Indonesian Golden Visa: investment attractiveness, features and disadvantages

Indonesia initiated the program golden visas V 2023 in order to increase the influx of foreign investment in the construction, industrial, tourism and energy sectors of the economy. The program is aimed at wealthy investors who want to obtain long-term residence rights with the opportunity to conduct business.

To obtain the right to stay in Indonesia for a period of 5 years, private investors planning to open a business in this country are required to make an investment of 2,500,000 US dollars, which is equivalent to approximately 38 billion Indonesian rupiah. For those who want to extend their stay to 10 years, the minimum investment amount is already 5,000,000 US dollars (about 76 billion rupees).

Indonesia bestows aureate visas upon directors and corporate delegates with capital infusions of $25 million or greater, endowing them with a five-year sojourn. Should the capital infusion escalate to $50 million, domicile is prolonged for a decade. For financiers disinterested in founding a venture, quinquennial aureate visas necessitate a security of $350,000, while decadal aureate visas mandate a capital investment of $700,000.

Why Indonesia: facts and figures for investors

Jakarta is the financial center of Southeast Asia with fantastic indicators:

Stable economic growth: According to the World Bank, Indonesia posted GDP growth of 5.1% in 2023, making it one of the fastest growing economies in the region (and the world). The rapid growth of the economy opens up many opportunities after obtaining a golden visa in Indonesia.

Low production costs: Indonesia's operating costs are an order of magnitude lower than most countries in the world. Particularly favorable conditions are observed in the construction and manufacturing sectors. Labor costs are significantly lower than in Portugal and Greece, making it an attractive location for production facilities. Local personnel have a relatively good level of qualifications and a good work culture. The average salary in Indonesia in 2023 was about $250 per month, which is an order of magnitude lower than in most developing countries (not to mention developed ones).

Preferences for exporters: The authorities actively support export-oriented companies by offering tax incentives and free economic zones. In 2023-2024, there were a number of particularly advantageous offers for manufacturing investors focused on Asian markets. One of these forms of support are programs Indonesia golden visas.

Big market: With a population of 270 million, Indonesia offers one of the largest consumer markets in Southeast Asia. For now, local purchasing power leaves much to be desired, but rapid economic growth will change this in the coming decades. Well, demographic trends suggest that by 2050, more people will live in Indonesia than in the United States.

Benefits in business and taxation

An ancillary argument in favor of Indonesia's aureate visas is the myriad commercial advantages accessible in the nation. Entrepreneurs may procure a tax holiday, abating corporate income tax for substantial investments in paramount sectors of the realm.

Complete tax absolution for a span of 5–20 years for enterprises that have expended a minimum of IDR 500 billion (approximately US$32 million) in ventures within pivotal sectors. Upon the conclusion of this duration, a 50% tax concession is proffered for an additional biennium. The initiative was operational well prior to the advent of Indonesian golden visas.For companies with smaller investments (from 100 to 500 billion rupees), the tax is reduced by 50% for five years, and then a 25% discount applies for another two years.

Benefits are available only to companies operating in strategically important sectors of the economy, such as pharmaceuticals, mechanical engineering, agriculture and the digital economy.

Reference: Indonesia standard income tax rate - 22%.

Options for the applicant's family

Getting an Indonesia Golden Visa benefits not only the investor, but also his family. Relatives can count on the following benefits:

• Residence permit for a family: golden visa applies to family members, including spouse and minor children. They can obtain the right to reside in Indonesia for the same period as the main applicant (up to 10 years).
• Right to education: children of owners golden visa can study at Indonesian schools and universities, including private and international institutions. Many schools and universities in Indonesia are focused on international education standards.
• Medical assistance: owners golden visa and their families have access to Indonesia's private healthcare system, which has developed significantly in recent years. For example, hospitals in Jakarta and Bali meet international standards and are certified JCI (Joint Commission International).

Protection of investor rights

The country is gradually improving legislation aimed at protecting the rights of foreign investors (including owners golden visas in indonesia) . Basic measures:

Bilateral investment protection agreements: Indonesia has signed agreements with key partner countries that provide protection to foreign investors from expropriation of assets and guarantee the right to international arbitration in the event of disputes. These agreements include the protection of property rights and legal support in the event of confiscation of property.

Intellectual Property Protection: Indonesia has taken steps to improve intellectual property protection. Since 2020, a law on the protection of patents, trademarks and copyrights has been in effect, which is important for companies operating in innovative industries.

These measures create a relatively safe environment for long-term investment, despite existing risks associated with the level of corruption (Corruption Perceptions Index - 34/100, Transparency International).

Ease of starting a business for holders golden visas: Indonesia vs other countries

Indonesia proffers an occasion to expeditiously inaugurate an enterprise predicated on a golden visa. This constitutes a significant boon in contrast to several nations:

• Portugal: The Golden Visa scheme enables one to operate an enterprise, yet the emphasis lies in property acquisition or employment generation, and the procedure of initiating an enterprise necessitates supplementary authorizations and consents.
• Malaysia: The MM2H initiative solely grants the privilege to dwell, yet not to labor or engage in enterprise absent supplementary authorizations.
• Thailand: Thailand Elite Visa offers long-term residence rights, but does not allow work or running a business. Violation of this rule can result in a fine of up to $2,800 and deportation.
• Greece: after receiving golden visa It is possible to receive income from investments, but active business requires a work visa or special permits.

Thus, Indonesia stands out for its ability to start a business immediately without additional bureaucratic obstacles, which attracts those who plan to actively participate in the country's economic life and are eager to get a business up and running quickly.

Indonesia's Economic Potential: Statistics for Investors

Indonesia is the largest economy in Southeast Asia with GDP $1.19 trillion in 2022 (World Bank data). The country is showing stable growth: in In 2023, GDP grew by 5.1%. This growth is expected to remain at the same level by 2025. 4.8-5%.

Priority sectors for foreign investors:

1. Infrastructure: By 2045, Indonesia plans to invest $1.5 trillion in infrastructure development (ADB data).
2. Tourism: In 2023, the tourism sector contributed more than 5% of GDP, with projected growth to 6% by 2025.
3. Energy: Indonesia is actively developing projects in renewable energy. Geothermal energy takes 7th place in the world by production volume.

Expected returns and prospects

• Real estate market: Property prices in tourist and commercial areas of Indonesia (Bali, Jakarta) increase by 5-7% annually.
• Government bonds: The yield on Indonesian bonds in 2023 was 6.5%, which is higher than in developed countries.
• Infrastructure projects: According to Fitch Ratings, investments in infrastructure and construction can provide returns of up to 10% per annum.

Limitations of investment instruments

Indonesia proffers pecuniary endowments in immovable assets, sovereign promissory notes, and privatized undertakings, subordinate to Malaysia's shares, fiduciary holdings, and estate usufruct, enticing individuals inclined toward fiscal participation.

Procurement aureate residence: who may engage in the scheme and how to accomplish it

Indonesia Golden Visa can get wealthy investors ready to invest money in the country's economy. Main investment options:

Investors planning to open or develop a business in Indonesia can obtain a residence permit for a period of 5 years if they invest $2,500,000 (approximately Rp 38 billion).

Example: Creating a hotel complex in Bali or opening a construction company to participate in government infrastructure projects (for example, building roads or bridges).

Requirements:

• The business must be registered in Indonesia.
• The project must correspond to priority sectors such as tourism, infrastructure or agriculture.
• Investments must be documented through local banks or financial institutions.

For investors wishing to extend their stay up to 10 years, the minimum investment is $5,000,000 (approx. 76 billion rupees). These investments can be aimed at creating new enterprises or developing existing ones.

Example: Creation of a large tourist complex or construction of infrastructure facilities such as airports or ports.

Requirements:

• Business should be aimed at creating jobs and developing priority sectors of the economy.
• Company registration in Indonesia and documentary evidence of investment are required.

Directors and representatives of companies, investing $25,000,000 (about 380 billion rupees) receive a five-year golden visa.

Example: Large-scale investments in energy projects, such as the construction of solar power plants or mining.

Requesties:

• Investments must be directed to government-approved projects in construction, industry or energy.

Should the commercial capital infusion attain $50,000,000 (approximately Rp 760 billion), financiers are authorized to a decade-long domicile in Indonesia.

Example: Investments in national infrastructure development, such as the construction of railway lines, airports or ports.

Foreign Stakeholders unwilling to establish an enterprise in Indonesia may procure a quinquennial aureate permit by allocating $350,000 (circa Rp 5.3 billion) into pecuniary apparatuses.

Example: Acquiring Indonesian sovereign securities with a return of 6.5%, equities of enterprises on the bourse, or allocating capital in repositories within regional financial institutions.

Requirements:

• Investments must be made in government-approved financial instruments.
• All transactions must go through local banks.

For a ten-year residence permit, investors must invest $700,000 (about Rp 10.6 billion) in approved financial instruments.

Example: Investing in long-term government bonds or participating in government infrastructure projects such as the Jakarta-Bandung railway line.

Requirements:

• All investments must be documented through local financial institutions and banks accredited by the Indonesian government.

For receiving Indonesia golden visa need to provide bank statements, which confirm the availability of capital for investment. These should be bank statements showing that you have sufficient funds in your account for the type of investment you have chosen.

The documents must be certified by the bank and contain information about the current balance and account movements for the last 6 months. All documents must be uploaded on the online portal of the Indonesian Ministry of Foreign Affairs.

You will need police certificate from your country, confirming that you have no criminal record. If applications are submitted for family members, they also need similar certificates. They need to be uploaded to the same online portal. Documents must be translated into Indonesian or English.

Must have health insurance, covering all medical expenses during your stay in Indonesia (minimum 1 year). Insurance must cover the costs of treatment, hospitalization and other medical services. The insurance policy must be submitted along with other documents on the portal.

Complete list of documents for obtaining a golden visa Indonesia

Passport: necessitated to retain legitimacy for no fewer than 18 months subsequent to the epoch of submission.

Evidence of investment:

• If this is real estate, copies of contracts for the purchase of real estate.
• If these are bonds, bank statements about the purchase of bonds.
• If this is a business, business registration documents and confirmation of payment of the authorized capital.

Health certificate confirming that the applicant does not suffer from serious illnesses. The following documents are also required:

1. For dependents (wife, children):
   • Copies of dependents' passports.
   • Birth certificates or documents confirming family ties with the applicant.
   • Confirmation of financial support for dependents.
2. About the origin of money:
   • Bank statements confirming the legitimacy of the source of funds.
   • Documents confirming the origin of income, such as tax returns, employment or business contracts.
3. Health insurance documents:
   • Health insurance policy covering the entire period of stay in Indonesia.
   • Documents confirming payment of insurance.

These documents, together with the main list (passport, proof of investment, health certificate) will help you obtain a visa.

Selecting investments: recommendations for Indonesia golden visa application

Government bonds provide long-term stable income with minimal risks. They are guaranteed by the government and have a stable profitability.

To manage attachments directly, create own business. If you are interested immovable asset and rental income, especially in tourist areas, select real estate.

Procedure pApplying for an Indonesia Golden Visa

We have prepared step-by-step instructions for you:

1. Registration on the portal:
   • Go to Indonesian Ministry of Foreign Affairs online portal (https://visa-online.imigrasi.go.id/).
   • Create an account using your email.
2. Uploading documents:
   • Upload all necessary documents (passport, bank statements, certificates, etc.).
   • Check that all documents comply with the requirements and are certified.
3. Payment of duty:
   • At the application stage, the amount of the state fee will be indicated. On average, the fee for investment visas ranges from $1,500 to $3,000, depending on the type of investment chosen.
   • Payment is made via bank transfer or credit card.
4. Checking and waiting:
   • After submitting the application form and documents, your application is sent for verification. The verification process takes from 1 to 2 months.
   • During this period you may be asked to provide additional documents.

That's all.

Registration with the Indonesian Migration Service:

Once your application has been approved and you have received your visa, you will need to register in Indonesia: Once you arrive in the country, go to customs and present your visa. For 7 days after arrival visit local immigration bureau to confirm your status. Registration process:

• Show your passport and visa.
• Fill out the registration form and submit your fingerprints.
• Shapes NEXT (temporary residence permit), which confirms your status as an investor. KITAS must be renewed every year.

For hardened investor status will be required copies of contracts, bank statements or real estate purchase documents. After checking all documents you will receive investor certificate, which allows you to officially conduct business in Indonesia.

Corruption risks when investing

The magnitude of graft in the nation is moderately pronounced (34/100 as per Transparency International). This denotes conceivable hindrances with proprietorship entitlements, adjudication, and red tape. Business pioneers encounter the subsequent predicaments:

• Clandestine remittances

Industrialists are intermittently solicited for inducements to expedite the acquisition of authorizations and endorsements (building, exportation/importation). A gilded visa offers no absolute immunity from these challenges; jurisprudential assistance is indispensable.

• Judiciary malpractice

Provincial tribunals might be swayed via gratuities, complicating the safeguarding of financiers' entitlements during contentions.

• Depravity amid fiscal inspections

Revenue examiners might exaggerate requisitions to coerce kickbacks, amplifying expenditures and unpredictability.

• Partiality towards indigenous enterprises

Domestic corporations might procure inequitable priorities in procurement processes and agreements owing to affiliations with bureaucratic dignitaries. Although the gilded visa grants augmented prerogatives, it fails to entirely rectify the predicament.

• Preferences for local companies

In some cases, local competitors may have unfair preferences over foreign investors due to their connections to government officials. It is relevant when obtaining contracts on favorable terms, as well as access to government tenders, where foreign companies are actually excluded from competition due to corrupt agreements. This puts foreign investors at a disadvantage compared to local players. Securing an aureate permit in Indonesia is partially attributable to the augmented entitlements and prerogatives for an foreign financier, yet it fails to resolve the matter in its entirety.

Problems with the protection of property rights

Fraud with land documents: Weaknesses in the registration system and legal transparency facilitate land title fraud. Some investors fall victim to fake title deeds. For instance, the vendor may proffer a spurious land certificate, and the investor subsequently confronts litigation to establish the veracity of his acquisition. Meticulously scrutinize all documentation at the juncture of procuring a golden visa in Indonesia to avert such perils.

Coerced expropriation of assets: In Indonesia, there exists a peril of coerced land appropriation by the state for monumental infrastructure undertakings. Although such instances ought to be officially accompanied by indemnification, investors frequently encounter protracted delays in remuneration or diminished appraisals of the expropriated assets. This is particularly pertinent for construction and realty endeavors, wherein land may be appropriated for the erection of thoroughfares, aerodromes, and other governmental edifices. Investors contemplating a golden visa in Indonesia should deliberate upon these potential hazards when allocating capital in realty.

Difficulties with land leasing: Foreign investors in Indonesia are prohibited from possessing land directly, hence they frequently resort to protracted leases. Nevertheless, the rental framework also harbors its snares. Certain land proprietors may reconstitute the stipulations of the lease or endeavor to annul the lease entirely if they unearth more advantageous propositions from alternative tenants or investors. Consequently, investors may forfeit access to land or be compelled to remunerate supplementary recompense.

Currency fluctuations

The Indonesian Rupiah (IDR) is subject to significant exchange rate fluctuations and this often creates problems for foreign investors. In 2018, for example, the rupee fell to its lowest level in 20 years against the US dollar, losing almost 10% of its value in a year. This situation was caused by global economic factors, including rising interest rates in the US and falling prices for commodities such as oil and coal, which play a key role in the Indonesian economy. As a result of this decline, many companies operating in Indonesia suffered losses, especially those whose operating expenses or debts were in US dollars.

An example is the large energy company PT Pertamina, which imports large quantities of oil for refining. As the rupee weakened, the cost of importing raw materials increased sharply, leading to additional costs and the need to revise budgets. Companies in the construction, engineering and technology sectors have also suffered due to rising prices for imported equipment purchased for foreign currency. Obtaining a Golden Visa in Indonesia can help investors in these sectors minimize the impact of currency fluctuations through local business opportunities.

Currency fluctuations can be caused not only by external factors, but also by internal ones. For example, the rupee depreciated sharply in 2020 in response to the COVID-19 pandemic as investors began withdrawing their capital from emerging markets. This has created difficulties for export-oriented companies, as they are caught between falling demand and rising import costs.

Currency risks also apply to those planning long-term projects in Indonesia, such as infrastructure construction. For example, foreign companies working under local currency contracts may face a situation where the cost of materials purchased abroad increases sharply due to the depreciation of the rupee, resulting in higher project costs. Such risks must be taken into account by using currency hedges and other financial instruments to protect against losses.

General recommendations for risk reduction

We recommend investing in the safest and most stable investment instruments. Below we will introduce you to the most reliable destinations:

Government bonds

Indonesian government bonds are considered one of the safest instruments for foreign investors. According to data Bloomberg, Indonesia is actively raising capital through the issuance of fixed income bonds, which are backed by the government.

Profitability Indonesian government bonds in 2023 amounted to about 6.5%, which is higher than in developed countries (for example, in the USA, the yield on government bonds is about 4-5%). This makes Indonesian bonds attractive to investors seeking stable income. Bond rating from Moody's at the level Baa2 and BBB from Fitch indicates that Indonesian bonds remain in the investment grade with moderate risks.

Advantages: Government bonds provide security of return of funds as they are guaranteed by the government. This minimizes the risk of capital loss even during economic instability. Ideal for success getting a golden visa in Indonesia.

Properties in tourist areas

Indonesia is one of the leading countries in Southeast Asia for tourism. Islands Points, Lombok and other popular destinations continue to attract both tourists and investors. According to Statesman, in 2022 the tourist flow to Indonesia amounted to about 15 million people, and is expected to rise to 20 million.

• Ascending realty valuations in esteemed traveler locales is steadfast. In Bali, for instance, over the preceding quinquennium, realty has escalated in cost by a mean of 5-7% annually.
• Realty connoisseurs (such as the advisory firm Knight Frank) observe that property in Indonesia, particularly in touristic locales, persists as one of the most steadfast and exceedingly lucrative holdings, especially for protracted-term investors.
• Advantages: Investments in immovable property furnish not solely capital conservation, but also a steadfast rental revenue, particularly in touristic locales. Bali and Jakarta persist as paragons in opulent immovable property rentals.

There are other arguments in favor obtaining an Indonesia golden visa: loyal attitude towards foreign investors, comfortable living conditions and highly qualified work, numerous incentive programs for entrepreneurs.

Conclusions

The most secure ventures in Indonesia are:

1. Sovereign securities: steadfast, foreseeable income stream with negligible hazards.
2. Property in traveler-frequented locales: protracted venture with elevated lease proceeds and asset appreciation.
3. Structural undertakings: globally funded, minimally susceptibility to political turbulence.
4. Earthly commodities: Carbonaceous fuel, petroleum, and hydrocarbon derivatives yield enduring fiscal prospects.

The selection of these avenues when procuring a golden visa in Indonesia shall mitigate the perils linked with political volatility and graft, as well as procure a steady revenue from investments in one of the swiftest burgeoning economies in Southeast Asia.

Conclusion: investment attractiveness of Indonesia golden visa

The Indonesian Golden Visa is an attractive option for investors with a capital of $350,000 or more who want to operate a business or earn investment income in a fast-growing economy. Government bonds with yield 6.5% and real estate with rising prices 5-7% per year offer stable and predictable income. The ability to do business immediately upon arrival makes Indonesia more competitive with programs in Thailand and Malaysia, where doing business is either limited or requires additional permits.

However, political risks such as high levels of corruption (34/100 по Transparency International), and tax obligations for residents may reduce the attractiveness for those expecting a low tax burden. The program is most beneficial to investors planning long-term projects in infrastructure, tourism or manufacturing, where it is possible to benefit from low operating costs and a large domestic market with a population 270 million people.

Thus, Indonesia golden visa Best suited for active entrepreneurs and long-term investors who are prepared to accept possible political and economic risks for the sake of high returns. Investors focused on passive income and low tax rates should consider other countries.