🏨🌏 Indonesia’s Latest Foreign Investment Rules for the Hospitality Sector (2025 Guide)
🏨🌏 Indonesia’s Latest Foreign Investment Rules for the Hospitality Sector (2025 Guide)
Indonesia’s tourism and hospitality sector remains one of the most attractive in Southeast Asia. Bali, Lombok, Labuan Bajo and many other destinations are seeing strong demand for sustainable resorts, wellness retreats and eco-lodges. At the same time, the regulatory environment for foreign investors has changed significantly in recent years, especially with the shift from the old Negative Investment List to the new Positive Investment List and updated capital rules for foreign-owned companies (PT PMA).
This article gives a practical overview of the latest foreign investment restrictions and opportunities for hotels, villas and other accommodation businesses in Indonesia. It is written for international investors, hospitality operators and family offices that want a clear, business-focused summary rather than dense legal jargon.
Important disclaimer: This blog is for general information only and does not constitute legal advice. Indonesian investment and licensing rules are detailed and change from time to time. Always confirm the latest requirements with qualified Indonesian legal and tax advisors before making any investment decisions.
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📜 Indonesia’s new investment framework for hospitality
For many years, foreign investment in Indonesia was governed by the Negative Investment List, which listed sectors closed or restricted to foreign capital. In 2021, Indonesia introduced a more liberal and investment-friendly regime through the Positive Investment List, issued under Presidential Regulation No. 10/2021 (as amended by Presidential Regulation No. 49/2021). Instead of focusing on prohibitions, the new regime focuses on which sectors are open, partially open or reserved for local micro, small and medium enterprises (MSMEs).
For the hospitality industry, this means that many hotel and tourism-related activities are now open or conditionally open to foreign investors, but the exact rules depend heavily on the KBLI code you choose (Indonesia’s business classification system) and the scale of your project. Misclassifying your business activity can lead to very different ownership limits, so getting the KBLI correct is a strategic decision, not just a checkbox.
In parallel, Indonesia has rolled out a risk-based licensing system, implemented through the Online Single Submission (OSS) platform. Hospitality projects must now navigate both:
- the Positive Investment List (to check whether foreign ownership is allowed and under what conditions), and
- the risk-based licensing rules (to determine what licenses, permits and environmental approvals are required).
The result is a framework that, while more open than before, still requires careful planning. Large, professionally managed hotels and integrated resorts are generally welcomed, while small-scale homestays and certain villa rentals are increasingly reserved for local MSMEs.
🏝️ Foreign ownership limits for hotels, resorts, villas and homestays
Under the current rules, foreign investment in hospitality is channelled through a foreign-owned limited liability company, known as a PT PMA. This company can then hold licenses for hotel, resort and other tourism activities. The key question is: How much of that company can foreign investors own?
The answer depends on the business model, KBLI classification and sometimes the star rating or size of the property. The table below summarises typical patterns that foreign investors encounter in practice. The exact caps can change and may differ slightly between sources, so treat this as a roadmap, not a legal opinion.
📊 Snapshot: Typical foreign ownership patterns in Indonesian hospitality
| Segment | Typical business profile | Foreign ownership trend | Key considerations |
|---|---|---|---|
| Large 4–5 star hotels & branded resorts | City or destination hotels, 100+ rooms, branded management, substantial facilities | Frequently up to 100% foreign-owned PT PMA, subject to minimum investment thresholds | Focus is on scale, professional management and contribution to tourism; conditions may apply in special economic or priority tourism zones. |
| Non-star or lower-star hotels | Smaller budget hotels, local brands, limited services | Often subject to partial foreign ownership caps (for example in the range of 67–70%) or local partnership requirements | Authorities may encourage domestic participation; classification and local regulations matter. |
| Homestays & guesthouses | Family-run accommodation, limited room count, community-based tourism | Many categories are reserved for local MSMEs, limiting or excluding direct foreign ownership | Designed to protect small local entrepreneurs and communities; foreign involvement is usually indirect (e.g. training, marketing support). |
| Daily rental villas & short-term stays | Stand-alone villas rented via platforms (e.g. OTA, online marketplaces) | Short-term rental KBLIs can be tightly regulated; some are reserved for MSMEs or have foreign ownership caps | On top of investment rules, zoning and land-use planning (e.g. residential vs commercial zones) strongly influence what is legally allowed. |
| Integrated eco-resorts & wellness retreats | Destination properties combining accommodation, wellness, F&B, experiences and sometimes real estate components | Often can be structured under tourism KBLIs that are open or conditionally open to high foreign ownership | Success depends on selecting the right KBLIs, meeting the minimum investment thresholds and aligning with regional tourism plans. |
Key takeaway: In today’s regime, Indonesia is far more open to foreign capital in large, professionally run hospitality projects than it was under the old Negative Investment List. However, Indonesia still protects small-scale accommodation and community-based tourism by reserving some business lines for local MSMEs or limiting foreign equity.
💰 Updated PT PMA capital requirements in 2025
Every foreign investor in Indonesian hospitality must pay close attention to the capital requirements for a PT PMA. For years, the standard guidance was that a foreign-owned company needed a minimum of IDR 10 billion in paid-up capital.
In 2025, Indonesia updated these rules. Instead of requiring the full IDR 10 billion to be paid in as capital, the regulations now distinguish between:
- a minimum total investment plan, and
- a separate minimum paid-up capital.
In practice, this means:
- The project must still have a total investment value of more than IDR 10 billion (excluding land and buildings in most sectors).
- The minimum paid-up capital can be lower (for example, IDR 2.5 billion under the latest general rules), as long as it forms part of the overall investment plan.
For hospitality investors, this is a material change. It lowers the initial cash barrier to entry while maintaining Indonesia’s preference for larger, “large-scale” foreign-invested businesses. For high-end resorts and hotels, the new thresholds are usually not a constraint. But for boutique eco-lodges or wellness retreats, they can be a deciding factor in how you structure the project.
Note that specific tourism KBLIs, special economic zones or priority tourism destinations may come with higher requirements or special incentives. Always check if your project falls into a priority category, as this can affect both tax incentives and investment thresholds.
🏗️ Common structures for foreign hospitality investors
Foreign investors rarely just ask, “What is the maximum percentage I can own?” The more strategic question is: What is the right structure for long-term, compliant operations? Here are some of the most common models used in Indonesia’s hospitality sector today:
-
Wholly foreign-owned PT PMA (where allowed)
In segments that are fully open to foreign capital, investors may establish a PT PMA with up to 100% foreign shareholding. This structure offers maximum control and is often used for international hotel brands, integrated resorts and large-scale wellness projects.
-
Joint venture PT PMA with Indonesian partners
Where foreign ownership is capped (for example at 67–70%), investors structure a joint venture. Indonesian partners may be local entrepreneurs, regional developers or corporate groups. Joint ventures require careful shareholder agreements, governance rules and exit planning.
-
Local PT with foreign management or branding
In segments reserved for MSMEs or where foreign equity is highly restricted, some projects operate through a local Indonesian PT that owns the licenses and assets, while foreign parties provide management, branding, training or technology services. This can be compliant if structured transparently, but “smoke-and-mirrors” nominee structures introduce serious legal risks.
-
Hybrid resort platforms
More sophisticated investors may set up a foreign-owned platform company (PT PMA) that focuses on large-scale tourism or wellness services, while individual sub-projects (e.g. community homestays or local activity providers) remain in the hands of local MSMEs. The platform then offers booking, marketing, training and sustainability certification services to this network.
Regardless of the model, one principle is non-negotiable: avoid informal nominee arrangements. Structures where Indonesians appear as formal shareholders but hold equity purely on behalf of foreign investors are increasingly scrutinised and may be challenged in a dispute or during a regulatory audit.
🛂 Risk-based licensing and OSS in practice
Once you have selected the right structure and KBLIs, the next step is licensing. Indonesia now uses a risk-based approach, implemented through the OSS (Online Single Submission) system. In simple terms, higher-risk activities require more approvals and post-licensing supervision, while lower-risk activities enjoy simplified processes.
For hospitality projects, a simplified roadmap often looks like this:
- Define your business model (hotel, resort, wellness retreat, villa rental, eco-lodge, etc.).
- Match the model to specific KBLIs and confirm foreign ownership limits under the Positive Investment List.
- Establish the appropriate PT PMA or joint venture structure and declare your investment value and paid-up capital.
- Apply for a Business Identification Number (NIB) through OSS as your base license.
- Complete any risk-based requirements, such as environmental approvals, building permits and tourism sector licenses from local authorities.
- Maintain regular reporting (for example, investment activity reports) and ensure your operations remain aligned with the declared KBLI and licenses.
In tourism hot spots like Bali or Labuan Bajo, you must also take into account regional regulations, zoning plans and local tourism taxes. For example, residential-zoned land may not legally support commercial daily rentals, even if the investment structure itself is compliant.
🧩 Real-world scenarios: From five-star resorts to daily rental villas
To make these rules more concrete, let’s look at some typical scenarios that foreign investors often explore in Indonesia.
🏝️ Scenario 1: International wellness resort in a priority tourism destination
An international investor wants to build a 120-key wellness resort with medical-spa facilities and a strong sustainability profile in a designated priority tourism area. The project budget comfortably exceeds IDR 10 billion, and the investor is prepared to meet environmental and building standards at a high level.
In this scenario, it is often possible to structure the project as a wholly foreign-owned PT PMA under hotel and tourism KBLIs that are open or conditionally open to 100% foreign ownership. The main challenges are land acquisition, environmental approvals, infrastructure and execution — not the foreign ownership cap.
🏡 Scenario 2: Boutique eco-lodge with 20 keys in a rural area
A family office plans a small eco-lodge with 20 rooms, farm-to-table dining and community-based activities in a rural area. The total investment value is just above IDR 10 billion, and the brand wants to emphasise local culture and employment.
This project may still qualify for a PT PMA structure, but the investor must carefully confirm:
- whether the selected KBLIs allow high foreign ownership at this scale,
- whether local regulations prefer domestic or joint ventures for this type of accommodation, and
- how to integrate local MSMEs (e.g. for guiding, craft, F&B or homestay spillover) into the business model.
Sometimes, a hybrid approach works best: a foreign-owned platform company for core services, with local MSME partners delivering complementary experiences.
🏘️ Scenario 3: Short-term rental villas in a residential area
Another common idea is to acquire or lease several villas in a popular area (for example, near beaches or yoga districts) and rent them out short-term to tourists via online platforms.
Here, foreign investors face a more complex matrix of restrictions:
- Some short-term rental KBLIs are reserved for MSMEs or carry foreign ownership caps.
- Zoning rules may prohibit commercial accommodation in residential zones, regardless of ownership structure.
- Local authorities may increasingly crack down on non-compliant daily rentals, especially where they negatively affect communities.
In other words, even if you can legally establish a PT PMA, the combination of KBLI selection, zone planning, building permits and community impact may make a pure short-term villa play much more sensitive. Many serious investors instead move toward professionally managed villa resorts or branded residences in properly zoned areas.
✅ Compliance checklist for hospitality foreign investment
Before you commit capital, use the checklist below as a practical starting point:
- Clarify your primary revenue model: hotel rooms, long-stay wellness programs, daily rentals, F&B, medical-wellness services, or a mix.
- Map the model to specific KBLIs and confirm foreign ownership limits under the Positive Investment List.
- Confirm minimum investment value and paid-up capital for your intended structure and location.
- Check zoning and land-use rules at the provincial and regency level, not just national-level investment policy.
- Ensure the land structure (e.g. HGB, Hak Pakai, long-term lease) matches your investment horizon and exit strategy.
- Design a transparent governance structure that avoids nominee arrangements and clearly allocates roles between foreign and local partners.
- Prepare for risk-based licensing: environmental impact assessments, building permits, tourism licenses, health and safety compliance.
- Integrate ESG and community impact into your design from day one — projects that benefit local communities and ecosystems are increasingly favoured by regulators, guests and investors.
Getting these fundamentals right early will save you time, cost and reputation risk later.
Pro tip: When in doubt, assume that authorities will prefer larger, transparent, professionally managed projects that create local jobs, pay taxes and respect environmental rules. If your project aligns with that narrative, you are already on stronger ground.
❓ FAQs: Indonesia hospitality foreign investment rules
1. Can foreign investors still own 100% of a hotel or resort in Indonesia?
In many cases, yes. Large-scale hotels and integrated resorts that fall under certain tourism KBLIs can be owned up to 100% by foreign shareholders through a PT PMA, provided you meet the minimum investment thresholds and comply with all licensing requirements. However, some sub-sectors (especially small-scale accommodation) remain partially restricted or reserved for local MSMEs, so you must always check the exact KBLI and latest regulations.
2. What is the minimum capital required for a foreign-owned hospitality company (PT PMA)?
Under the current rules, most PT PMAs must present a total investment plan above IDR 10 billion, while the minimum paid-up capital is now lower than it used to be (for example, IDR 2.5 billion under the general framework). Specific tourism and hospitality KBLIs, special economic zones or tax incentive schemes may impose higher thresholds or tailored conditions. It is essential to confirm the exact numbers for your case with professional advisors.
3. How do foreign investment rules interact with Bali’s local rules on villas and daily rentals?
National foreign investment rules are only one part of the equation. In practice, your project must also comply with regional zoning, building permits and tourism tax rules. In Bali, for example, some residential areas do not allow commercial short-term rentals, even if you have a valid PT PMA. At the same time, local governments are increasingly focused on community impact, safety and tax collection. The safest path is to choose appropriately zoned land, invest at a professional scale and design a project that clearly benefits the local community and environment.
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This article is a general guide and does not replace tailored Indonesian legal, tax or licensing advice. Regulations can change; always verify the latest requirements for your specific hospitality project.
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