Home Blog Addressing Business Challenges in the Indonesian Market Business Licenses | Company Registration Addressing Business Challenges in the Indonesian Market InCorp Editorial Team 4 June 2025 5 minutes reading time Table of Contents Indonesia's Business Environment The Challenges of Doing Business in Indonesia How Can Companies Deal with the Business Challenges? How InCorp Indonesia Can Assist In Indonesia’s dynamic and diverse business landscape, addressing business challenges is crucial for organizations aiming to thrive and expand. Organizations must navigate complex regulatory frameworks to stay compliant. Companies must also grasp cultural nuances to capitalize on the Indonesian market’s immense opportunities. Read on to discover why overcoming these obstacles is vital for businesses aiming to maximize growth and succeed in Indonesia. Indonesia’s Business Environment Now with the expansion of the middle class, Indonesia’s population exceeds 260 million. The situation leads to potential growth with a nominal GDP of approximately 1 trillion USD. Therefore, it has become a focal point for investors seeking a stake in its rapidly growing market. The country is gradually reducing its reliance on exporting raw materials as it transforms towards a modern economy driven by industry and services. Despite undergoing political changes inherent to its democratic system, Indonesia displays considerable economic resilience. By implementing policies that prioritize the development of new infrastructure and fostering a business-friendly tax environment, Indonesia aims to achieve sustainable, long-term growth and enhance its appeal to businesses of all sizes. The government has set ambitious growth objectives and addresses the logistical challenges of connecting a nation comprising more than 17,000 islands. The new venture opens up new business challenges to tackle. Read more: Unlocking Investment Opportunities in The New Capital of Indonesia. The Challenges of Doing Business in Indonesia Indonesia’s inclusive growth projection by Standard Chartered highlights its emergence as a dominant force in Asia. However, business challenges may hinder private-sector development. Nevertheless, businesses can still benefit by capitalizing on Indonesia’s growth prospects and seeking local support. 1. Starting a Business According to the World Bank and International Finance Corporation (IFC), Indonesia is ranked 166th globally regarding ease of doing business. Establishing a corporate entity in Indonesia involves nine procedures and takes an average of 47 days, compared to the OECD average of five methods. 2. Permits and Licenses Acquiring construction permits in Indonesia takes an average of 158 days and involves 13 procedures. The lengthy process includes certificates and consultations with the Zoning Department and the land and building tax office. Other permits from the Ministry of Industry and Trade regional office are required. The bureaucratic process often stretches for long periods. However, the Indonesian government has enhanced this by providing a streamlined system. 3. Property Registration Registering property in Indonesia takes 22 days and involves six procedures. The process will include land certificate examination and tax payment on acquisition. The cost of registering property is also considerably higher than the OECD norm. 4. Securing Funding According to the World Bank and IFC, Indonesia ranks 129th in the world for ease of getting credit. However, efforts are being made to restore its credit reputation by improving the asset-based lending system and promoting a real property registration system. 5. Tax Regime A significant 51 tax payments will be made annually in Indonesia, requiring an average of 259 hours of company time. In addition, processing corporate income tax takes 75 hours, while social security contributions and VAT add another 184 hours. 6. Enforcement and Insolvency Enforcing contracts in Indonesia takes 498 days and incurs substantial costs. Similarly, insolvency cases have an average duration of 5.5 years, with a low recovery rate of 14.2 cents on the dollar, contrasting with the OECD average of 70.6 cents. How Can Companies Deal with the Business Challenges? Guide to Doing Business in Jakarta Mailchimp Free eBook Indonesia Business Insight Newsletter Full NameEmail I have read InCorp's Privacy Policy and agree to InCorp using my information provided to contact me about related content, and services.*Subscribe Despite bureaucratic challenges, starting businesses in a new country can be overwhelming. Some may feel unprepared due to a lack of local knowledge, capital distribution, or confusion about business concepts in other regions. Here are some general guidelines and valuable tips before starting a business in Indonesia. 1. Start Without Hesitation The first crucial step for aspiring business people is to start. Taking risks and pursuing goals is essential. Moving forward means broadening your horizons, expanding networks, and opening doors to countless opportunities. 2. Focus on Making an Impact, Not Just on Profits Focusing on something other than immediate large turnovers and rewards is essential to tackle any business challenges. Successful entrepreneurs often emphasize that money isn’t their primary motivation. Instead, start small and concentrate on providing excellent customer service. 3. Leverage Modern Technology Embrace the advantages of technology in your business. Social media can significantly empower your business by effectively marketing and establishing strong brand awareness. In addition, digital platforms offer cost-effective advertising and enable businesses to operate 24/7 without incurring high rental and manpower expenses associated with physical stores. 4. Foster Relationships Building connections is vital for business success. Seek partnerships and collaborations with trustworthy individuals, whether they are close acquaintances or potential investors. 5. Keep It Simple When starting your business, consider starting with a simple concept. Simple ideas often have a solid pioneering appeal. Moreover, successful businesses don’t have to be complex; they exist to solve real-world problems. Read more: EV Battery Indonesia: Understanding the Opportunities and Challenges How InCorp Indonesia Can Assist Indonesia presents significant opportunities for entrepreneurs and businesses with its ambitious economic growth. Nevertheless, starting a business in Indonesia entails navigating challenges that require careful consideration. For entrepreneurs embarking on a new journey, InCorp Indonesia (An Ascentium Company) offers a one-stop solution for business licensing and company registration. This service may be integral to successfully maneuvering the business challenges in Indonesia. Read Full Bio Verified by Hotdo Nauli Senior Legal & Delivery Manager at InCorp Indonesia Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). Frequently Asked Questions What responsibilities does a PMA company have in terms of non-tax compliance? In Indonesia, a PMA company is typically required to submit various reports to relevant authorities, such as: Annual financial report Investment realisation report Manpower and employee welfare report Expatriate utilisation report Company loan repot Foreign exchange and prudential principles report However, depending on the business activities and classification relevant authority may require additional reports from a PMA company. How A PMA company can be eligible to conduct import activities? What licenses and procedures are necessary while engaging in import-related activities? A PMA company in Indonesia must obtain an NIB, which also functions as: Importer Identification Number (Angka Pengenal Impor or API) Producer Importer Identification Number (Angka Pengenal Impor Produsen or API-P), which is required for the import of machinery and equipment, goods, and materials used in production. General Importer Identification Number (Angka Pengenal Impor Umum or API-U), which is required for the import of specific goods for trading purposes, is grouped under one section in the Customs Classification System. Customs Identification Number (Nomor Identitas Kepabeanan or NIK), It functions as an identifying document for the applicable Customs and Excise authorities during the customs clearance process. Some goods may face limitations or restrictions on importation in Indonesia, potentially requiring additional approval from the Ministry of Trade. Recommendations from technical ministries like Industry or Agriculture may influence these approvals. Is it required to hire Indonesian staff in the PMA company? In Indonesia, the necessity of hiring Indonesian employees by foreign companies typically arises from commercial requirements, regulatory mandates in specific sectors like construction or shipping, or as part of employing foreigners to fulfill knowledge transfer obligations. Will the government check the minimum paid-up capital for doing business in Indonesia? The government will check the minimum paid-up capital, IDR 10,000,000,000. Fulfilling this requirement is a must. Get in touch with us. Lead Form Notify Full NameEmailPlease provide corporate email where possiblePhone NumberOffice SetupWhich city are you planning to expand into?JakartaSemarang/Central JavaBali/LombokBatam/SumateraSurabaya/East JavaOther ProvincesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Package (20% OFF)[SPECIAL PACKAGE] Product Registration + License Holder (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration + Office Service (20% OFF)[SPECIAL PACKAGE] Comprehensive Industrial Package (15% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (25% OFF) + Office Space (Private Office 30% OFF)[SPECIAL PACKAGE] Company Registration + Investor KITAS (25% OFF)[SPECIAL PACKAGE] Accounting + Tax Services+ Annual Fintax Report (20% OFF)[SPECIAL PACKAGE] Payroll Services for Executive Role (20% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -[SPECIAL PACKAGE] Company Registration (20% OFF) + Office Service (25% OFF)[SPECIAL PACKAGE] Company Registration + Micro Finance Services (25% OFF)[SPECIAL PACKAGE] Property Assistance: Due Diligence + AJB Purchase/Lease Agreement (25% OFF)Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesType of Service- Please Select -Business SetupAccounting and TaxHR & Payroll servicesImmigration ServicesProduct Registration and ImportCompliance and Secretarial ServicesBusiness AdvisoryMore ServicesServices Company Registration Renting Virtual and Serviced Office Business and Import Licenses Corporate Recovery and Insolvency Closing of Company (Dissolution) Land and Property Ownership Shelf Company Local NomineeServices Accounting and Tax Reporting Audit and Review Transfer Pricing Compliance Tax RefundHuman Resource Sub Services Payroll Outsourcing Employer of Record Recruitment and HR Establishment Employment ServiceServices Business Visa Work Permit and KITAS Dependent Visa (Spouse and Family) OtherBusiness Visa Subservices Business Visa Visit Visa Visa ExtensionServices Medical Device Beauty (Skincare and Cosmetic) Food and Beverage Health Supplement Household Product Halal Certification TrademarkServices Legal Consultation Legal Agreement Service Due Diligence and Background Check Company Documents RevisionBusiness Advisory Business Advisory Services ESG Reporting & Advisory Internal Audit Risk ManagementMore Services Market Research and Analysis Local Distributor and Partner Bank AccountMessageSubmit What you’ll get A prompt response to your inquiry Knowledge for doing business from local experts Ongoing support for your business Disclaimer The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website. More on Business Licenses Unlocking Investment Opportunities in The New Capital of Indonesia Read more Indonesia’s Halal Industry: Redefining Traditions in Travel, Fashion, and Business Read more Investment Trends during Indonesian Presidential Elections Read more