Planning a joint venture with an Indonesian partner?
- We check whether your KBLI needs a local partner, and the ownership cap
- We set up the PT PMA and draft the shareholders’ agreement
- We help with partner due diligence before you commit
Types of joint venture in Indonesia
| Type | Structure | Best for |
|---|---|---|
| Equity JV (PT PMA) | A new limited liability company owned by foreign and Indonesian shareholders | Long-term businesses with shared ownership and control |
| Share acquisition | A foreign investor buys shares in an existing local PT, which then converts to a PT PMA | Entering through a company that already has licences or customers |
| Contractual JV / joint operation | No new company: the parties cooperate under a contract | Project-based work in construction, oil and gas, and similar sectors |
Starting a new PT PMA is usually simpler and cleaner than buying into an existing company, because you avoid inheriting past tax, licence or labour liabilities.
When you need a local partner
- Capped sectors: your KBLI limits foreign ownership, so Indonesian shareholders must hold the rest.
- Partnership requirements: some activities must involve cooperatives or micro, small and medium businesses.
- Strategic reasons: the partner brings licences, land, distribution, government relationships or industry experience.
Many sectors became fully open to foreign ownership after the Omnibus Law reforms. Check first: you may not need a partner at all. Our company setup guide explains how.
Ownership limits and capital
- Ownership: set per KBLI by the Positive Investment List (Presidential Regulation 10/2021, amended by 49/2021). Some activities also have location rules.
- Capital: a JV is a PT PMA, so the same rules apply. Under BKPM Regulation 5/2025, that means a total investment plan above IDR 10 billion per KBLI per location (excluding land and buildings) and at least IDR 2.5 billion issued and paid-up capital. Check the current rules before you plan.
- Contributions: partners can contribute cash or, with valuation, other assets. Agree how each contribution is valued in writing.
How to set up a JV company
- Feasibility check: confirm KBLI codes, ownership caps, location rules and capital.
- Partner due diligence: check the partner’s legal status, licences, tax compliance, litigation and reputation.
- Term sheet: agree shareholding, contributions, board seats, key decisions and exit before drafting.
- Shareholders’ agreement signed by all partners.
- Company setup: name reservation, notarial deed, Ministry of Law approval, tax number and NIB through OSS.
- Licences under risk-based licensing, plus bank account and capital paid in.
- KITAS for foreign shareholders and staff, and ongoing LKPM reporting.
The joint venture agreement
Indonesian company law does not automatically give minority shareholders protections such as veto rights, tag-along or drag-along. They must be written into the shareholders’ agreement and, where possible, mirrored in the articles of association. Cover at least:
- Capital contributions, shareholding and future funding
- Board of directors and commissioners: who appoints whom
- Reserved matters that need both partners’ approval
- Dividend policy
- Deadlock resolution
- Share transfers, right of first refusal, tag-along and drag-along
- Exit, buy-out and termination
- Non-compete and confidentiality
- Governing law and dispute resolution, for example arbitration
Tax points
- The JV company pays corporate income tax on its profits.
- Dividends to a foreign shareholder are subject to withholding tax, generally 20%, which may be reduced under a tax treaty.
- Transactions between the JV and either partner must follow transfer pricing rules.
See our tax services for ongoing compliance.
Risks and how to avoid them
- Nominee structures: prohibited by the Investment Law and unenforceable. Always use a real, registered shareholding.
- Weak agreements: without reserved matters and exit clauses, a majority partner can take decisions without you.
- Partner disputes: agree deadlock and exit mechanisms at the start, not when problems appear.
- Hidden liabilities: when buying into an existing company, do full legal and tax due diligence first.
Comparing structures? See types of companies in Indonesia.
Frequently asked questions
Is a joint venture in Indonesia a separate company type?
No. An equity joint venture is a PT PMA with both foreign and Indonesian shareholders. A contractual joint venture creates no new company: the parties cooperate under a contract for a specific project.
When do I need an Indonesian partner?
When your KBLI caps foreign ownership under the Positive Investment List, when the activity is reserved for partnership with cooperatives or small businesses, or when a partner brings licences, land, customers or local know-how you need.
What percentage can the foreign partner own?
It depends on the KBLI code. Many activities allow 100% foreign ownership, so a partner is optional. Others are capped. Check the current Positive Investment List for each code.
Can I use a nominee shareholder instead of a real partner?
No. Nominee arrangements are prohibited by the Investment Law and are not recognised by Indonesian courts. The registered shareholder legally owns the shares, and the foreign investor can lose the business.
What should a joint venture agreement include?
Capital contributions, shareholding, board seats, reserved matters that need both partners’ approval, profit distribution, deadlock resolution, transfer restrictions, exit rights, non-compete, governing law and dispute resolution. Key terms should also be reflected in the articles of association.
How are dividends to a foreign partner taxed?
Dividends paid to a foreign shareholder are subject to withholding tax, generally 20%, which may be reduced under a tax treaty with the shareholder’s country. Confirm the current rate for your case.
Can a joint venture sponsor KITAS for the foreign partner?
Yes. Like any PT PMA, it can sponsor an Investor KITAS for qualifying shareholders and Work KITAS for foreign directors and staff.
Last reviewed: October 2026. Foreign ownership limits, capital rules and tax rates change. Confirm current requirements with BKPM, OSS or our team before you decide. This guide is general information, not legal advice for your specific case.
Planning a joint venture?
Tell us about your sector and your partner. We’ll check ownership limits, structure the company and help you protect your position, with a written quote before you pay.