Top 10 Restricted Sectors for Foreigners in 2025: What PT PMA in Indonesia Can’t Do Under the New Rules

Introduction

Indonesia is one of Southeast Asia’s most attractive markets for foreign direct investment, and establishing a PT PMA in Indonesia—a Foreign Investment Limited Liability Company—is the most common legal structure for foreign companies looking to tap into this growing economy. However, while the PT PMA in Indonesia offers access to local operations, tax incentives, and market credibility, it does not mean every business activity is open for foreign ownership.

Foreign investors must navigate a complex landscape of sectoral restrictions. Some business sectors are completely closed, others are open with specific conditions, and a few are only partially accessible depending on capital thresholds, local partnerships, or licensing approvals. The Indonesian government enforces these rules strictly—non-compliance can lead to license revocation, sanctions, or even permanent blacklisting.

The enactment of the Omnibus Law on Job Creation in 2020 and its most recent 2025 amendments marked a shift in Indonesia’s investment climate. While the law simplifies many procedures and opens new sectors, it also redefines which industries remain restricted or conditional for foreign ownership.

Understanding these evolving legal boundaries is crucial before setting up a PT PMA in Indonesia. In this article, we’ll explore the top restricted sectors, the real meaning of “conditional access”, and how you can avoid critical legal mistakes when entering the Indonesian market as a foreign investor.

Understanding the Legal Framework: Omnibus Law & Investment List

A PT PMA in Indonesia (foreign investment company) operates within a carefully structured legal environment. Its establishment and operation are governed primarily by Law No. 11 of 2020, widely known as the Omnibus Law, which aims to simplify and streamline business processes. In addition to this overarching regulation, the BKPM (Indonesia Investment Coordinating Board) and the Online Single Submission (OSS) system play central roles in facilitating PT PMA registrations and approvals.

One of the most significant changes introduced by the Omnibus Law is the replacement of the Negative Investment List (DNI) with the Positive Investment List (PIL). This shift reflects the government’s intention to be more open to foreign investment while still safeguarding key national interests.

Under the Positive Investment List, business sectors fall into three major classifications:

1. Fully Open Sectors: These sectors allow 100% foreign ownership with minimal restrictions. Common examples include tech, manufacturing, and certain hospitality businesses.
2. Conditional Sectors: These sectors are open to foreign investment but with specific requirements—such as partnerships with local entities, licensing, capital thresholds, or ownership caps. Many construction and education-related businesses fall under this category.
3. Closed Sectors: These remain off-limits to foreign investors and are typically related to national defense, fisheries involving endangered species, and specific cultural heritage sectors.

The BKPM plays a crucial role in assessing applications for PT PMA in Indonesia, especially for businesses in conditional sectors. They determine compliance with the Omnibus Law and ensure alignment with the national development goals.

Understanding where your business idea falls within these classifications is crucial. Navigating this legal framework effectively determines whether your PT PMA in Indonesia can operate legally and sustainably—or face unnecessary delays and penalties.

Restricted vs Conditional Sectors

When planning to establish a PT PMA in Indonesia, foreign investors must clearly understand the distinction between restricted (closed) and conditional business sectors as defined in the Positive Investment List (PIL).

Restricted or Closed Sectors refer to business fields that are entirely off-limits to foreign investors. These sectors are considered strategic or sensitive to national interests. Examples include arms manufacturing, certain marine capture fisheries, and cannabis cultivation. For these sectors, a PT PMA in Indonesia cannot operate or apply for a license, regardless of investment size or partnership with local entities.

Conditional Sectors, on the other hand, are partially open to foreign ownership but subject to specific requirements. These may include:

• Maximum foreign ownership limits (e.g., 49% or 67%)
• Mandatory joint ventures with Indonesian partners
• Compliance with location-specific criteria, such as being located in Special Economic Zones (SEZs)
• Adherence to capital requirements or special licenses

Foreign investors looking to establish a PT PMA in Indonesia must carefully review these conditions to ensure compliance from the start.

Violating the sectoral restrictions—whether by entering a closed sector or ignoring conditions in a conditional one—can lead to serious consequences, including:

• Loss of PT PMA license
• Revocation of business permits
• Sanctions or financial penalties
• Blacklisting on Indonesia’s national investment watchlist

Understanding these classifications helps foreign investors protect their interests and ensure their PT PMA in Indonesia operates legally and sustainably. It's not just about choosing a business field—it's about choosing one that aligns with the law.

Top 10 Business Sectors Still Restricted or Closed to Foreigners in Indonesia

Before investing through a PT PMA in Indonesia, it's essential to understand which sectors remain off-limits or carry strict conditions for foreign ownership. While the Omnibus Law and Presidential Regulation No. 49/2021 have opened many doors, several industries remain restricted to protect national interests, cultural heritage, public welfare, or strategic sectors.

Legal Disclaimer: The list below references Presidential Regulation No. 49/2021 (commonly referred to as the Positive Investment List), and investors are advised to consult legal professionals before engaging in restricted sectors.

1. Cultivation of Controlled Narcotic Plants

• Legal Basis: Law No. 35 of 2009 on Narcotics
• Status: Fully Closed
• Why It’s Restricted: National security, health, and law enforcement concerns.
• Example: A foreign pharmaceutical company interested in cultivating cannabis for research cannot set up a PT PMA in Indonesia for this purpose.
• Alternatives: Collaborate with a state-sanctioned research institution for downstream medical research (non-cultivation).

2. Fishing of Endangered Species

• Legal Basis: Ministry of Maritime Affairs Regulation No. 59/2014
• Status: Fully Closed
• Why It’s Restricted: To protect biodiversity and marine ecosystems.
• Example: A seafood export company cannot target protected species like manta rays or Napoleon wrasse via a PT PMA in Indonesia.
• Alternatives: Operate in permitted fishing zones with licensed species.

3. Historical/Heritage Museum Management

• Legal Basis: Presidential Regulation No. 49/2021
• Status: Conditional
• Why It’s Restricted: Preservation of national identity and culture.
• Example: A foreign foundation wants to open a museum in Yogyakarta but must partner with a local entity and get special cultural approvals.
• Alternatives: Engage through sponsorships, donations, or co-managed educational projects.

4. Alcoholic Beverage Production

• Legal Basis: Presidential Regulation No. 49/2021
• Status: Conditional – capped at 49% foreign ownership
• Why It’s Restricted: Public health and social policy considerations.
• Example: A European winery cannot establish a fully foreign-owned PT PMA in Indonesia to produce spirits or beer locally.
• Alternatives: Form a joint venture with a licensed Indonesian producer.

5. Gambling and Casino Services

• Legal Basis: Criminal Code (KUHP) and Ministry of Tourism Regulations
• Status: Fully Closed
• Why It’s Restricted: Religious, ethical, and social grounds.
• Example: Any attempt to open online or physical casinos through a PT PMA in Indonesia will result in immediate rejection and legal repercussions.
• Alternatives: None – this sector is entirely prohibited.

6. Broadcasting Services (TV/Radio)

• Legal Basis: Law No. 32 of 2002 on Broadcasting
• Status: Conditional – max 20% foreign ownership
• Why It’s Restricted: Media influence and public opinion control.
• Example: A foreign media group must limit its stake to under 20% in any PT PMA in Indonesia offering broadcast services.
• Alternatives: Focus on digital streaming, podcasting, or OTT platforms with fewer ownership restrictions.

7. Domestic Sea Transportation

• Legal Basis: Law No. 17 of 2008 on Shipping
• Status: Fully Closed – must be 100% Indonesian-owned
• Why It’s Restricted: Sovereignty over national waters and domestic logistics control.
• Example: A global shipping company must partner with a locally owned entity instead of establishing a direct PT PMA in Indonesia for domestic transport.
• Alternatives: Operate international shipping routes or lease vessels to Indonesian firms.

8. Air Traffic Navigation Services

• Legal Basis: Law No. 1 of 2009 on Aviation
• Status: Fully Closed
• Why It’s Restricted: National safety and strategic airspace control.
• Example: A foreign aerospace company cannot operate air traffic control towers or navigation systems through a PT PMA in Indonesia.
• Alternatives: Collaborate with the government via procurement or technology partnerships.

9. Weapons and Explosives Manufacturing

• Legal Basis: Ministry of Defense Regulation No. 20/2012
• Status: Fully Closed
• Why It’s Restricted: National defense and internal security.
• Example: Foreign arms manufacturers cannot create a PT PMA in Indonesia to produce weapons or ammunition.
• Alternatives: Joint production under military procurement deals (rare and highly regulated).

10. Organized Taxi and Ride-hailing Operations

• Legal Basis: Minister of Transportation Regulation No. 118/2018
• Status: Conditional – foreign ownership capped
• Why It’s Restricted: To protect local driver cooperatives and SMEs.
• Example: A foreign tech company cannot fully own a PT PMA in Indonesia operating app-based taxis or ride-hailing services.
• Alternatives: License technology or act as a minority shareholder in a local operation.

Despite the liberalization under the Omnibus Law, certain industries remain out of reach for foreign investors. Understanding these limitations ensures that your PT PMA in Indonesia stays compliant and avoids legal consequences. For businesses targeting these sectors, strategic partnerships and legal consultations are essential for navigating the regulatory landscape.

What Foreign Investors Can Still Do with a PT PMA in Indonesia

Despite some limitations, foreign investors still have ample opportunities to grow successful businesses in Indonesia through a PT PMA. The country continues to open up dynamic sectors that align with national development goals, innovation, and sustainability.

Open and Growing Sectors for PT PMA

1. Renewable Energy
   Indonesia is pushing aggressively toward sustainable development. Sectors like solar, wind, and biomass energy are open to foreign investors, especially under partnerships that support local infrastructure or environmental goals.
2. E-Commerce & Digital Platforms
   The digital economy is booming. PT PMAs can operate fully in online marketplaces, SaaS, fintech, and digital marketing. These are sectors where foreign investors are welcomed, especially those bringing technological know-how and capital.
3. Tourism and Hospitality
   Given the strategic role of tourism in regions like Bali, Lombok, and Labuan Bajo, foreign investors can still tap into resorts, travel services, and boutique accommodations through fully owned PT PMAs or strategic partnerships.
4. Education (Non-Formal)
   Non-formal education like training centers, language schools, and professional development institutes are generally open, allowing investors to contribute to human capital development.
5. Industrial Estate Development
   Foreign ownership is permitted in developing and managing industrial zones, logistics hubs, and warehousing, aligning with government priorities in infrastructure and regional development.

Ensuring Legal Compliance

To maximize investment potential and avoid legal issues, it’s essential to verify whether your business activities fall under the open or conditional category. This can be done through the Online Single Submission (OSS) system and by checking updates from BKPM (Indonesia Investment Coordinating Board).

Foreign investors are strongly encouraged to work with experienced legal and business consultants to interpret the Positive Investment List correctly and ensure full compliance with sectoral limitations.

Checklist: Choosing the Right Business Sector for Your PT PMA in Indonesia

Before launching your PT PMA in Indonesia, it's essential to ensure that your chosen business activity is legally permissible and strategically sound. Here’s a quick due diligence checklist every foreign investor should follow:

✅ Review the Positive Investment List (PIL)
Start by checking Presidential Regulation No. 49/2021 to understand if your intended sector is open, conditional, or closed for foreign investment.

✅ Verify Through OSS
Use Indonesia’s Online Single Submission (OSS) system to check licensing requirements and business classifications for your PT PMA in Indonesia.

✅ Consult a Legal Advisor
Partnering with experienced legal or investment consultants helps you avoid costly mistakes and ensures your PT PMA complies with local restrictions and licensing conditions.

Recommended Tools:

• OSS Risk-Based Approach System: Classifies sectors by risk level and determines licensing paths.
  
  
• BKPM Consultation Services: The Investment Coordinating Board (BKPM) provides guidance for sector eligibility and compliance.

Choosing the right business sector for your PT PMA in Indonesia is not just about opportunity—it’s also about legal compliance and long-term sustainability.

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