Restricted sectors for foreigners in Indonesia are easy to underestimate when your focus is growth and speed. Yet one wrong KBLI choice can quietly place your PT PMA in a business field it is legally barred from entering.
Indonesia moved from a negative list to a positive investment list, but that does not mean every sector is open. Some remain fully closed, while others require local partners, equity caps, or are reserved to MSMEs. The detail sits deep in attachments, not slogans.
To see the bigger picture, foreign investors should start with the official Indonesia Investment Guidebook from the Ministry of Investment, available through the Indonesia Investment Guidebook. It explains how priority sectors, restricted fields, and closed sectors fit together.
Then, think operationally. Your PT PMA will be licensed and monitored through the risk-based licensing platform. Understanding how your chosen business field is risk-rated is just as important as shareholding percentages, so the official OSS portal matters. You can review the Online Single Submission (OSS) system for how risk and licensing interact.
Behind those systems sits the investment law that applies to all investors, domestic and foreign. It gives the legal backbone for what is open, restricted, or reserved to the state. For a more legal-text view, many advisors start from the official English version of Law No. 25 of 2007 on Investment.
This article turns those dense rules into a practical, 2026-ready guide. You will see which restricted sectors for foreigners in Indonesia still exist, how they affect PT PMA, and how to structure projects so your investment stays on the safe side of the line.
Table of Contents
- How New Rules Redefine Restricted Sectors for Foreigners
- Sectors Fully Closed in Indonesia That PT PMA Cannot Enter
- Restricted Sectors for Foreigners in Indonesia with Equity Caps
- Restricted Sectors for Foreigners Reserved to MSME Partners
- Real Story — When Restricted Sectors Blocked a Bali PT PMA
- Land, Property, and Licensing Limits for Foreigners via PT PMA
- Compliance Checks When PT PMA Operates Near Restricted Sectors
- Structuring PT PMA Deals Safely Around Restricted Sectors
- FAQ’s About Restricted Sectors for Foreigners in Indonesia ❓
How New Rules Redefine Restricted Sectors for Foreigners
Restricted sectors for foreigners in Indonesia are now framed by a “positive list” approach. The default is that a business field is open unless it is declared closed, capped, partnership-only, or reserved to MSMEs and cooperatives.
For PT PMA, this means you must know not only whether the KBLI is open, but how it is open. Is the sector fully open, under an equity cap, partnership-based, or reserved to the state? Each path leads to very different structuring options and risks.
The headline news that “only a few sectors are fully closed” can be misleading. In practice, a long list of sectors is still restricted for foreigners because they require MSME partners, impose caps, or are off-limits to private investors entirely.
Sectors Fully Closed in Indonesia That PT PMA Cannot Enter
Restricted sectors for foreigners in Indonesia include a small group of business fields that are fully closed to private investment. These are typically sensitive for national security, health, or environmental reasons and can only be carried out by the state.
Common examples from the current rules include very high-risk or illegal activities, such as:
- Cultivation of class I narcotics and certain controlled plants
- All forms of gambling and casino-type activities
- Fishing or trading in endangered species and protected fauna
- Utilisation of natural coral for building, jewelry, or souvenirs
- Chemical weapons production and some ozone-depleting industries
If your PT PMA touches any of these areas, even indirectly, red flags are immediate. You cannot “structure around” a fully closed sector; at best you might participate in downstream, compliant activities under strict state control and with specialist legal advice.
Restricted Sectors for Foreigners in Indonesia with Equity Caps
Restricted sectors for foreigners in Indonesia also appear where foreign shareholding is capped. In these sectors, PT PMA can enter, but only with a maximum foreign percentage and usually with specific capital or partnership requirements.
Typical examples include strategic agriculture, plantations, certain logistics or transport services, and some media or telecom-related fields. You might see caps such as 49%, 67%, or 95% foreign ownership, with the balance held by Indonesian shareholders.
For PT PMA directors, the risk is not just breaching the cap. Misclassifying your KBLI, using nominee arrangements, or ignoring look-through ownership (via holding companies) can cause regulators to treat your structure as non-compliant and force restructuring or divestment.
Restricted Sectors for Foreigners Reserved to MSME Partners
Restricted sectors for foreigners in Indonesia are also found in business fields reserved for micro, small, and medium enterprises and cooperatives. Here, foreign investors cannot hold the main business license at all; the field is reserved to Indonesian MSMEs.
Examples often include traditional industries and local cultural products, such as batik manufacturing, small-scale wooden crafts, or certain local food and retail activities. These are protected to preserve local livelihoods and cultural heritage, not to block all foreign involvement.
Practically, your PT PMA can still engage with these sectors through supply contracts, franchising, or service agreements with MSME partners. But trying to “own” the MSME’s field through a PT PMA license is likely to conflict directly with the positive list and MSME reservation rules.
Real Story — When Restricted Sectors Blocked a Bali PT PMA
Restricted sectors for foreigners in Indonesia became painfully real for Lukas, a European investor who wanted a Bali PT PMA to make coral-based décor and run a small gaming lounge. On paper, the plan looked creative and profitable.
During licensing, his advisor discovered that harvesting natural coral was completely closed, while gambling-like activities were also prohibited. Even marketing that looked close to gambling risked problems for the PT PMA’s brand and licensing profile.
Lukas restructured. The PT PMA shifted to sustainably sourced, non-coral materials and created a legal entertainment concept that avoided gambling elements. Profit projections changed, but he kept his Bali strategy alive without risking a shutdown or criminal exposure.
Land, Property, and Licensing Limits for Foreigners via PT PMA
Restricted sectors for foreigners in Indonesia are not only about KBLI codes. Land and property rules mean your PT PMA cannot simply buy “any” property or operate “any” business model from residential land owned under a local title.
Foreigners cannot directly hold freehold (Hak Milik) land; instead, PT PMA typically uses HGB or Hak Pakai. Certain small-scale accommodation or retail activities are intended for locals and MSMEs, not foreign-controlled companies operating from residential neighborhoods.
If your PT PMA tries to combine a restricted sector with inappropriate zoning or land rights, the risk multiplies. Problems can come not only from investment authorities, but also from land agencies, villages, and neighbors who question your legal basis to operate.
Compliance Checks When PT PMA Operates Near Restricted Sectors
Restricted sectors for foreigners in Indonesia are actively monitored through OSS-RBA and sectoral regulators. Your risk profile depends on your KBLI choice, licensing history, and whether your real activities match what you declared.
Regulators can examine whether a PT PMA in a seemingly open field is effectively operating in a restricted one, for example by engaging in de-facto gambling, unlicensed financial services, or activities reserved to MSMEs. They can require explanations, corrective action, or even reclassification.
Directors should build an internal checklist for each project: KBLI mapping, shareholding checks, MSME reservation review, land rights, and real-world operations. This turns a static “list of restricted sectors” into a dynamic risk-control routine before and after licensing.
Structuring PT PMA Deals Safely Around Restricted Sectors
Restricted sectors for foreigners in Indonesia do not always mean you must abandon a business idea. Often, the solution is to separate activities: keep the PT PMA in open, clearly permitted fields and use contracts with local partners for restricted elements.
Practical tools include service agreements, franchising, IP licensing, and supply contracts that keep the PT PMA out of MSME-reserved or capped sectors, while still allowing economic cooperation. Each tool must respect foreign ownership caps, anti-nominee rules, and competition law.
Early structuring is critical. Once capital is injected, leases are signed, and staff hired, changing KBLI or ownership structures becomes expensive. A pre-investment “restricted sectors” review should be standard for any PT PMA investment committee.
FAQ’s About Restricted Sectors for Foreigners in Indonesia ❓
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How many sectors are completely closed to foreign and domestic investors?
Current rules list only a small group of fields that are fully closed, such as narcotics cultivation, gambling, certain environmental exploitation, and specific weapons-related industries. The exact list can change, so it must be checked before investing.
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Can my PT PMA join a restricted sector through an Indonesian nominee?
Using nominees to bypass foreign ownership caps or MSME reservations is high risk. Authorities increasingly look through structures, and sanctions can include forced divestment, license revocation, or even criminal exposure in extreme cases.
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If a sector is reserved for MSMEs, can I still supply or franchise to them?
Usually yes. MSME-reservation often limits who can hold the main license, not who can supply goods, technology, or branding. Contracts must be carefully drafted so the PT PMA is not effectively running the MSME’s licensed business.
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Are alcoholic beverages always a restricted sector for foreigners?
Alcohol production and distribution face tight controls and, in some regions, bans or special conditions. Whether a PT PMA can enter depends on national rules, local policies, and zoning. Detailed legal and licensing checks are essential before planning such projects. (KPMG Assets)
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How often should PT PMA review restricted sectors for foreigners in Indonesia?
At least before any new project, KBLI change, major expansion, or equity restructuring. Law and practice evolve, and a sector that looked open when you entered Indonesia can later be reclassified or more tightly enforced.
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Does a minority foreign shareholding always avoid “restricted sector” issues?
No. Regulators look at effective control, not only percentages. Even with minority shares, foreigners may be treated as controlling if they dominate management, funding, or key decisions in a sector that is meant to stay locally controlled.
