While many countries are busy engaging in tariff wars and erecting trade barriers, Indonesia is taking a different path: opening its doors wide to foreign investors. Amid global tensions, the opportunity to start a business in Indonesia is growing—especially now, as Indonesia takes a more proactive approach. So, what opportunities are available?
The new government under President Prabowo Subianto has set an ambitious target: 8% economic growth over the next five years. It’s no easy task, especially following global disruptions from the U.S. trade war with several countries. Yet, just as competitors hesitate, Indonesia is stepping on the gas to attract as much investment as possible.
Investment is expected to steadily rise and reach IDR 13,032 trillion over the next five years. The government has also rolled out the red carpet for investors, offering incentives like tax holidays, tax allowances, and various ease-of-doing-business measures.
However, this effort comes amid challenges posed by the trade war, triggered by U.S. President Donald Trump’s reciprocal tariff policies. This situation has increased global uncertainty and forced investors to reevaluate their investment plans.
Why Is Indonesia Becoming a New Hotspot for Foreign Investors?
Data from Detik shows Southeast Asia attracted US$240 billion in investments in 2024. Unfortunately, Indonesia only secured about US$39 billion—far behind Vietnam, which raked in US$156 billion. This gap serves as a wake-up call for Indonesia to act quickly.
In an exclusive interview with Detikcom, Deputy Minister for Investment and Downstreaming/Head of BKPM, Todotua Pasaribu, explained that current global conditions are creating significant opportunities for Indonesia. Trade conflicts, geopolitical uncertainty, and a trend toward investment diversification are prompting global companies to look for new locations to manufacture and expand.
Indonesia has strong fundamentals: a large domestic market, abundant natural resources, and a demographic bonus with a young workforce. The government is also aware that it must make the investment climate more welcoming.
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That’s why it has introduced a range of incentives—from tax holidays and tax allowances to streamlined business licensing processes. Moreover, Juwai IQI Chief Economist Shan Saeed believes the newly established Indonesia Investment Management Agency, Danantara, will play a key role in driving Indonesia’s financial and investment markets over the next five to ten years.
According to him, the government’s decision to establish Danantara is a strategic move to attract foreign investment from multiple potential countries.
“Danantara, as a sovereign wealth fund, will drive Indonesia’s financial market over the next five to ten years. If you look at GCC member countries like Saudi Arabia, the UAE, and Qatar, they have US$4 trillion. So, they’re investing in countries like Vietnam, Indonesia, and Malaysia because this region continues to grow,” Shan said during the “Indonesia Economic Outlook 2025” media briefing in Jakarta on Monday, as quoted by Antara.
Danantara is expected to channel investments into productive sectors, especially as Indonesia benefits from a large demographic potential and relatively strong macroeconomic stability.
He believes Indonesia is now in a strategic position to attract global investment, thanks to a growing middle class, rapid technology adoption, and improvements in human capital—particularly through investments in women’s education.
Shan is optimistic that with effective management of Danantara, Indonesia can accelerate its economic transformation and become even more relevant on the global stage.
What Challenges Do Foreign Investors Face in Indonesia?
Despite the open opportunities, challenges remain.
Many foreign investors still encounter complications with:
- Establishing a business entity,
- Navigating technical and local permits,
- Complying with tax and labor regulations,
- And recruiting local talent for operations.
While Indonesia’s investment service infrastructure is improving, in practice, many companies still need a local partner who understands the legal and administrative landscape.
This Is Where Bizindo Comes In
For foreign companies looking to enter Indonesia without the hassle, Bizindo is ready to be your trusted solution.
With a full range of services including:
- Company Establishment (PMA setup),
- Visa and Immigration Services,
- Accounting, Tax, and Payroll Management,
- PEO & Employer of Record (EOR),
- And Recruitment Services for top local talent,
Bizindo handles everything—from legality and permits to tax processing and local workforce management—so your company can focus on growing the business without any obstacles. If your company is planning to expand into Indonesia, Bizindo is the key to entering the market quickly, securely, and in full compliance. Contact us now www.bizindo.com
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