Video Insights
Four practitioners. One moderator. One hour of intense discussion.
A working combination of legal and tax expertise, drawn from the two firms with the deepest joint practice on Indonesian cross-border transactions. This podcast by Nusantara DFDL Partnership and PB Taxand is a must see for – Foreign investors, Fund managers, General counsel, Chief financial officers, Tax professionals for anyone for whom Indonesia is on their investment desk.
MODERATOR
Partner & Managing Director, Indonesia and Singapore with DFDL
SPEAKERS
Renate Alice
Corporate Tax Partner · PBTaxand
Aristo Tjahyadi
Senior Corporate Tax Partner · PBTaxand
Sri Wahyu Ningsih
Partner · NDP
Afriyan Rachmad
Partner · NDP
From thirty thousand feet, Indonesia reads as a clear bet: close to 290 million people, growth near 5 percent, and a credible story for global capital. The difficulty starts on the ground. In M&A, a country’s potential is measured less by its growth rate than by whether a deal can be executed inside it, and Indonesia tests that capacity directly.
This page works through six questions with four practitioners, two legal and two tax. The point is to run past the headlines and look at how deals are really done: where ownership is capped, what diligence misses, how the holding structure decides the tax bill, and why sequencing matters as much as price.
Why Indonesia is attractive yet challenging for cross-border M&A
The legal and tax diligence areas investors overlook
Indonesia against Singapore and Vietnam
What causes deal delays and post-deal surprises
Due diligence against Singapore and Thailand
What makes a deal truly Indonesia-ready
The appeal is genuine: Indonesia is the largest market in Southeast Asia, with a young population and a government that has actively widened the door since the Omnibus Law. The difficulty is execution, not attraction. Foreign ownership remains capped sector by sector, several authorities sit between signing and operating, and the tax regime spans roughly eleven different taxes across central and regional government.
THE LEGAL VIEW
The numbers carry the case for entry. The harder reality is that openness varies by activity, and a foreign buyer cannot assume that owning the shares means controlling the company.
THE TAX VIEW
Indonesia is courting investors with incentives, but the compliance surface is wide. An investor needs to know which obligations attach before committing.
Indonesia is very attractive because of the vast opportunities. It can be a struggle when it comes to the rules. But once you understand the rules, it gets easier.
Legally, the recurring blind spots are licences and permits, which change by zone and location, and sector-specific limits on foreign ownership. On tax, the danger is historic exposure that only appears after signing: unpaid or undisclosed liabilities, transactions that were never declared, and grey areas in regulation. The fix is timing. Diligence belongs at the term sheet stage, not after the deal.
THE LEGAL VIEW
Licensing is the first thing to test, because it is location-driven. A target in a special economic zone, a bonded zone, an industrial area or a city is not governed by the same set of permits.
THE TAX VIEW
A thorough tax due diligence reads the target’s historic compliance and tests whether an exposure could surface after the acquisition closes.
The choice is speed against scale. Singapore closes fast with few approvals, but offers a smaller market. Vietnam is slower and heavily local-practice driven, often needing both national and local government certificates. Indonesia rewards patience, three to six months for a manufacturing deal, with the largest market of the three. On tax, the holding jurisdiction decides the result: a hub needs a treaty with Indonesia and real economic substance, or the relief disappears.
THE LEGAL VIEW
Three distinctions tend to come up whenever investors compare the markets: timeline, foreign ownership, and dispute enforceability.
THE TAX VIEW
Investors can enter Indonesia directly, but many route through a Singapore or Hong Kong hub. The hub only works if it earns its treaty access.
If you want a fast deal, go to Singapore. If you want large-scale opportunity, you need a bit of patience, and you go with Indonesia.
Delays usually come from regulatory clearance rather than commercial terms. Sector consents, OSS licensing and KPPU merger notification all sit on the critical path, and KPPU can reach offshore deals that affect the Indonesian market. The expensive surprises appear after signing: a target that turns out to be mis-licensed, employee change-of-control compensation, and historic tax exposure.
THE LEGAL VIEW
Most delays trace to approvals and consents. The sharper surprises come from a target that does not do what the buyer assumed.
THE TAX VIEW
Where diligence finds a material exposure, the buyer and seller have to decide who carries it, and that negotiation itself can delay the deal.
Even though it looks like a small issue, it can be avoided if they know exactly what they want to do and obtain the proper licence from the start.
Sequence is the strategy. Indonesia is procedural, so some steps must happen before signing, some before closing, and some after, such as KPPU notification and the newspaper announcement. Investors should map the full chain of approvals, plan the exit from day one, and keep legal and tax aligned rather than running them in sequence.
THE LEGAL VIEW
Everything in the deal correlates. Order is critical, and one wrong step can force a business to be rebuilt and attract regulatory attention nobody wants.
THE TAX VIEW
For a new establishment rather than an acquisition, the structure decision starts with the business form, and the full tax cost should be modelled before entry.
Indonesia appreciates patience and procedure, not shortcuts. A different route might look tax-efficient, but everything still has to be in compliance.
A deal is Indonesia-ready when licensing is clean, the corporate structure is compliant, foreign ownership headroom is clear, and the right local partner is in place and vetted. On tax it means a defensible position from day one, a treaty-supported holding and funding structure, a plan for compliance in the Coretax era, and an exit that accounts for capital gains and treaty access.
THE LEGAL VIEW
Two things matter most before entry: regulatory clarity, and the right local partner. Both reward diligence done early.
THE TAX VIEW
Readiness on the tax side is about expectation and visibility. Entry is not a one or two week exercise, and the tax history is now far more transparent.
Instead of fixing things later, we need to prepare and build a strong foundation. Be frank with each other, and put it in writing.
Sri Wahyu Ningsih
Partner
Sri is a Partner at Nusantara DFDL Partnership, an Indonesian law firm and a DFDL collaborating firm. Sri’s areas of expertise cover investment law, labour and employment, immigration, tourism, consumer protection, general corporate and commercial matters.
Practice Areas: Compliance & Investigations | Corporate & M&A | Employment
SPEAK WITH Sri Wahyu Ningsih
The conversation in compressed form, for a general counsel or investment committee deciding whether to proceed.
Indonesian M&A runs principally on the Company Law (No. 40/2007), amended by the Job Creation Law (No. 6/2023), together with Government Regulation 27/1998. Around that statutory base sits a set of regulators, each owning a distinct part of the approval chain.
Corporate approvals and company registration.
Foreign investment, and OSS RBA licensing.
Competition and merger control.
Oversight of regulated industries, including financial services, energy and mining.
Indonesia does not require competition clearance before completion. The filing falls due once a deal becomes effective, and the thresholds are measured on a group-wide basis, so even an offshore transaction can trigger it.
Business days after the deal becomes effective to file the notification with KPPU.
Filing triggered above IDR 2.5 trillion combined Indonesian assets, or IDR 5 trillion turnover.
Late-filing penalty, accruing for every day the notification is overdue.
1
Screen sector ownership caps first, before any other workstream begins.
2
Calculate the KPPU thresholds early, group-wide, so the filing is never a surprise.
3
Sequence the corporate and licensing approvals once the first two points are clear.
Afriyan Rachmad
Partner
Afriyan Rachmad advises multinational corporations, financial institutions, and Indonesian
companies on regulatory, operational, and dispute matters across aviation, logistics, and
transport sectors.
Practice Areas: Aviation & Logistics | Corporate and M&A | Dispute Resolution | Restructuring | Energy, Natural Resources and Infrastructure
SPEAK WITH Afriyan RachmadIt depends entirely on the sector. The Positive Investment List sets the ceilings. Some activities are fully open, others are capped, and sectors such as energy and mining carry divestment obligations. Distribution and construction are common cases where a foreign company needs a local counterpart.
For a manufacturing target, roughly three to six months from preparation through to closing, before antitrust approvals. Technical permits, the Ministry of Law verification process, and sector consents push it toward the longer end, so plan for six months rather than three.
KPPU notification is a post-closing obligation, not a pre-clearance one. The filing is due within 30 business days after the deal becomes effective, where combined Indonesian assets exceed IDR 2.5 trillion or turnover exceeds IDR 5 trillion, measured on a group-wide basis. Late filing carries a penalty of IDR 1 billion per day.
Only if the hub earns its treaty access. It must have a tax treaty with Indonesia and demonstrate genuine economic substance, which Singapore now requires. A hub without a treaty, such as the British Virgin Islands, attracts 20 percent withholding tax on dividends and around 5 percent on a share sale.
The Board of Directors runs the company day to day. The Board of Commissioners supervises and oversees. They handle distinct functions, which is why owning shares is not the same as controlling the company.
Tax assessments carry a five-year statute of limitations, so a five to six year indemnity period is reasonable in transaction documents. A dispute that runs through audit, objection, the tax court and judicial review can take six to seven years to conclude.
No. Nominee arrangements are not recognised under Indonesian law and are illegal. A structure that relies on one may read well on paper but cannot be implemented, so ownership should be structured through arrangements the law recognises.
Enforceability. An agreement signed only in English creates a problem from the outset and a sharper one in any future dispute. Every enforceable agreement should have an Indonesian-language version.
