Indonesia is a signatory to the Convention On The Settlement Of Investment Disputes Between States And Nationals Of Other States (ICSID). The new investment law ensures that disputes between the government and investors can now be arbitrated using international laws. It also retains the submission of disputes to ICSID arbitration. The Indonesian court system is… Read More

Article 21 of the 1967 Foreign Capital Investment Law stipulates that the government shall not initiate nationalization of foreign investments except by law and when such action is necessary in the interest of the state. The new 2007 investment law, which replaces both foreign and domestic investment laws, in broad terms opens up a major… Read More

The rupiah, the local currency, remains freely convertible, although Bank Indonesia (BI) requires submission of evidence of underlying transactions to support the purchase of a foreign currency against the rupiah through banks exceeding $100,000 per month (regulation 10/28/PBI/2008, effective November 13, 2008). For foreign parties (foreign citizens and foreign legal entities), this regulation governed the… Read More

Indonesia maintains significant and far-reaching foreign investment restrictions. Its investment climate continues to be characterized by legal uncertainty, economic nationalism, and disproportionate influence of business interests seeking control and ownership of existing enterprises and new market opportunities. Both through formal regulation and indirect guidance, foreign companies are sometimes compelled to do business with local partners… Read More

In December 2010, Minister of Trade issued Decree No. 57/2010, concerning the provisions on certain product imports. The decree regulates seven categories of products including food and beverages, ready-to-wear clothes, footwear, electronics, toys, traditional and herbal medicine, and cosmetics. The measure includes a requirement for pre-shipment verification by designated surveyors at importers’ expense and a… Read More

Import Tariffs Indonesia’s simple average bound tariff remained at 37 percent in 2010, while its simple average applied tariffs are around seven to eight percent. Most tariffs are bound at 40 percent, although tariff bindings exceed 40 percent or remain unbound on automobiles, iron, steel, and some chemical products. U.S. motorcycle exports are severely restricted… Read More

Advertising in local media and newspapers is recommended for introducing new products, particularly in areas of purchasing power concentration, such as Jakarta and West Java. In January 2011, the prices quoted for a display regular full color 184 mm x 270 mm ad ranged from $2,500 to $15,000 in five prestigious daily newspapers. In those… Read More

Cotton Cotton, wheat, and soybeans are the leading U.S. agriculture exports to Indonesia. Indonesia is the third largest importer of cotton from the United States. Local production meets only 0.5 percent of total demand from the textile and textile products industry. For marketing year (MY) 2010/11, Indonesian cotton imports are expected to decrease slightly to… Read More

Since 2002, the country’s telecommunications sector has been undergoing major regulatory restructuring to liberalize the telecommunications sector. The monopoly of major operators in Indonesia – PT Telkom, PT Indosat, and PT Satelindo was terminated. PT Telkom’s exclusive right in operating domestic and long-distance fixed lines was terminated. PT Indosat and PT Satelindo lost their exclusive… Read More

The GOI opened the retail industry to foreign investment in 1998 following a letter of intent which the GOI signed with the International Monetary Fund (IMF) to revive Indonesia’s ailing economy. Soon after the 1998 liberalization, many big foreign retailers began to invest in Indonesia. Foreign retailers have been particularly active in the hypermarket and… Read More