Indonesia - Market Insights

Indonesia’s mergers and acquisitions (M&A) market enters 2026 at an important turning point. The overall outlook remains attractive: Indonesia is the largest economy in Southeast Asia, with a population of over 280 million, abundant natural resources, rapid digital adoption, and a regulatory framework that continues to develop. However, dealmakers are now operating in the most challenging environment seen in the past decade.

Higher global interest rates, shifts in supply chains, energy transition needs, domestic political changes, and tighter regulatory oversight have all affected how transactions are structured and negotiated. As a result, M&A in Indonesia is no longer solely driven by growth; it is increasingly about managing risk and structuring deals carefully.

Recent domestic political shifts and regulatory updates have also shaped investor sentiment. The introduction of new rules requires investors to pay closer attention to regulatory compliance and strengthen their local partnership strategies. In this evolving landscape, Danantara, Indonesia’s sovereign wealth fund, plays an increasingly significant role in supporting and shaping the Indonesian economic priorities.

This article examines the main trends shaping corporate M&A in Indonesia, focusing on renewable energy, mining, technology and data centers, manufacturing, healthcare, and other sectors that are expected to expand in 2026.

Renewable energy

Indonesia’s commitment to energy transition remains one of the strongest long‑term drivers of investment and M&A activity. The government’s net-zero targets and its plan to gradually reduce coal use continue to reinforce the importance of renewable energy. As a result, acquisitions and joint ventures in solar, geothermal, hydropower, and battery-related projects remain priority opportunities for both strategic and financial investors.

For many, renewable energy is still one of the most attractive sectors in Indonesia, however successful projects require careful planning and preparation.

Key issues that affect how renewable energy deals are structured include:

• risk sharing under Power Purchase Agreements (PPAs) with the state-owned electricity company Perusahaan Listrik Negara (PLN) and certainty of tariffs;
• compliance with local content (TKDN) requirements and how this affects project costs;
• challenges in acquiring land for large-scale solar and hydropower projects;
• foreign ownership limits; and
• Environmental, Social, and Governance (ESG) related financing requirements from international lenders.

Government‑led initiatives further demonstrate Indonesia’s long‑term commitment to clean energy. A notable example is Danantara’s Waste-to-Energy projects in some Indonesian cities that show the government’s commitment to renewable energy.

Mining

Nickel, coal and gold continue to be the primary focus of Indonesia’s mining sector. Indonesia’s downstreaming policy continues to influence M&A activity in the mining sector. The government’s policy banning the export of raw minerals has encouraged companies to invest in smelters, battery materials, and integrated processing facilities to promote domestic processing and increase added value within the country.

This policy has created strong investment demand in:

• smelters and refining facilities;
• battery materials processing;
• integrated electric vehicle supply chains; and
• infrastructure support around mining sites.

A recent regulatory development that foreign investors should monitor is the potential for mining areas and licenses to be granted to micro, small, and medium enterprises (MSMEs), cooperatives, religious community organizations, and regional-owned enterprises. Although the policy is still evolving, it reflects the government’s broader objective of increasing local participation and distributing economic benefits more widely.

For foreign investors, this may affect how mining concessions are allocated in certain areas and may require partnerships or joint ventures with locally affiliated entities. While this development does not diminish the attractiveness of Indonesia’s mining sector, it highlights the close link between mining investment and social and regional development policies.

Technology and data centers

Indonesia’s technology sector has matured, and investor priorities have shifted toward sustainable business models. In both e-commerce and fintech, greater attention is being placed on compliance with financial services and consumer protection regulations, as well as robust data governance and security.

The market has also moved toward secondary transactions and strategic consolidations, away from large venture funding rounds aimed at rapid startup expansion. In parallel, development of data centers has emerged, driven by Indonesia’s data localization requirements and the continued growth of the digital economy and artificial intelligence.

M&A transactions in this sector often involve complex land and property arrangements, securing stable and reliable power supplies (including renewable energy solutions), long-term agreements with anchor tenants, and ESG considerations related to energy consumption and operational sustainability. As a result, data centers are increasingly viewed as infrastructure investments, attracting sovereign wealth funds and infrastructure-focused private equity. This reflects a broader transformation in the technology sector, from venture-driven growth toward capital-intensive infrastructure models that prioritize long-term stability and operational resilience.

Manufacturing and supply chain

Indonesia’s manufacturing sector continues to attract strong foreign investment due to its large domestic market, competitive labor force, improving infrastructure, and consistent government support for industrial expansion. Growth is visible in electric vehicle components and battery production, electronics assembly, consumer goods, food processing, and industrial chemicals. For many investors, Indonesia offers a production base as well as access to a fast-growing consumer market, creating dual revenue potential.

Industrial estates and special economic zones play an important role in manufacturing investments. These areas often provide integrated infrastructure, tax incentives, and customs facilities that improve project economics. However, investors should conduct careful due diligence on:

• land title and duration of land-use rights;
• eligibility and conditions for tax holidays or allowances;
• import duty and bonded zone facilities;
• reliability of utilities and logistics access; and
• zoning compliance and operational permits.

Acquisitions of existing facilities require review of environmental compliance and potential legacy liabilities. Employment matters must also be considered as Indonesian labor law provides statutory protections and severance obligations. With proper structuring and compliance, Indonesia’s manufacturing sector remains an attractive long-term opportunity for foreign investors.

Healthcare

Demand for higher-quality healthcare services nationwide has positioned the healthcare sector as a major focus of M&A activity in Indonesia. This trend is further supported by the growth of Indonesia’s middle class and the expansion of the national health insurance system.

M&A of hospital groups require careful legal and operational review. Investors must verify the level of compliance of the target given that the business is highly regulated. In addition, exposure to reimbursement risks from the national social security agency (Badan Penyelenggara Jaminan Sosial (BPJS)) must be assessed, including payment timelines and tariff structures. Private equity investors remain active given the promising growth potential in this sector.

The business is more mature in the pharmaceutical sector, given the long presence of multinational pharmaceutical companies. The consolidation and acquisition of products amongst major players remains a focus of M&A transactions in this sector. Although the government always encourages investment for the domestic production of active ingredients, the established global supply chain in the pharmaceutical sector still plays a significant role in supplying the raw materials for local pharmaceutical production.

Emerging sectors to watch in 2026

Looking ahead, several sectors are expected to attract more M&A transactions in 2026. These areas align closely with Indonesia’s national priorities, global sustainability trends, and the continued expansion of the digital economy.

Carbon and environmental services. Indonesia has significant forestry resources and is positioning itself as a major supplier of carbon credits, supported by its extensive forestry resources and large‑scale conservation areas. This may lead to more acquisitions of carbon project developers, carbon trading platforms, and verification companies.

Agritech and food security. Food security has become a national priority, driven by population growth, climate pressures, and the need to strengthen domestic supply chains. As a result, technology-based agricultural platforms and integrated plantation businesses may become attractive targets. Investors are interested in improving productivity, supply chain efficiency, and long-term sustainability in the food sector.

Financial sector. Indonesia’s financial sector has grown and transformed significantly in recent years, driven by a young digital population, rising internet penetration, and government efforts to modernize the financial system. Beyond consumer‑focused fintech, there is now increasing attention on the “backbone” of the financial system: the infrastructure and platforms that enable secure, efficient, and scalable financial transactions. These financial sector players are becoming increasingly important as Indonesia’s economy continues to digitize and demand for reliable financial infrastructure expands.

Structural themes shaping Indonesian M&A

Across different sectors, several common trends are shaping M&A activity in 2026. There is a stronger focus on regulatory compliance, which is no longer addressed only after closing but now plays a key role in determining valuation and transaction structure from the outset. Foreign investors are increasingly open to taking minority stakes, provided that they obtain robust governance rights, reserved matters, and clear exit mechanisms to protect their investment.

Environmental and social considerations have also become central to transactions, influencing access to financing, pricing discussions, and the scope of representations, warranties, and indemnities. In addition, parties are adopting more flexible deal structures, including earn-outs, deferred payments, escrow arrangements, and phased closings, to manage risk and bridge valuation gaps. At the same time, higher borrowing costs have placed pressure on highly leveraged companies, creating selective opportunities for distressed acquisitions and restructuring transactions.

Final perspective

Indonesia’s corporate M&A market is moving away from simple growth-driven deals toward transactions that are more carefully structured and focused on managing risk. This should be viewed as a sign of market development rather than a barrier. Today, successful dealmaking in Indonesia is not only about choosing the right sector. It is about managing execution risk.

Key areas of risk include:

• changes or uncertainty in regulations;
• multiple layers of licenses;
• land and environmental issues;
• policy shifts in key sectors; and
• uncertainty in dispute resolution and enforcement.

The opportunities in Indonesia remain significant. The country’s young population, digital expansion, energy transition plans, and industrial development continue to support strategic M&A activity. However, one clear lesson for 2026 is that transactions which properly assess and price regulatory and structural risks are more likely to reach completion.

For legal professionals and business leaders, the key challenge is not only navigating Indonesian laws, but also understanding how regulation, policy, and commercial strategy interact in a fast-changing environment. Indonesia remains one of the most promising M&A markets in Asia, but success requires careful preparation, thoughtful structuring, and disciplined execution.