How to Start A Business in Indonesia: A Complete Guide

Indonesia is Southeast Asia’s largest economy and one of the region’s most active destinations for foreign direct investment. For most foreign-owned businesses, market entry follows the same structured path: choose an entity type (typically a PT PMA), confirm sector access under the Positive Investment List, meet the minimum investment plan, secure licensing through Indonesia’s OSS-RBA system, and put recurring tax, accounting, and immigration compliance in place.

Key Takeaways

• Foreign investors establish a business in Indonesia primarily through a PT PMA (foreign-owned limited liability company), regulated under Law No. 25/2007 and Law No. 40/2007, as amended by Law No. 6/2023.
• Foreign ownership is governed by the Positive Investment List under Presidential Regulation No. 10/2021, as amended by Presidential Regulation No. 49/2021.
• A PT PMA generally requires a paid-up capital of IDR 2.5 billion and an investment plan of more than IDR 10 billion per KBLI and location, excluding land and buildings, under BKPM Regulation No. 5/2025.
• OSS-RBA handles business licensing and is now governed by Government Regulation No. 28/2025.
• Alternatives to a PT PMA are a Representative Office for non-commercial activities or a PT PMDN for domestic investors.

How to Start a Business in Indonesia as a Foreigner

Starting a business in a foreign country can be both exciting and challenging. With its vibrant economy and diverse market, Indonesia offers promising opportunities for business incorporation for foreign entrepreneurs. If you’re considering venturing into this dynamic landscape, follow these steps to navigate the process of starting a business in Indonesia as a foreigner.

Plan Your Market Entry

Before incorporating, confirm your sector is open to foreign investment under the Positive Investment List (Presidential Regulation 10/2021, amended by Presidential Regulation 49/2021). The list clarifies which sectors permit 100% foreign ownership, which require local partners, and which remain closed.

Choose the Right Business Structure

The two most common options for foreign businesses are:

• PT PMA (Perseroan Terbatas Penanaman Modal Asing): PT PMA is a limited liability company with foreign ownership. The default vehicle for foreign companies that want to trade, manufacture, or generate revenue in Indonesia. Governed by the Investment Law (UU 25/2007), the Company Law (UU 40/2007), and the Omnibus Law on Job Creation (UU 6/2023).
• Representative Office (RO): RO is a non-revenue presence used for market research, promotion, and liaison. Typically issued an operational license for up to two years and cannot conduct sales.

Meet the Minimum Capital Requirement

Indonesia requires foreign-owned businesses to meet minimum capital thresholds. The standard baseline for a PT PMA is:

• IDR 2.5 billion minimum paid-up capital, deposited into a local company bank account after incorporation, per BKPM/Ministry of Investment Regulation No. 5 of 2025 (effective 2 October 2025), which reduced the previous IDR 10 billion paid-up capital requirement by 75%
• IDR 10 billion total investment plan, calculated per five-digit KBLI code and per project location, excluding land and buildings

Both figures are sector-dependent under the Positive Investment List, meaning the actual amounts can vary by KBLI code.

Your investment plan should align with current Ministry of Investment/BKPM regulations, and you should prepare financial statements and a feasibility study to demonstrate your business’s viability.

Obtain Licensing Through OSS-RBA

Navigating Indonesia’s regulatory landscape requires obtaining the appropriate licenses and permits through the OSS-RBA system.

Under the updated Government Regulation No. 28/2025, businesses must ensure their licenses align with their risk classification, business activities, and sectoral requirements.

Work closely with legal experts to secure necessary approvals from relevant authorities such as BKPM and local government agencies. Depending on your business’s risk classification under OSS-RBA, this may include a Business Identification Number (NIB) and, for medium- to high-risk activities, additional permits such as location-related approvals.

Handle Employment, Work Permits, and KITAS

Foreign directors, investors, and skilled employees require a KITAS (Kartu Izin Tinggal Terbatas) to live and work in Indonesia. The most common types for businesses are the Investor KITAS (for shareholders meeting BKPM investment thresholds) and the Work KITAS (sponsored by the company and tied to a work permit / IMTA).

READ MORE:

• Developing A Company? Here are Business Startup Tips to Follow
• How to establish PT PMA in Indonesia
• Easy Investing in Indonesian Business

Things to Consider Before Starting a Business in Indonesia

Before investing or opening a business in Indonesia, companies should review these key factors:

Element	Standard Requirement	Authority
Minimum total investment plan (PT PMA)	IDR 10 billion (sector-dependent)	BKPM / Ministry of Investment
Minimum paid-up capital (PT PMA)	IDR 2.5 billion (sector-dependent)	BKPM / Ministry of Investment
Sector access	Positive Investment List (PR 10/2021, amended PR 49/2021)	Ministry of Investment
Business identifier	NIB (issued via OSS-RBA)	OSS / Ministry of Investment
Licensing pathway	NIB + risk-tier permit (Low / Medium-Low / Medium-High / High)	OSS-RBA
KITAS for foreign staff	Investor KITAS or Work KITAS	Directorate General of Immigration
Corporate income tax	PPh Badan, monthly + annual returns	Directorate General of Taxation (DGT)
VAT	PPN, monthly returns	Directorate General of Taxation (DGT)
Annual financial statements	Per Indonesian Financial Accounting Standards (PSAK/SAK)	Reporting via DGT, BKPM (LKPM)
Investment activity reporting	LKPM, quarterly (varies by size)	BKPM

Regulations such as the Positive Investment List and the licensing framework are revised periodically by the central government, so staying current is essential before and during your market entry.

Client Experience: PT Asia Victory

PT Asia Victory engaged InCorp Indonesia for support across multiple stages of its operations in Indonesia, illustrating the typical post-incorporation service model adopted by foreign-affiliated companies.

The engagement covered four service areas that recur for most foreign-affiliated companies in Indonesia:

• Company Certification: Licensing and certification under OSS-RBA
• KITAS Application: Investor or Work KITAS for foreign directors and employees
• Financial Statement Compliance: Annual statements per PSAK/SAK, with audit where required
• Tax Obligations: Monthly and annual PPh Badan, PPN, withholding taxes filed with the DGT

Read the full client review: PT Asia Victory’s testimonial →

Why This Client Experience Matters

The most common mistake foreign companies make in Indonesia is treating incorporation as a finished project. PT Asia Victory’s engagement illustrates the opposite pattern and matches how Indonesian regulation actually works.

Once a PT PMA is established and the NIB is issued, the obligations begin. Monthly and annual tax filings, annual financial statements aligned with Indonesian Financial Accounting Standards (PSAK/SAK), quarterly LKPM investment activity reports to BKPM, business license and certification renewals, and KITAS renewals for foreign management. Each of these falls under a different authority. Each has its own deadline, format, and language requirement.

Consolidating these with a single provider has measurable operational effects:

• Documentation remains consistent across tax, corporate, and immigration filings, a frequent cause of rejection when handled by separate vendors.
• A single point of accountability reduces hand-off risk between specialists.
• Local-language correspondence with the DGT, BKPM, and Directorate General of Immigration is handled in one place.
• Renewal and filing calendars are tracked together, reducing exposure to late-filing penalties.

That is the service pattern PT Asia Victory’s testimonial describes and that most foreign-affiliated companies in Indonesia ultimately adopt, whether they consolidate with InCorp Indonesia or another provider.

How to Choose the Best Corporate Consulting Firm in Indonesia

For foreign companies evaluating providers, the following criteria are practical filters:

Regulatory Coverage Breadth

A reliable provider should support the full incorporation-to-compliance cycle, including PT PMA registration, KBLI classification, NIB and risk-tier licensing through OSS-RBA, KITAS and work permits, tax filings, financial statement preparation, audit support, LKPM reporting, and ongoing corporate secretarial work.

Splitting these across different vendors is possible, but it can create documentation hand-off risks.

Named, Credentialed Professionals

The firm’s expert profiles should show clear regulatory, legal, tax, accounting, or compliance expertise. For Indonesian compliance work, visible professional experience matters more than general management titles.

Relevant Industry Experience

Choose a provider with experience supporting businesses in your sector, such as manufacturing, trading, technology, healthcare, logistics, hospitality, or professional services.

Sector experience matters because licensing, ownership limits, capital requirements, and reporting obligations can vary by business activity.

Geographic Coverage

Indonesia’s commercial activity is concentrated in Java but continues to expand across Bali, Sumatra, Sulawesi, and Eastern Indonesia.

A provider with multi-location presence can better support regional licensing, coordination, and operational compliance.

End-to-End Compliance Support

Incorporation is only the starting point. The right consulting firm should also help businesses manage post-setup obligations, including tax, payroll, corporate reporting, licensing updates, and annual compliance requirements.

How InCorp Indonesia Meets These Criteria

InCorp Indonesia (an Ascentium Company) has a multi-location presence across Jakarta, Bali, Semarang, and Batam.

• Company Setup and Structuring: PT PMA registration, KBLI classification, and entity structuring support.
• Business Licensing Support: NIB registration, OSS-RBA licensing, and risk-tier licensing assistance.
• Immigration and Work Permit Support: KITAS, work permits, and related documentation for foreign employees and directors.
• Tax, Accounting, and Reporting: Monthly and annual tax filings, financial statement preparation, and LKPM reporting.
• Ongoing Corporate Compliance: Corporate secretarial work, licensing updates, audit liaison, and legal advisory support.

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