How to Establish a University in Indonesia with Foreign Investment

It is now possible to establish a university in Indonesia through foreign investment, thanks to the implementation of Regulation No. 53 of 2018 regarding Foreign Higher Education (also known as MRHE Regulation 53/2018) that has been effective since October 30, 2018.

However, the investment needs to fulfill certain requirements and is subject to some restrictions in Negative Investment List (DNI). One of the requirements is the obligation to cooperate with a local university.

The higher education sector falls under category 85321 in the Klasifikasi Baku Lapangan Usaha Indonesia (KBLI). Under the scope of KBLI 85321, a higher learning institution can be managed by a private institution and participate in the fields of technology, knowledge and research, knowledge, technology and the arts.

In this guide, Cekindo will show you how you can establish a university in Indonesia with foreign investment.

Foreign University Establishment: Requirements and Limitations

Foreign entities need to meet the requirements and restrictions under Higher Education Law in Indonesia regarding the establishment of higher learning institution in Indonesia.

Under Indonesia’s Higher Education Law, investors need to establish a college if they want to get involved in the higher education sector. The two types of college are: Perguruan Tinggi Negeri (PTN or state college) and Perguruan Tinggi Swasta (PTS or private college)

PTN and PTS are allowed to be established in the form of institute, university, vocational school, academy, polytechnic, or community academy.

According to GR 4/2014 the government is the body that can establish a state college and a community non-profit group (yayasan or perkumpulan) is the one that can establish a private college.

Foreign Investments are Permitted in Higher Education Sector

MRHE Regulation 53/2018 allows foreign investors to set up a foreign university in Indonesia without the need of yayasan, perkumpulan or other non-profit entities.

Under this regulation, foreign colleges can establish a foreign institution (PTLN) in Indonesia. A PTLN needs to comply with the requirements below:

• The PTLN is required to be set up in a special economic zone.
• The foreign university must be a non-profit institution.
• The foreign university must be recognised and accredited in its country of origin.
• The foreign university must be in the world’s top 200 universities.

All establishments of PTLN are subject to the relevant minister’s permission and must be done in cooperation with a yayasan, perkumpulan or other non-profit entities.

Here are the procedures to establish a PTLN:

1. All submissions of applications for PTLN licensing must comply with the Online Single Submission (OSS) agency and be carried out through the OSS system.
2. Acquire a Business Identification Number (NIB) through OSS.
3. Submit all required documents through OSS to designated websites.
4. Documents will be verified in 30 business days.
5. The ministry will approve or reject the PTLN application after the verification.

To reiterate, even though a foreign university can apply for a NIB without first setting up a legal entity in Indonesia, the foreign university must first go through the consultation with MRHE regarding its plan of PTLN establishment in Indonesia. MRHE will require the foreign university to cooperate with a local university before the NIB application.

How Cekindo can Help

Cekindo’s expertise and expansive network of contacts work collaboratively to develop business solutions for organisations of all sizes in Indonesia.

As your business consultant, we will assure that you can benefit from our know-how and experience by seizing every opportunity in Indonesia.

We are here to support your business venture by successfully establishing a foreign university or higher learning institution in Indonesia. Contact us today for a no-obligation consultation. Fill in the form below.