMA generally has a minimum placed and paid-up capital of IDR 2.5 billion per company, unless another rule provides otherwise, while the general minimum investment value is above IDR 10 billion under the relevant calculation basis.

Operational conditions may also include OSS risk-based licensing, spatial and environmental approvals, building requirements, importer status, product registration, sector standards, employment compliance and immigration permissions. These dependencies should be budgeted at the same time as share acquisition or incorporation. IndoGateway’s corporate setup services and OSS licensing support address these connected workstreams.

Structuring Options When 100% Foreign Ownership Is Not Available

A restriction does not automatically end the Indonesia opportunity, but it changes the structure analysis. Depending on the exact rule and commercial objectives, investors may evaluate a genuine joint venture with an eligible Indonesian shareholder, a compliant partnership arrangement, a distributor or service-provider model, a representative office where permitted, or a narrower PT PMA scope that excludes the restricted activity.

Each alternative changes control, economics, liability, tax, intellectual property, employment and regulatory exposure. A distributor arrangement, for example, is not economically equivalent to owning the operating company. A representative office generally has a limited role and is not a substitute for a revenue-generating company where local commercial transactions are required.

Nominee ownership should not be treated as a shortcut. Indonesia’s Investment Law prohibits arrangements stating that shares are held for and on behalf of another person. A lawful structure should reflect the real ownership and rights of the parties and be supported by enforceable governance documents.

Common Foreign Ownership Mistakes

• Screening only the main activity: every proposed KBLI should be reviewed.
• Relying on an outdated negative list: use the current investment framework and current activity mapping.
• Confusing ownership with licensing: an open activity can still be medium-high or high risk.
• Assuming an industry is uniform: manufacturing one product may have different treatment from manufacturing another.
• Adding speculative KBLI codes: unnecessary activities can introduce restrictions and reporting complexity.
• Using nominee arrangements: hidden beneficial ownership creates serious enforceability and compliance risk.
• Ignoring acquisition approvals: buying an existing company can require corporate, OSS and sector updates in addition to the share transfer.

Questions to Answer Before Incorporation

• What will the Indonesian entity invoice customers for?
• Will it import, manufacture, distribute, sell online, install or provide after-sales service?
• Which current KBLI description covers each function?
• Does any activity carry an ownership cap, allocation or partnership requirement?
• Does a sector regulator impose a more specific ownership or capital rule?
• Can all activities operate from the planned location?
• What licences, standards and product approvals must be effective before launch?
• Does the investment budget satisfy the calculation basis for every project?

Frequently Asked Questions

1. Can a foreigner own 100% of a company in Indonesia?

Yes, a foreign investor can own 100% of an Indonesian PT PMA when the company’s precise business activities are open to full foreign investment and no sector-specific restriction applies. The conclusion must be made for each KBLI activity, not for the company name or broad industry. The entity must also satisfy incorporation, capital, investment and licensing requirements. If one proposed activity is subject to a domestic ownership cap or is allocated to local businesses, the founders should revise the activity scope or evaluate a lawful alternative structure before incorporation.

2. What is Indonesia’s Positive Investment List?

The Positive Investment List is the commonly used name for the framework established by Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021. It starts from the principle that commercial fields are open except those closed or reserved to government, while its annexes identify priority fields, activities allocated to cooperatives and MSMEs or requiring partnership, and fields subject to specific conditions. It should be read with sector regulations and the correct KBLI. It is not a guarantee that an open activity has no other licensing conditions.

3. Which common sectors may allow 100% foreign ownership?

Many activities in consulting, software and IT services, wholesale trade, manufacturing, hospitality and business support may be capable of full foreign ownership. These are broad planning categories, not legal conclusions for every activity within them. For example, a technology company that only develops software may face a different analysis from one that operates payment services or telecommunications infrastructure. A manufacturer must be screened by the actual product, process and KBLI. Investors should use the open-field presumption as a starting point and confirm that no specific condition or sector rule applies.

4. Can a PT PMA register both open and restricted activities?

A PT PMA should only register activities that are compatible with its actual ownership and the conditions applicable to each activity. Adding an activity subject to a lower foreign ownership ceiling can make the proposed all-foreign structure unsuitable for that activity, even if the company’s main activity is fully open. The correct response is not to ignore the inconsistency. The founders should consider removing the activity, adjusting the lawful ownership structure, separating activities into appropriate entities where commercially justified, or using another compliant operating arrangement after professional review.

5. Does 100% foreign ownership require an Indonesian director or shareholder?

Full foreign ownership means the shares may be held entirely by eligible foreign persons or entities for an open activity; it does not by itself answer management, residence, tax or immigration questions. Corporate law, sector rules and practical administration should be reviewed when appointing directors and commissioners. A foreign individual performing work in Indonesia may require the appropriate immigration and manpower permissions regardless of share ownership or office. Do not appoint a local shareholder merely as a name-lending device. Governance appointments should reflect genuine roles, authority, availability and compliance responsibilities.

6. Is a local nominee shareholder a safe way around an ownership cap?

No. A nominee arrangement should not be treated as a lawful solution to a foreign ownership restriction. Indonesia’s Investment Law prohibits agreements or statements that shares in a limited liability company are held for and on behalf of another person. Beyond regulatory concerns, a nominee structure can create severe control, beneficial ownership, banking, tax and enforceability risks. If an activity requires Indonesian ownership or partnership, investors should evaluate a genuine joint venture or another permitted commercial model with transparent rights, economics and governance, supported by Indonesian legal advice.

7. Can a foreign investor buy an existing Indonesian company?

Yes, an acquisition may be possible, but the target and transaction must be screened. If a locally owned company becomes foreign-owned, it may need to convert to PMA status and comply with the requirements applicable to foreign investment. Review the target’s KBLI activities, licences, capital, land rights, contracts, tax position, employees, beneficial ownership and sector approvals before closing. The share transfer may require corporate approvals, a notarial deed, Ministry of Law notification or approval, OSS updates and regulator filings. Existing licences should never be assumed to transfer unchanged without verification.

8. How can an investor confirm the allowed foreign ownership percentage?

Begin with a detailed operating description and map it to the current KBLI. Check the activity against the current Presidential Regulation and annexes, then review any more specific sector legislation or regulator rules. Confirm how the activity appears in the live OSS system and document the sources and date of review. During classification transitions, check the official conversion table and the substance of the new description. For a material investment, obtain Indonesian legal or regulatory confirmation before signing shareholder arrangements, leases, acquisitions or binding customer commitments based on the ownership assumption.

Conclusion

Indonesia permits full foreign ownership across many commercial activities, but there is no responsible one-line answer for an entire industry. The investable unit is the exact activity: its KBLI, investment-list treatment, sector rules and licensing path. A careful investor maps the business model first, screens every activity, documents the ownership conclusion and then aligns the deed, capital plan and OSS applications with that analysis.

Confirm Your Foreign Ownership Route

IndoGateway can help translate your operating model into a current KBLI, ownership and licensing matrix before you commit capital or sign local agreements. Contact IndoGateway for a practical Indonesia entry assessment.