An Australian can hold an ownership interest in an Indonesian business, but not on the same terms as in Australia, and not in every sector. The reliable answer comes from checking Indonesia's current foreign investment rules against an official source, not from a summary. Under the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which entered into force on 5 July 2020, the Australian Government publishes Indonesia's schedule of commitments and reservations. DFAT's Annex I: Schedule of Indonesia sets out the existing measures that are not subject to some or all of the national treatment, most-favoured-nation, market access and local presence obligations. For anyone asking "can an Australian own a business in Indonesia?", that Annex is the map — but you still need to confirm the current domestic position, because the Annex points to Indonesian laws and regulations that can change.
Read the official treaty schedule first
Start with the agreement text, not a secondary explainer. The Australian Consulate-General Surabaya trade page states that IA-CEPA entered into force on 5 July 2020, builds on the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), and that Australia's arrangements with Indonesia under AANZFTA remain unchanged. Under IA-CEPA, Australia eliminated all remaining tariffs on Indonesian imports, and over 99% of Australian goods exports by value to Indonesia enter duty free or under significantly improved preferential arrangements. The agreement also includes a reciprocal Skills Exchange allowing professionals from both countries to gain six months' experience in the other's market.
DFAT's Annex I: Schedule of Indonesia is structured in two main parts:
- Section A records Indonesia's non-conforming measures for trade in services under Articles 9.3 (National Treatment), 9.4 (Most-Favoured-Nation Treatment), 9.5 (Market Access) and 9.6 (Local Presence).
- Section B records non-conforming measures for investment under Articles 14.4 (National Treatment), 14.5 (Most-Favoured-Nation Treatment), 14.6 (Prohibition of Performance Requirements) and 14.10 (Senior Management and Boards of Directors).
Critically, Section B's investment disciplines apply only to these sectors: manufacturing; agriculture; fisheries; forestry; mining and quarrying; energy infrastructure, specifically power plants of more than 10 megawatts and geothermal power plants of 10 megawatts or less; and transport infrastructure, specifically highway, bridge and tunnel concessions. If your planned activity sits outside that list, the Annex's investment commitments do not engage in the same way, and you must look at Section A and at current Indonesian law.
Check who you are: Australian citizen or permanent resident
The Annex draws a distinction that matters before you look at any sector. According to DFAT, "the recognition of Australian permanent residents shall be limited to Australian permanent residents who have the nationality of a country that already has an investment agreement or a free trade agreement in force with Indonesia (with an investment chapter)." The recognition "shall not apply to an Australian permanent resident who is also an Indonesian national," and Indonesia is not obliged to give such a permanent resident treatment more favourable than Australia would give that resident.
In practical terms: IA-CEPA is the agreement between Australia and Indonesia, so Australian citizens are the primary reference point for the Australian schedule. If you are an Australian permanent resident rather than a citizen, the Agreement's recognition depends on your nationality of another country that has an investment agreement or FTA with an investment chapter in force with Indonesia, and it does not apply if you are also an Indonesian national. This is not migration advice — verify your own status against the Annex and obtain official confirmation before relying on it.
The baseline foreign investment conditions apply across sectors
For foreign investment generally, the Annex records several conditions that apply across all sectors, with the source measures named so you can verify them:
- Form of entity. Foreign investment must be in the form of a limited liability company based on Indonesian law. A foreign investor organised under the laws of another country must establish an Indonesian limited liability company (a Perseroan Terbatas, or PT) under Law No. 25 of 2007 Concerning Investment and Law No. 40 of 2007 Concerning Limited Liability Company.
- Investment value. Foreign investment must have a total investment value of more than IDR 10 billion, excluding land and buildings. For large businesses in the industrial sector as defined in the relevant regulation, the total investment value must be more than IDR 15 billion, including land and buildings. The listed sources include Law No. 25 of 2007, Law No. 20 of 2008 on Micro, Small and Medium Enterprises, Law No. 23 of 2014 on Local Government, Ministry of Industry Regulation No. 64 of 2016, and Investment Coordinating Board Regulation No. 13 of 2017 on capital investment licensing and facilities.
- Distribution. Foreign investment must appoint local distribution agents to sell its products to end-users in Indonesia, under Ministry of Trade Regulation No. 22 of 2016 and Regulation No. 11 of 2006.
- Personnel. Foreign investment companies established under Indonesian corporate law must have positions related to personnel affairs occupied by Indonesian nationals, decided on a case-by-case basis, under Law No. 13 of 2003, Presidential Decree No. 72 of 2014 and Ministry of Manpower and Transmigration Decree No. 40 of 2012 (Presidential Regulation No. 20 of 2018 is noted as not yet in force in the Annex).
How land and premises can be held
Freehold ownership of land (hak milik) is restricted to Indonesian nationals. Foreign nationals and foreign companies incorporated and domiciled in Indonesia may still acquire land and property on the following rights, all subject to approval by the relevant authority:
| Right | Who may hold it | Maximum initial period | Extension |
|---|---|---|---|
| Hak milik (ownership) | Indonesian nationals only | n/a | n/a |
| Hak guna usaha (leasehold) | Foreign company | 35 years | 25 years |
| Hak guna bangunan (building rights) | Foreign company | 30 years | 20 years |
| Hak pakai (right of use) | Foreign national | 30 years | 20 years |
| Hak pakai (right of use) | Foreign company | 25 years | 20 years |
| Hak sewa (right of lease) | Foreign national or foreign company | As agreed by the parties | As agreed by the parties |
Source: DFAT, Annex I: Schedule of Indonesia, Section B, entry on acquisition or lease of land, citing Article 33 of the 1945 Constitution, Law No. 5 of 1960, Government Regulation No. 40 of 1996 and Government Regulation No. 103 of 2015.
Where ownership is prohibited, reserved or capped
The Annex lists specific sectors where foreign investment is not permitted or is limited:
- Capture fisheries are prohibited for foreign investors (Law No. 31 of 2004 as amended by Law No. 45 of 2009, among others).
- Sea sand extraction is prohibited for foreign investors in mining and quarrying (Law No. 4 of 2009 and Presidential Regulation No. 44 of 2016).
- Manufacturing has lines of business reserved for micro, small and medium enterprises, with capacity limits set under Regulation of the Minister of Agriculture No. 98 of 2013 as amended by No. 29 of 2016. The reserved list is long and includes activities such as certain dried and processed plantation and food products, boiling of fish, manufacture of tempeh and tofu, crackers (krupuk), palm sugar, and hand-painted batik. Check the entry directly rather than relying on a short summary.
- Existing companies or projects that existed before the Agreement's entry into force keep the conditions in their approvals; any change to those conditions is subject to approval.
For services, Section A shows how caps and operational conditions can apply even where foreign participation is allowed:
- Legal services: commercial presence of foreign law firms is prohibited. Cross-border supply and consumption abroad of advisory services on foreign and international law are permitted, but legal representation in an Indonesian court and notarial activities are not.
- Postal and courier services: foreign service suppliers may only establish a commercial presence through a joint venture with one Indonesian postal service provider, with foreign equity not exceeding 49%. The Indonesian partner must be wholly Indonesian-owned, the joint venture may only operate in a provincial capital with an international airport or seaport, and it is prohibited from providing postal or courier services between cities in Indonesia.
- International maritime passenger and freight transport (excluding cabotage): foreign service suppliers may only establish a commercial presence through a joint venture with foreign equity not exceeding 49%. The joint venture must operate at least one Indonesian-flagged vessel of a minimum 5,000 gross tonnage, crewed by Indonesian nationals, and foreign shipping enterprises must appoint an Indonesian shipping enterprise or agent as General Agent and may only serve seaports or special ports open for foreign trade.
Turn the listed source measure into a verification task
Each entry in the Annex names a Source of Measure — the Indonesian law, presidential regulation, ministerial regulation or Investment Coordinating Board regulation behind the reservation. Examples include Presidential Regulation No. 44 of 2016 on the list of business fields closed and conditionally open to investment, Investment Coordinating Board Regulation No. 13 of 2017, Ministry of Agriculture Regulation No. 98 of 2013 (as amended by No. 29 of 2016), and Law No. 25 of 2007.
The verification method is straightforward: take the exact name and number of the source measure, then confirm through official Indonesian government channels whether it is still in force, and whether it has been amended, replaced or revoked. Where the entry names a regulator — for example, the Investment Coordinating Board for capital investment licensing guidelines — check that body's current licensing requirements as well. The Annex records Indonesia's scheduled measures at the time of the Agreement; it is not a live statement of every current domestic rule.
Cross-check the Australian side through official sources. Austrade, the Australian Trade and Investment Commission, is the Australian Government agency that helps Australian companies win overseas business by reducing the time, cost and risk of selecting, entering and developing international markets. The Consulate-General Surabaya page also refers to the DFAT FTA Portal for looking up FTA tariffs and services market access, and lists business associations such as the Indonesia Australia Business Council (IABC), the Australia Indonesia Business Council (AIBC) and the Australian Mining Chamber in Indonesia (Ausmincham) for sector context. These bodies are associations, not regulators.
Operating responsibly
The Australian Government encourages Australian enterprises operating overseas to observe the OECD Guidelines for Multinational Enterprises. These are voluntary principles and standards covering human rights, employment and industrial relations, the environment, combating bribery and extortion, consumer interests, science and technology, competition and taxation. The Australian National Contact Point (AusNCP) promotes the Guidelines and can help facilitate access to conciliation services.
Checklist: what to verify before you commit
- Are you an Australian citizen or permanent resident, and if a permanent resident, does the Annex I nationality condition apply to you?
- Is your sector inside Section B's listed investment sectors (manufacturing, agriculture, fisheries, forestry, mining and quarrying, the specified energy infrastructure, or transport infrastructure concessions)?
- Is the activity prohibited — for example capture fisheries or sea sand extraction — or reserved for micro, small and medium enterprises?
- Does the entry impose a foreign equity cap, such as the 49% cap for postal/courier and international maritime transport joint ventures, or a local partner, vessel or agent requirement?
- What entity form is required, and what minimum total investment value applies (more than IDR 10 billion excluding land and buildings; more than IDR 15 billion including land and buildings for large industrial businesses)?
- How will the business hold land or premises, given hak milik is restricted to Indonesian nationals and the other rights have set maximum periods?
- What is the current status of each listed source measure, and has it been amended or replaced?
- Do local personnel and distribution requirements change your operating model?
- If a company or project already exists, do pre-existing licence conditions continue, and are changes subject to approval?
General information boundary
This article is general information published by Australian Asia, an independent information website. It is not legal, tax, migration, investment or financial advice, and it is not a government determination or approval. Australian Asia is not a lender, broker, government body, regulator or comparison service. Foreign ownership and sector rules in Indonesia can change, and the IA-CEPA Annex records Indonesia's scheduled measures rather than guaranteeing any particular structure, licence or outcome. Before incorporating, signing a lease, transferring funds or lodging an application, confirm the current rules with official Indonesian authorities and the relevant Australian government sources, and obtain advice from a qualified professional licensed or registered in the relevant jurisdiction.
Next steps
- Open DFAT's Annex I: Schedule of Indonesia and search for your sector. Note the "Source of Measure" named in the relevant entry.
- Read the Australian Consulate-General Surabaya "Doing business with Australia" page for IA-CEPA context, Austrade's role and the FTA Portal reference.
- Confirm each listed Indonesian measure's current status through official Indonesian government sources, including the issuing ministry or the Investment Coordinating Board regulation named in the entry.
- Record the date and URL of every source you checked, and re-check before you sign anything.
- If your structure involves land, labour, distribution or a capped sector, get jurisdiction-appropriate professional advice before proceeding.