Indonesia

Investment & 
Operational
Climate

Indonesia’s 276mm population, USD 1trn economy, growing middle class, abundant natural resources, and stable economy are attractive features to outside investors; however, investing in Indonesia remains challenging. President Joko Widodo (“President Jokowi”), now in his second five-year term, has prioritized pandemic recovery, infrastructure investment, and human capital development. The government’s marquee reform effort — the 2020 Omnibus Law on Job Creation (Omnibus Law) — was ratified in March 2023. When fully implemented, the Omnibus Law is touted to improve competitiveness by lowering corporate taxes, reforming labor laws, and reducing bureaucratic and regulatory barriers. The United States does not have a bilateral investment treaty (BIT) with Indonesia. In February 2021, Indonesia replaced its 2016 Negative Investment List, liberalizing nearly all sectors to foreign investment, except for seven “strategic” sectors reserved for central government oversight. In 2021, the government established the Risk-Based Online Single Submission System (OSS), to streamline the business license and import permit process. Indonesia established a sovereign wealth fund (Indonesian Investment Authority, i.e., INA) in 2021 that has a goal of attracting foreign investment for government infrastructure projects in sectors such as transportation, oil and gas, health, tourism, and digital technologies, with a large nexus to the Ministry of State-Owned Enterprises (BUMN).