Without having the total knowledge of the question you ask - I am quite sure that it is possible for a foreigner to buy a motorbik in Indonesia. Ask HUBB-member Rocketz who is an indonesian bikemechanic and bikerider who lives and works in a city called Solo (also known as Surakarta) on central Java. I know he have hlped foreigners buying bikes in Indonesia.

Rocketz own thread: http://www.horizonsunlimited.com/hub...ndonesia-76018

About insurance I dont know, most likely not...

About riding Sulawesi - yeas that island is exactly as wild as it looks on the map.
I rode approx 5000 kms in one month there earlier this year. And on my trip from Norway via eastern Europe, central Asia, China, southeast Asia and right now Australia I can say it is one of the highlights if not the highlight of my trip.
Its so wild, its so diverse, its so little travelled by foreigners and its people are amazing when it comes to helpfulnes, hospitability and general frindliness - that I can never forget it. Even the local police fed me, paid my hotel - two nights actually. Where else in the world would that happen? Also other people invited me to stay in their homes and helped me along the road when I needed it. I wasnt allowed to pay meals when I ate with locals.

The traffic is quite intense on Sulawesi but not as bad as on Java and Bali. Similar to Sumatra I would say. But it is wilder - vehicles without reggo plates, without lights and with underaged drivers. And people drive exactly where they want on the road, left, right in the middle. And they turn whenever they want without looking. But its not so bad north of Palu until 100-200 kms before you reach Manado. And around the central eastern parts its just magnificent beautiful and low traficced.

Just send me a pm if you need more information...

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In the end everything will be fine. If its not fine its not the end....