New Laws in Indonesia: What Foreigners, Tourists, and Investors Need to Know in 2023–2026
New Laws in Indonesia: What Foreigners, Tourists, and Investors Need to Know in 2023–2026
Since January 2023, Indonesia has initiated major legal reforms affecting its criminal code as well as foreign investment regulations. These changes impact both locals and foreigners — whether tourists, expats, or business owners.
One of the most significant developments is the introduction of the new Indonesian Criminal Code (KUHP), enacted under Law No. 1/2023 (Undang-Undang Nomor 1 Tahun 2023 tentang Kitab Undang-Undang Hukum Pidana). It replaces the colonial-era Dutch code and includes over 600 articles addressing morality, privacy, religious practices, and public order. While the law officially came into effect on January 2, 2023, many of its provisions will be gradually implemented through 2026.
This article provides a structured guide to the key elements of Indonesia's new legal framework — designed to help prevent missteps when relocating, launching a business, or residing long-term in the country.
Table of Contents
- 1. New Criminal Code: Key Provisions
- 2. Changes for Foreign Investors
- 3. What to Consider for Immigration or Business
- 4. Conclusion: Managing Legal Risks
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1. New Indonesian Criminal Code: Key Changes
The KUHP passed in January 2023 introduces new norms focusing on private behavior, conduct, and individual liberties. While some provisions are active, full implementation will extend until 2026.
Sexual Relations and Cohabitation Outside Marriage
Under Article 411 of the new KUHP:
- Sexual acts outside of marriage may carry a prison sentence of up to one year.
- Cohabitation (unmarried couples living together) may be punishable by up to six months in prison.
- Note: These cases are initiated through personal complaints — from a spouse, parent, or child of the accused.
Although enforcement of these rules remains inconsistent and often targets locals, foreigners residing in or visiting Indonesia are also subject to the law. On Bali, for instance, unmarried couples may face challenges renting accommodations, particularly outside of tourist zones.
Violations of Religious Norms and Freedom of Expression
The new criminal code imposes serious limitations on speech related to religion and national symbols:
- Blasphemy (Pasal 300) — punishable by up to five years in prison;
- Insults against the president, national flag, or anthem (Pasal 240) — up to three years in prison;
- Promotion of atheism — if perceived as undermining religious values, is also a punishable offense.
This carries particular importance for bloggers, YouTubers, journalists, educators, and media creators. Public statements should respect religious sensitivities — especially in regions like Java, Sumatra, or Lombok, where religious norms often outweigh secular perspectives. ---
2. What Changed for Foreign Investors and Business Owners
The government maintains a strong focus on attracting foreign capital. In 2023, new regulations under Perppu 2/2022 and the updated Omnibus Law aimed at simplifying business operations came into force. These affect company registration, capital structure, and taxation.
Minimum Capital Requirements for PT PMA
To set up a foreign-owned company (PT PMA — Perseroan Terbatas Penanaman Modal Asing), the following capital criteria remain mandatory:
- 10 billion Indonesian Rupiah (approximately USD 650,000) in minimum authorized capital;
- At least 25% of this amount must be paid in at the time of registration.
This rule is enforced by BKPM (Indonesia Investment Coordinating Board). Submitting false capital declarations may result in business license suspension or cancellation.
Converting Loans into Capital
As per the Omnibus Law, a foreign investor can convert loans issued to a company into equity — without triggering immediate taxation, provided no dividends are distributed. This facilitates long-term investments while reducing tax exposure.
Financial Reporting and Transparency
Foreign-owned companies (PT PMA) are required to submit regular reports:
- To BKPM — disclosing ownership structure, financial performance, and investment activity;
- To tax authorities — adhering to transparency rules and deadlines.
Delays or inaccurate reporting can lead to financial penalties or license suspension. ---
3. Relocation, Business, Tourism: Practical Implications of the New Laws
If You Plan to Relocate with Permanent Residency/KITAP
Living with a partner outside of marriage is now formally penalized. If you plan to live together in Indonesia, legal marriage can help avoid complications with housing, address registration, or immigration authorities.
If You Are Investing in a Company or Property
Establishing a business under the PT PMA structure is recommended — allowing full asset control, local hiring capability, eligibility for a KITAS (stay/work permit), and participation in public tenders. Plan your investment capital carefully with consideration for tax implications.
If You Work in Media, Blogging, or Education
Exercise utmost caution when addressing issues related to religion or national symbols. Avoid criticizing Islamic practices, referencing atheism, or satirizing religion — especially in content published in the Indonesian language.
If You Are a Tourist
While criminal complaints must come from family members, in practice, some hotels and private rentals may deny accommodation to unmarried couples. This is particularly common outside of Bali — such as in Javanese cities or Lombok.
It's advisable to avoid public displays of affection in conservative regions and to always carry identification, especially when traveling inland. ---
4. Conclusion: Understanding the Law Is Key to a Safe and Successful Life in Indonesia
Indonesia’s legal system is undergoing major shifts. The new Criminal Code increases control over personal behavior and speech, while the regulatory framework for investment becomes stricter and more transparent.
✔️ If you are relocating, starting a business, or planning a long-term stay — it's crucial to understand not just the letter of the law, but how it's enforced in practice.
Consulting a local lawyer, formalizing your relationship through marriage, and legally structuring investments are essential steps toward minimizing risks and establishing a secure foundation in Indonesia. ---
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Sources
- Undang-Undang Nomor 1 Tahun 2023 tentang KUHP
- Perppu Nomor 2 Tahun 2022 tentang Cipta Kerja
- BKPM Guidelines on Foreign Capital Investment (2023)
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Case Example: How the Law Is Applied on Bali
In early 2024, a district in northern Bali cancelled a villa booking for an unmarried couple, citing local community rules. Although portions of the KUHP were not yet fully enforced, local authorities have the discretion to impose restrictions in advance of federal implementation. This underscores the importance of understanding unwritten local practices alongside formal legislation.
