In this page: FDI in Figures | What to consider if you invest in Indonesia | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
According to UNCTAD's World Investment Report 2023, FDI flows to Indonesia totalled USD 21.9 billion in 2022, up by 4% compared to the previous year, making the country the seventeenth-largest recipient worldwide. In the same year, the total stock of FDI was estimated at USD 262.9 billion, around 19.9% of Indonesia’s GDP. According to data from the Indonesian Investment Coordinating Board, in 2023, Indonesia attracted a total of USD 47.34 billion in FDI (excluding investment in financial and oil and gas sectors), marking a notable 13.7% increase compared to the previous year. The base metal industry emerged as the top recipient, securing USD 11.8 billion, while mining ranked fourth with USD 4.7 billion. Additionally, sectors such as warehousing, telecommunications, pharmaceuticals, and pulp and paper also experienced significant FDI inflows. Singapore, China, and Hong Kong stood out as the primary sources of FDI for Indonesia during the same period.
Indonesia's youth demographics, strong domestic demand, stable politics, rich natural resources, and sound macroeconomic policies make it an attractive destination for foreign direct investment. FDI flows to Indonesia have been growing and their base expanded due to resilient economic growth, low public debt and prudent fiscal management. FDI growth is attributed to a series of economic policy packages that have been implemented by the Indonesian government over the last years, mainly focusing on deregulation, law enforcement and business certainty, interest rate tax cuts for exporters, energy tariffs cuts for labour-intensive industries, tax incentives for investment in special economic zones and lowered tax rates on property acquired by local real estate investment trusts. Moreover, Indonesia lowered the minimum equity requirement for foreign investors and abolished the approval requirement for several business transactions involving foreign investors. On the other hand, foreign investors encounter a challenging investment climate in Indonesia due to various factors including restrictive regulations, legal and regulatory uncertainty, economic nationalism, trade protectionism, and vested interests. These obstacles pose significant barriers to investment, impacting the ease of doing business and potentially deterring foreign capital inflows. Indonesia ranks 61st among the 132 economies on the Global Innovation Index 2023 and 60th out of 177 countries on the 2023 Index of Economic Freedom.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Number of Greenfield Investments*
|Value of Greenfield Investments (million USD)
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
|Main Investing Countries
|2020, in %
|Main Invested Sectors
|2020, in %
|Transportation, Storage, and Communication
|Wholesale and retail trade
|Mining and quarrying
|Electricity, gas and water supply
Source: Bank Indonesia, Latest data available.
Advantages for FDI in Indonesia:
Disadvantages for FDI in Indonesia:
|Country Comparison For the Protection of Investors
|East Asia & Pacific
|Index of Transaction Transparency*
|Index of Manager’s Responsibility**
|Index of Shareholders’ Power***
Source: The World Bank - Doing Business, Latest data available.
Before conducting business in the abovementioned sectors , approval must be obtained from the competent organization BKPM.
Indonesia benefits from the assistance plan of the European Union and of USAID. For the USAID program, the national organization in charge of carrying it out is the Indonesian Plan of assistance to commerce (ITAP), whose task is to reinforce the capacities of public administrations in analysis, negotiation and setting up of bilateral and multilateral trade agreements. The ITAP works directly with the Ministry of Commerce to ensure training which will help Indonesian companies to find more openings on the international markets. The Program of support for commerce (TSP), which is in charge of carrying out the assistance program of the EU, devotes itself mainly to training and broadcasting information, as well as market research. The beneficiaries of this program are those who engage in international commercial activities in Indonesia, in particular exporting SMEs, who can thus increase trade with their counterparts in other countries and in the EU. European companies which buy in Indonesia will find more reliable products, more in conformity with European standards, while European companies which export to Indonesia, or which operate in the country, should also benefit from simplified import procedures.
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Latest Update: February 2024