How to Start a Business in Indonesia: Costs & Process (2026)

To start a business in Indonesia as a foreigner, you need to register a PT PMA (Foreign-Owned Limited Liability Company), the only legal structure that allows foreign individuals or companies to own shares, generate revenue, and operate commercially in Indonesia. The process takes 4–6 weeks, requires a minimum paid-up capital of IDR 2.5 billion (~USD 150,000), and is completed through Indonesia’s OSS-RBA online system. You do not need to visit Indonesia in person; the full process can be managed remotely.

Why Indonesia? Foreign direct investment reached IDR 900.9 trillion (USD 53.4 billion) in 2025. Over 200 business sectors are now open to 100% foreign ownership. With 278 million consumers and Southeast Asia’s largest economy, Indonesia is one of the world’s most compelling markets for foreign business entry in 2026.

Key Takeaways

• The only legal structure for foreigners to operate commercially in Indonesia is a PT PMA — it allows up to 100% foreign ownership in eligible sectors.
• Minimum paid-up capital is IDR 2.5 billion (~USD 150,000), reduced by 75% under BKPM Regulation No. 5 of 2025.
• The full registration process takes 4–6 weeks and can be completed entirely remotely via Indonesia’s OSS-RBA system.
• Over 200 business sectors are open to 100% foreign ownership; eligibility is determined by your KBLI code under Presidential Regulation No. 10 of 2021.
• All companies must update to KBLI 2025 codes by 18 June 2026 or risk NIB suspension.
• Nominee arrangements (an Indonesian holding shares on your behalf) are explicitly illegal under Article 10(1) of Law No. 25 of 2007.

Why Should You Start a Business in Indonesia? 

If you’re exploring how to start a business in a dynamic and growing market, Indonesia offers compelling reasons for entrepreneurs and investors: 

Free Trade Agreements 

Indonesia participates in several free trade agreements, which expand market access and lower trade barriers. These agreements lower costs for import-export activities and improve global competitiveness for locally based firms. 

Foreign Ownership of Land 

The government allows foreigners to own land under certain conditions, making it more feasible to establish a physical presence in the country. This is particularly advantageous for businesses needing manufacturing facilities, warehouses, or retail spaces. 

English-Speaking Business Environment 

English is commonly used in the Indonesian business sector, making operations smoother for international companies. This lowers communication barriers and enhances cooperation with local employees, clients, and partners. 

Diverse Business Classifications 

Indonesia offers a broad range of classifications, allowing businesses to register under the most suitable category. Whether you’re in tech, trading, or services, there’s likely a legal framework that fits your model. 

Strategic Location 

Positioned at the heart of Southeast Asia, Indonesia serves as a key access point to regional markets. Its proximity to major economies, such as China, India, and Australia, makes it ideal for trade and expansion. 

Growing Economy 

Indonesia has a consistently growing economy, providing a stable foundation for new ventures and investments. Rising domestic consumption and infrastructure development continue to support business activities. 

Reduced Corruption and Bureaucracy 

Reforms and digital systems, such as the Online Single Submission (OSS), have helped reduce red tape and improve transparency. Entrepreneurs now find obtaining licenses, permits, and tax IDs faster and more efficiently, simplifying the legal process of setting up a business.

What Type of Business Can a Foreigner Start in Indonesia?

Before choosing a legal structure, foreigners need to check whether their intended business sector is open to foreign investment.

Indonesia’s Positive Investment List (Presidential Regulation No. 10 of 2021) defines which sectors allow foreign ownership and the permitted percentage of foreign ownership.

There are three main legal structures available to foreign investors:

PT PMA (Foreign-Owned Limited Liability Company)

The most common and recommended structure for foreigners. A PT PMA allows up to 100% foreign ownership in eligible sectors. It can generate revenue, sign commercial contracts, hire staff, sponsor work permits, and register products with Indonesian authorities.

Best for: Any foreigner who wants to operate commercially, sell products or services, or build a long-term business in Indonesia.

Representative Office (KPPA)

A non-commercial presence that cannot generate revenue or sign commercial contracts. It can conduct market research, promote the parent company’s brand, and coordinate with local partners—all with no minimum capital required.

Best for: Foreign companies exploring the market before committing to full incorporation.

Local PT (PT PMDN)

A limited liability company restricted to Indonesian shareholders. Foreigners cannot legally hold shares in a local PT in their own name.

Best for: Indonesian investors only. Foreign investors must use a PT PMA.

Not sure which structure fits your situation? InCorp Indonesia offers a free consultation to identify the right entity type for your business sector, ownership goals, and timeline. Get your free consultation →

Capital Requirements for Starting a Business in Indonesia (2026)

Under BKPM Regulation No. 5 of 2025, the minimum paid-up capital for PT PMA was reduced from IDR 10 billion to IDR 2.5 billion — a 75% reduction that makes Indonesia significantly more accessible to foreign investors, SMEs, and startups.

Requirement	Amount
Minimum paid-up capital (PT PMA)	IDR 2.5 billion (~USD 150,000)
Total investment plan per KBLI	IDR 10 billion (~USD 600,000)
Representative office	No minimum capital
Local PT	Lower — varies by sector

The paid-up capital need not be deposited at the time of registration. A capital declaration letter from shareholders is accepted, with the actual deposit made after the corporate bank account is opened.

Step-by-step: How to Start a Business in Indonesia as a Foreigner

Understanding how to start a business in Indonesia begins with a structured approach and compliance with local laws and regulations. Here are the actionable steps to get you started:

Step 1: Check Your Sector and KBLI Code

(Before anything else)

Before registering, confirm that your intended business activity is open to foreign investment. Every business in Indonesia is classified under a KBLI code (Klasifikasi Baku Lapangan Usaha Indonesia). Your KBLI code determines:

• Whether your sector allows foreign ownership (and what percentage)
• What licenses do you need beyond the NIB
• Your minimum investment plan requirement
• Your risk classification in the OSS-RBA system

Important 2026 deadline: All existing companies must update their KBLI 2025 classification codes by 18 June 2026. New registrations should use KBLI 2025 codes from the start.

Step 2: Choose and Reserve Your Company Name

(1–2 days)

Your company name must have a minimum of three distinct words. It cannot be identical to an existing registered company name or trademark. The name is submitted to and approved by the Ministry of Law and Human Rights (MoLHR) through their online system.

Tips for choosing a name:

• PT PMA companies can use English or other foreign language names
• Avoid generic terms that may be rejected (e.g., “PT Indonesia Business”)
• Have 2–3 name options ready in case your first choice is unavailable

Step 3: Prepare Your Documents and Notarize the Deed of Incorporation

(3–5 days)

A licensed Indonesian notary drafts and authenticates your Deed of Incorporation (Akta Pendirian) and Articles of Association. This document establishes your company’s legal identity and includes:

• Company name, registered address, and business activities (KBLI codes)
• Share structure, capital amounts, and shareholder details
• Names and roles of directors and commissioners

If shareholders are based outside Indonesia, they sign via a notarized and legalized Power of Attorney — no travel required.

Documents you need to prepare:

• Passport copies of all shareholders and directors
• Power of Attorney (if signing remotely)
• Proposed company name and KBLI codes
• Registered Indonesian business address documentation
• Capital declaration letter confirming shareholder funds

Step 4: Obtain Ministry of Law and Human Rights (MoLHR) Approval

(3–7 days)

The notary submits your Deed of Incorporation to the MoLHR electronically. Upon approval, MoLHR issues a Ministerial Decree (SK Menteri Hukum dan HAM) confirming your company is a recognized legal entity. Without this decree, your company cannot proceed with licensing or banking.

Step 5: Register for a Tax ID (NPWP)

(1–2 days)

Your company must register with the Directorate General of Taxes to obtain a corporate NPWP (Nomor Pokok Wajib Pajak — Tax Identification Number). The NPWP is required for:

• Opening a corporate bank account
• Applying for all business licenses
• Filing tax returns and paying corporate taxes
• Importing goods into Indonesia

As of 2026, NPWP registration is processed through Indonesia’s Coretax Administration System.

Step 6: Register through OSS-RBA and Receive Your NIB

(1–2 days)

Your NIB (Nomor Induk Berusaha — Business Identification Number) is issued through Indonesia’s OSS-RBA (Online Single Submission — Risk-Based Approach) system at oss.go.id. The NIB is your company’s master permit and simultaneously functions as:

• Your official business registration number
• Your import license (API-U or API-P)
• Your customs identification number (NIK)
• Automatic BPJS social security enrollment

For low-risk business activities, the NIB alone is sufficient to begin operations immediately. Medium and high-risk activities require additional sectoral permits.

Step 7: Obtain Sector-Specific Licenses (If Required)

(7–20 days, if applicable)

Depending on your KBLI code, you may need additional permits before you can legally begin operations. Common examples include:

• Food and Beverage: BPOM product registration, PIRT license for home production
• Medical Devices: IDAK license from the Ministry of Health (Kemenkes)
• Cosmetics: BPOM notification number (NA number)
• Financial Services / Fintech: OJK license
• Construction: IUJK license from the Ministry of Public Works
• Tourism and Hospitality: Regional government tourism license

InCorp identifies which licenses apply to your specific sector and manages their acquisition on your behalf.

Step 8: Open a Corporate Bank Account

(3–7 days)

Once your NPWP and NIB are issued, open a corporate bank account at an Indonesian bank. You will need:

• MoLHR Ministerial Decree confirming legal entity status
• Corporate NPWP
• NIB
• Articles of Association
• At least one director with a valid Indonesian residency status

InCorp has relationships with several Indonesian banks and can facilitate account opening — in many cases without requiring the director to visit the bank in person.

Step 9: Register Products (If You Sell Physical Products)

(2–8 weeks, depending on product category)

If your business involves selling physical products in Indonesia — food, beverages, cosmetics, health supplements, medical devices, or household products — those products must be registered with the relevant Indonesian authority before they can be sold.

Key product registration requirements:

• Food, beverages, supplements, cosmetics → registered with BPOM
• Medical devices and diagnostics → registered with Kemenkes (IDAK license)
• Household products (cleaners, disinfectants) → PKRT registration with the Ministry of Health

Foreign companies cannot submit product registrations directly. The registration must be held by an Indonesian legal entity — your PT PMA. InCorp handles both PT PMA setup and product registration as a single combined service.

Selling products in Indonesia? InCorp registers products across all categories — from BPOM food and cosmetics to Kemenkes medical devices. See our product registration services →

Common Mistakes Foreigners Make When Starting a Business in Indonesia

Many foreign investors underestimate how local regulations can quickly turn simple business plans into costly compliance issues in Indonesia. These are:

• Using a Nominee Arrangement: Having an Indonesian national hold shares on your behalf is explicitly illegal under Article 10(1) of Law No. 25 of 2007. These agreements are legally void and unenforceable. The legal alternative is direct foreign share ownership through a PT PMA.
• Choosing the Wrong KBLI Code: An incorrect KBLI code can limit your foreign ownership percentage, trigger unexpected licensing requirements, or prevent your bank account from being opened. Always verify your KBLI before submitting any documents.
• Underestimating the Total Investment Required: The minimum paid-up capital is IDR 2.5 billion, but the total investment required under the KBLI code must exceed IDR 10 billion. If your company has two distinct KBLI codes, the requirement doubles.
• Using a Residential Address: Indonesian law requires all companies to register at a commercial address. Residential addresses are not accepted. Virtual offices and serviced offices are legal and widely used alternatives.
• Ignoring Ongoing Compliance: Registration is not a one-time event. Quarterly LKPM reports to BKPM, monthly and annual tax filings, and license renewals are mandatory. Non-compliance leads to fines, NIB suspension, and operational disruption.
• Missing the KBLI 2025 Deadline: All companies must update their business activity codes to the new KBLI 2025 classification by 18 June 2026. Failing to update the risks of NIB suspension.

READ MORE:

• 10 Essential Tips Before Hiring an Outsourcing Company
• Understanding Business Model and How to Choose the Right One
• 10 Key Facts About Consulting Services You Should Know

10 Tips to Register and Expand Your Business in Indonesia 

Knowing how to start a business in Indonesia means more than just registering a company; it also involves understanding the local regulations and requirements. Here are ten tips to guide you from idea to execution: 

Conduct Market Research 

Market research helps you assess whether there’s real demand for your idea in Indonesia. This also enables you to gain insights into consumer behavior, local trends, and current competitors’ activities. This insight can reveal a market gap and inform your positioning strategy. 

Write Your Business Plan 

A business plan outlines your objectives and the path to achieving them. It’s your foundation for operations, marketing, and growth. A solid plan also helps when seeking investors or partners, especially in unfamiliar markets like Indonesia. 

Fund Your Business 

Estimate your capital needs and explore funding options such as local investors, bank loans, or government incentives. Indonesia offers various schemes for small and medium-sized enterprises (SMEs) and startups. Your financial plan should include initial setup, licensing, and operational costs. 

Pick Your Business Location 

Location influences taxes, licensing, and market reach. Whether you choose Jakarta, Bali, or Surabaya, align the area with your industry and target audience. Also, ensure your physical or virtual office meets the legal address requirement for registration. 

Choose a Business Structure 

Based on your ownership and investment model, select a Local PT, PT PMA, or Representative Office. Your structure will impact tax obligations, liability, and administrative requirements. Consult experts like InCorp (an Ascentium Company) to ensure full legal compliance. 

Choose Your Business Name 

Pick a name that reflects your brand and complies with Indonesia’s naming rules. Avoid names that are already registered or inappropriate in the local context. A good name boosts your brand’s memorability and legal protection. 

Register Your Business 

Legalize your business by registering with the Ministry of Law and Human Rights. The process includes submitting the Deed of Establishment and getting approval. Registering also enables you to apply for business licenses and tax numbers. 

Get Federal and State Tax IDs 

In Indonesia, you must obtain an NPWP (Taxpayer Identification Number). This is required for compliance, tax filings, and financial transactions. Additional documents may be necessary for foreign businesses. 

Apply for Licenses and Permits 

Use the OSS system to secure the necessary licenses for your sector. Different industries, such as food, trading, or tourism, have unique licensing requirements. Ensure compliance with local, regional, and sector-specific regulations. 

Open a Business Bank Account 

A corporate bank account separates personal and business finances. You’ll need your registration documents and NPWP to open one. It simplifies accounting and builds credibility with clients and suppliers. 

How InCorp Can Assist You in Starting and Growing Your Business 

InCorp Indonesia (an Ascentium Company) has helped companies from over 40 countries start businesses across Jakarta, Bali, Semarang, Batam, and Surabaya. We handle the full market entry process, from PT PMA registration and product licensing to tax compliance and work permits.

What we manage for you:

• PT PMA and representative office registration
• KBLI sector verification and Positive Investment List checks
• Document preparation, notary coordination, and OSS-RBA submission
• Product registration: BPOM (food, cosmetics, supplements), Kemenkes (medical devices), PKRT (household products)
• Corporate bank account facilitation
• Investor KITAS and work permit applications
• Ongoing LKPM reporting, tax compliance, and corporate secretarial services

Receive expert guidance and end-to-end support to set up your company. Start your Indonesia business setup →

Also planning to sell products in Indonesia? We can handle your PT PMA setup and your BPOM, Kemenkes, or PKRT product registration as a single combined service — saving you weeks of additional setup time. Learn more about product registration →

Frequently Asked Questions