Indonesia and Timor-Leste Sign Investment Treaty
Indonesia and Timor-Leste have signed a bilateral investment treaty designed to provide a framework for promoting, facilitating and protecting investment between the two neighbours. Indonesia’s Ministry of Investment and Downstream Industry and the Investment Coordinating Board, known as BKPM, announced the signing in Jakarta on 15 October.
The agreement was signed by Indonesia’s investment minister, Rosan Perkasa Roeslani, and Timor-Leste’s deputy prime minister and coordinating minister for economic affairs, Francisco Kalbuadi Lay. BKPM said the treaty follows discussions initiated in 2023, negotiations from November 2024 and legal review completed in August 2025.
A framework, not an immediate investment tally
The bilateral investment treaty, or BIT, is intended to establish a legal basis for investment promotion, facilitation and protection. BKPM said it is meant to encourage capital and technology flows while preserving each country’s authority to set lawful national policies.
That makes the signing an institutional milestone rather than evidence of a specific new investment commitment. The economic impact will depend on implementation, investor appetite and the projects that businesses ultimately choose to pursue.
Existing business links provide a starting point
BKPM said about 120 Indonesian private companies already invest in Timor-Leste. Indonesian state-owned enterprises and large businesses active there include Bank BRI, Bank Mandiri, Pegadaian, Telkomsel, Pertamina International Timor, Waskita Karya, PT PP and Adhi Karya.
The ministry also cited two-way trade of US$150 million, with Indonesia supplying goods including vehicles and parts, processed flour products, and animal or vegetable fats and oils. Timor-Leste supplies products including coffee, tea, spices, machinery and mechanical equipment, according to the release.
Sectors identified for future collaboration
The two governments identified downstream industries and manufacturing, infrastructure, renewable energy, logistics, real estate and digital technology as areas for potential collaboration. The treaty also envisages information sharing on investment opportunities and greater private-sector participation.
For companies, a clearer bilateral framework can reduce uncertainty around market engagement, but it does not replace commercial due diligence, project approvals or the regulatory requirements that apply in either country. Those practical steps will determine whether the treaty leads to investable projects.
Why the agreement matters regionally
The pact reinforces Indonesia’s economic links with its newest ASEAN neighbour at a time when Timor-Leste is seeking to broaden private-sector activity and attract capital. For Indonesia, the agreement creates a structured channel for companies already operating across the border and those assessing future opportunities.
Its value should be measured over time by the quality and durability of resulting investment, not by the signing ceremony alone. The first signals to watch will be whether agencies translate the framework into usable investor information, facilitation and projects in the sectors identified by both governments.
