Since Indonesia’s 2018 investment reforms, the process for foreign investors has been significantly simplified. Foreign investors are no longer required to obtain special government approval to establish a business, except in highly regulated sectors. Investment is primarily made through the formation of a limited liability company known as PT PMA, which follows the same incorporation procedures as domestic entities, including approval from the Minister of Law and Human Rights. Foreign ownership is generally permitted unless restrictions apply under specific regulations. These restrictions are outlined in the Investment List, which identifies business sectors either closed or partially open to foreign investment. Investors may either establish a new PT PMA or acquire shares in existing companies to enter the market.

The Investment List, as set out in Presidential Regulation No. 10 of 2021 (amended by Presidential Regulation No. 49 of 2021), governs the extent of foreign ownership allowed in various sectors. If a business sector is not listed, it is typically open to 100% foreign investment. However, for sectors that are included, the regulations may impose maximum ownership thresholds or require partnerships with local small- or medium-sized enterprises (SMEs). Additionally, industry-specific regulations must be consulted to confirm foreign ownership eligibility. The List is structured based on the Indonesian Business Fields Classification (KBLI), issued by the Central Statistics Body (BPS). A PT PMA may operate under multiple KBLI codes, unless prohibited by applicable regulations. Overall, Indonesia maintains a generally open investment environment with sector-specific limitations.
Excerpted from Doing Business in Indonesia, published by Thomson Reuters Practical Law.

Source:
https://www.ssek.com/blog/how-foreign-investors-can-establish-a-business-in-indonesia-a-legal-guide/