Indonesia has become an increasingly attractive destination for foreign investors due to its large consumer market, abundant natural resources, and growing digital economy. However, entering the Indonesian market requires compliance with specific legal frameworks and licensing systems — namely through BKPM (Investment Coordinating Board) and OSS (Online Single Submission).
Understanding these systems is crucial for a smooth and lawful business setup.
1. Who is BKPM and What is Its Role?
BKPM, now known as the Ministry of Investment, is the Indonesian government body responsible for coordinating investment policy and facilitating both domestic and foreign investment. It acts as a one-stop service for investors needing permits, licenses, and investment approvals.
Foreign companies must engage with BKPM when:
- Establishing a foreign-owned company (PT PMA)
- Applying for business licenses in restricted sectors
- Seeking fiscal and non-fiscal incentives
2. What is OSS and How Does It Work?
The OSS (Online Single Submission) system is Indonesia’s national licensing platform launched to simplify business licensing. OSS allows investors to:
- Apply for a Business Identification Number (NIB)
- Obtain licenses based on risk-based approach (low, medium, high)
- Integrate permits from central and regional authorities
The OSS system is mandatory and fully online, increasing transparency and reducing bureaucratic delays.
3. What Types of Businesses Can Foreigners Own?
Foreign investors can establish:
- PT PMA (Foreign Direct Investment Company)
- Joint Ventures (with local partners)
- Representative Offices (non-commercial activities)
However, some sectors are partially or fully closed to foreign ownership, as defined in the Positive Investment List (Presidential Regulation No. 10 of 2021). It’s essential to review this list or consult legal experts before proceeding.
4. Key Legal Requirements to Prepare
- Deed of Establishment (notarized and legalized)
- Investment Plan (minimum capital of IDR 10 billion for PT PMA)
- Taxpayer ID (NPWP) and Company Domicile Letter
- Environmental permits (if required by sector)
- Labor and BPJS registration
Conclusion:
Indonesia welcomes foreign investors — but entering its market requires a clear legal strategy, proper licensing, and compliance with dynamic policies. If you’re planning to invest in Indonesia, Mylaw.id can help your needs — from company establishment to legal due diligence and government licensing.