Additional Indonesia resources
Understanding how economics, politics and government intersect can help businesses navigate Indonesia's market with confidence. This chapter outlines key institutions, economic zones, essential contacts and support resources for business success.
Country information
Politics and government
Indonesia is a presidential republic divided into 38 provinces. Parliamentary representatives are elected to the People’s Consultative Assembly (MPR) every five years. The MPR has two houses: the House of Representatives (DPR) made up of 575 seats, and the Council of Regional Representatives (DPD) made up of 136 seats. The DPR adopts legislation, passes the budget and ratifies international agreements. The DPD debates and presents bills on regional matters.
The president is the head of state and government, appoints government ministers and approves legislation adopted by the DPR. The president and vice president are elected as a pair by popular vote for a maximum of two consecutive five-year terms. The president can issue government regulations instead of laws, but these must be approved by the DPR at its next session to remain in force. No single party dominates the political scene. Indonesia is a multi-party democracy with numerous parties competing at elections and holding seats in various legislatures.
No single party has ever held a majority in Parliament. A lack of strong ideological positions among the major parties enables the formation of broad coalitions.
Indonesia's government and judicial structure
Legal system
Indonesia’s judiciary is based on the legal system inherited from the Dutch colonial administration. Elements of Islamic law exist, including in dispute resolution mechanisms between Muslims, but Sharia law is practiced only in the province of Aceh.
The Supreme Court manages the judicial system. Supreme Court judges are proposed by the Judicial Commission and approved by the president. Members of the Judicial Commission are approved by the DPR and appointed by the president.
Specialised courts have responsibility for specific matters. These include the Commercial Court, AntiCorruption Court, Fisheries Court, Human Rights Court, Tax Court, Religious Court, State Administrative Court and Military Court.
Key government agencies
Key government agencies and industry associations will need to be consulted throughout the process of setting up a business in Indonesia. Some of these agencies can also be useful for providing advice and initiating contacts.
The main agencies and their areas of authority relating to foreign businesses are:
| Government agency | Responsibilities | Website |
|---|---|---|
| Indonesia Investment Coordinating Board (BKPM) | Regulates and promotes domestic and foreign investment in Indonesia. BKPM administers the Online Single Submission (OSS) system and is the first point of contact when establishing a business in Indonesia. | https://www.bkpm. go.id/en/home |
| Ministry of Trade (MoT) | Services and supports the domestic and international commercial and trading sector in Indonesia. | representative. kemendag.go.id |
| Ministry of Law and Human Rights | Approves the establishment of foreign owned companies in Indonesia. | centralauthority. kemenkumham.go.id |
| Ministry of Manpower (MoM) | Oversees corporate governance, industrial relations, worker social security and regional development. Also responsible for granting work permits to companies employing foreign nationals in Indonesia. | kemnaker.go.id |
| Ministry of Finance (MoF) | Formulates fiscal and financial sector policy and oversees budgeting, taxes, customs and excise. | kemenkeu.go.id/en/home |
| Directorate General of Tax (DJP) | Under the Ministry of Finance, DJP collects state revenue via taxes and ensures taxpayer compliance. It also makes, implements and interprets tax laws and handles tax assessment related disputes. | pajak.go.id/en |
| Directorate General of Customs and Excise (DJBC) | Responsible for collecting state revenue associated with import activities including import duties. | beacukai.go.id |
| Bank Indonesia (BI) | The central banking agency sets monetary policy, supervises financial institutions and regulates payment system. It is a useful source for Australian businesses seeking an overview of economic conditions in Indonesia. | bi.go.id/en |
| Directorate General of Immigration | Controls and monitors all immigration related matters including issuance of visas and stay permits for foreigners, expatriate workers and residents in Indonesia. | kemenkumham.go.id |
Free trade and special economic zones
Indonesia has launched a system of free trade zones (FTZ) and special economic zones (SEZ) to encourage the establishment of businesses and industries. These zones offer various administrative incentives, including easier licensing processes, tax concessions and advanced infrastructure.
The largest free trade zone is the FTZ islands of Batam, Bintan and Karimun. Located just south of Singapore, this FTZ is designed to create an international logistics hub to support Indonesia’s industrial, trade, maritime and tourism sectors. Investors are exempt from import duty, income tax, VAT and sales tax on imported capital goods, equipment and raw materials.
Buoyed by the success of the Batam, Bintan and Karimun FTZ, SEZs were created to attract greater levels of foreign investment. SEZs offer similar benefits, including a reduction of CIT, customs duty and expedited import/export processes.
Special incentives exist for technology start-up investments. There are 24 SEZs in operation and five in the planning phase (see illustration on Page 46 of the Indonesia Doing Business Guide).
Indonesia-Australia bilateral relationship The Indonesia-Australia relationship is underpinned by regular high-level visits and institutional cooperation, including through the G20, East Asia Summit and ASEAN Regional Forum. In addition to promoting regional stability and prosperity, both countries are committed to defence and security cooperation, ASEAN centrality and people-topeople exchange. The relationship was elevated to a Comprehensive Strategic Partnership in 2018. Backed by integration and professional exchange, the trade and investment relationship has the potential to develop into one of Australia’s most important. Both countries are members of the Asia-Pacific Economic Cooperation (APEC) and the Regional Comprehensive Economic Partnership (RCEP). The 2021 Blueprint for Trade and Investment with Indonesia aims to take advantage of the opportunities afforded by the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). Further information on the bilateral relationship is available from DFAT.
Indonesia's Special Economic Zones (SEZ)
Please refer to Pages 46 and 47 of the Indonesia Doing Business Guide to access Indonesia's Special Economic Zones.
Useful contacts and support resources
Government organisations
Australian Department of Foreign Affairs and Trade (DFAT)
DFAT manages Australia’s international network, including in Indonesia. Australia has an Embassy in Jakarta, and three Consulates-General in Bali, Makassar and Surabaya.
Austrade is the Australian Government agency responsible for facilitating international trade and investment. Austrade can provide advice on the market, potential in-market partners and export marketing services. Austrade has offices in Jakarta and Surabaya.
EFA provides information, support and export finance solutions to Australian businesses looking to expand overseas.
State government agencies
Many state government agencies have representatives or offices in Indonesia, including New South Wales, Queensland, Victoria, Western Australia.
Business and industry associations
The ASEAN-Australia Chamber of Commerce represents and promotes Australian businesses operating in Southeast Asia. AustCham ASEAN coordinates a regular program of business seminars, networking and social functions for the business community in Indonesia.
Australia Indonesia Business Council / Indonesia Australia Business Council
The Australia Indonesia Business Council (based in Australia) and its counterpart the Indonesia Australia Business council (based in Indonesia) promote bilateral trade and investment opportunities between Australia and Indonesia. They offer networking, cultural awareness programs and resources on the Indonesian market.
The Export Council of Australia is the peak industry body for the Australian export community
Programs and support
Austrade's Go Global Toolkit provides market advice, legal and regulatory guidance and export readiness assessments.
Export Market Development Grants (EMDG)
Austrade seeks to help small to medium Australian enterprises grow their exports in international markets through their EMDG grant program.
The Industry Growth Program supports innovative SMEs undertaking commercialisation or growth projects in the National Reconstruction Fund priority areas.
State or territory government trade and investment agencies may also run programs and provide support to businesses looking to expand into international markets. Please consult your relevant state or territory agency for more information.
The Deal Team brings together the Australian Government’s commercial, finance and policy capability to connect Indonesian projects with Australian investors.
The Landing Pad helps tech scaleups to expand in Indonesia through residencies, coaching, in-market connections and introductions to partners and venture capital.
Southeast Asia Investment Financing Facility (SEAIFF)
The AUD 2 billion SEAIFF will provide loans, guarantees, equity and insurance for projects that would boost trade and investment, particularly in support of the region's clean energy transition and infrastructure development.
References
A select list of sources used in the development of this publication are included below.
Australian Department of Education
Australian Department of Foreign Affairs and Trade
Australian Trade and Investment Commission (Austrade)
Dezan Shira and Associates
Economist Intelligence Unit
Euromonitor
EY
IMF
Indonesian Government (various sources)
International Federation of Accountants
International Labour Organisation
King & Wood Mallesons
McKinsey & Company
OECD
PWC
The Heritage Foundation
Transparency International
S&P Global
US Chamber of Commerce
US Department of State
US International Trade Administration
We Are Social
World Bank
A note on currency
All money amounts are in Australian Dollars unless otherwise indicated. Exchange rate used is the historical rate for the previous twelve months.
AUD 1 = USD 0.6482
AUD 1 = IDR 10,431
Acknowledgements
Asialink Business gratefully acknowledges the assistance and information from the following individuals and organisations in the production of this Doing Business Guide:
Austrade Department of Foreign Affairs and Trade
Garry Embleton, Victoria Chair, Australia Indonesia Business Council
Andrew Wanady, Director of Operations, Indonesia Trading House Australia
Lydia Santoso, Board Chair, Australia-Indonesia Institute
Disclaimer
This publication contains country and industry specific general information and does not address the circumstances of any particular individual or entity. While all efforts have been made by Asialink Business to ensure that the data and information provided herein are accurate, the accuracy of the information in the future cannot be guaranteed.
Users of this document should undertake their own independent analysis and obtain appropriate professional advice, if required, before acting upon such information in any given situation. Asialink Business accepts no liability for any loss which may arise from the use of the information contained in this publication.
Reproduction of any part of this publication without prior written approval of Asialink Business is strictly prohibited. The information in this document is accurate as of August 2025.