This paper examines the effects of foreign ownership on technology transfer and spillovers in Indonesia. It uses micro data to analyze whether establishments with minority and majority ownership differ in productivity and whether the degree of spillovers varies with the level of foreign ownership. The results show that foreign establishments have comparable high levels of labor productivity, and domestic establishments benefit from spillovers. However, the degree of foreign ownership does not affect the productivity of foreign establishments or the degree of spillovers. The paper also finds that spillovers from foreign direct investment (FDI) exist in Indonesian manufacturing, but the degree of foreign ownership does not seem to affect the amount of spillovers. The findings suggest that local participation with multinationals does not facilitate technology diffusion in the host economy and that spillovers are determined by other factors, such as competitive pressure from FDI. The paper concludes that FDI increases labor productivity in domestic establishments through competitive pressure, and that spillovers are more a result of the increased competition that follows FDI than ownership sharing of the multinational affiliates.This paper examines the effects of foreign ownership on technology transfer and spillovers in Indonesia. It uses micro data to analyze whether establishments with minority and majority ownership differ in productivity and whether the degree of spillovers varies with the level of foreign ownership. The results show that foreign establishments have comparable high levels of labor productivity, and domestic establishments benefit from spillovers. However, the degree of foreign ownership does not affect the productivity of foreign establishments or the degree of spillovers. The paper also finds that spillovers from foreign direct investment (FDI) exist in Indonesian manufacturing, but the degree of foreign ownership does not seem to affect the amount of spillovers. The findings suggest that local participation with multinationals does not facilitate technology diffusion in the host economy and that spillovers are determined by other factors, such as competitive pressure from FDI. The paper concludes that FDI increases labor productivity in domestic establishments through competitive pressure, and that spillovers are more a result of the increased competition that follows FDI than ownership sharing of the multinational affiliates.