Home Blog Top 5 Reasons Why Expand Your Business to Indonesia in 2025 Business Setup | Indonesia | PT PMA Top 5 Reasons Why Expand Your Business to Indonesia in 2025 InCorp Editorial Team 5 December 2024 6 minutes reading time Table of Contents Indonesia Business Setup: Top 5 Reasons to Expand in 2025 Trade Agreements Boosting Business Prospects Investment Incentives in Indonesia How to Start Your Own Business in Indonesia? Permitted Land Ownership for Foreign Investors Start Setting Up Your Business in Indonesia with InCorp Indonesia, the world’s largest archipelago, offers an ideal blend of cultural richness, natural beauty, economic potential, and opportunities for Indonesia’s business setup. In this article, we will delve into why investing in Indonesia is a smart decision, explain the process of starting a business in Indonesia, and highlight key factors such as PT PMA Indonesia, business costs, and regulatory requirements. Indonesia Business Setup: Top 5 Reasons to Expand in 2025 Indonesia offers vast opportunities for businesses seeking high growth potential. Its growing middle class, large labor pool, and strategic position in global trade routes make it a premier destination for investors. Robust Economic Growth Indonesia is one of the biggest economies in Southeast Asia and ranks among the top 20 economies in the world. In the third quarter of 2024, the country experienced a GDP growth rate of 4.95 percent compared to the same quarter of the previous year. According to Trading Economics global macro models and analyst expectations, Indonesia’s GDP annual growth rate is projected to reach 5.20 percent by the end of this quarter. With strong domestic demand, Indonesia provides a favorable environment for long-term investments. Strategic Location and Developed Infrastructure Indonesia connects Asia-Pacific to global markets at the crossroads of big global trade routes. Its proximity to powerhouse economies like China, India, and ASEAN nations enhances its strategic importance. Massive investments in ports, airports, and toll roads enhance connectivity and support economic growth, creating thriving business opportunities. Large Consumer Market With over 275 million people and a growing middle class, Indonesia offers a massive and expanding market for consumer goods, technology, and services. Competitive Labor Market Indonesia provides a cost-effective labor force, with wages significantly lower than those of neighboring countries like Singapore and Malaysia. This makes it ideal for labor-intensive industries. Investment-Friendly Policies The Indonesian government supports foreign investments with tax reductions, incentives for PT PMA Indonesia, and simplified registration processes. READ MORE:3 Key Considerations before Setting up a Business in IndonesiaFranchise Agreement and Business in Indonesia Trade Agreements Boosting Business Prospects Indonesia has entered several significant trade agreements, making it a vital player in global commerce. These agreements provide greater market access and reduce trade barriers, enhancing business opportunities. RCEP (Regional Comprehensive Economic Partnership): The Regional Comprehensive Economic Partnership (RCEP) connects Indonesia with 14 Asia-Pacific nations, facilitating seamless trade across a third of the global economy. IA-CEPA (Indonesia-Australia Comprehensive Economic Partnership Agreement): This partnership boosts trade and investment flows between Indonesia and Australia, creating opportunities for various industries. Investment Incentives in Indonesia Indonesia has implemented a series of investment incentives to attract foreign businesses, encompassing both fiscal and non-fiscal benefits. Fiscal Incentives Corporate Income Tax Reduction: The corporate income tax rate has been reduced to 20%, aiming to enhance the country’s competitiveness. Super Deduction Tax: To encourage investment in research and development (R&D) and vocational training, companies can receive tax deductions of up to 300% for R&D expenses and up to 200% for vocational training costs. Tax Holidays: Businesses in pioneer industries may be eligible for tax holidays, which offer a 50% reduction in corporate income tax for investments between IDR 100 billion and IDR 500 billion for five years and a 100% reduction for investments over IDR 500 billion for up to 20 years. Non-Fiscal Incentives Special Economic Zones (SEZs): Investors operating within SEZs benefit from infrastructure support, streamlined business licensing procedures, and energy and raw materials supply guarantees. Extended Land Rights in Nusantara: To attract investment in the new capital city, Nusantara, the government has extended land rights durations, providing more precise terms for businesses operating in the region. READ MORE:How to Start a Wholesale Pharmacy Business in IndonesiaYour Guide to Setting up a Venture Capital Business in Indonesia How to Start Your Own Business in Indonesia? Starting a business in Indonesia involves navigating its legal and regulatory landscape. Foreigners must ensure compliance with local laws while tapping into a market full of opportunities. Choose a Business Structure Foreign investors often opt for a PT PMA (Penanaman Modal Asing), a foreign-owned limited liability company. This structure allows full or partial foreign ownership based on industry regulations. Register Your Business Indonesia’s Online Single Submission (OSS) system simplifies registration. It issues the Business Identification Number (NIB), enabling companies to operate legally. Secure Necessary Licenses Additional licenses may be needed for specific industries. For instance, companies engaging in real estate development must obtain Hak Guna Bangunan (HGB). Apply for Investor KITAS Foreign investors managing their businesses in Indonesia must secure an Investor KITAS. This temporary stay permit also waives the work permit fee, simplifying the process. Open a Corporate Bank Account Establishing a local corporate bank account is mandatory for all businesses operating in Indonesia. Understand Indonesia’s Business Setup Cost Costs vary depending on the business type and complexity. Setting up a PT PMA, including registration and capital requirements. Permitted Land Ownership for Foreign Investors Land ownership in Indonesia is an essential aspect of business setup for foreigners. While Hak Milik (Right of Ownership) is reserved for Indonesian citizens, foreigners can own land through alternative arrangements. How Foreigners Can Own Land PT PMA (Foreign-Owned Company): Allows ownership under Hak Guna Bangunan (Right to Build). Hak Pakai (Right to Use): A renewable title granting long-term use of state-owned land. By adhering to land ownership regulations in Indonesia, foreign businesses can invest securely and legally. Guide to Doing Business in Jakarta Mailchimp Free eBook Indonesia Business Insight Subscribe 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 Start Setting Up Your Business in Indonesia with InCorp Indonesia offers immense opportunities for foreign investors and entrepreneurs. Investors can secure high returns in a thriving economy by understanding its market dynamics, leveraging PT PMA Indonesia, and effectively navigating Indonesia’s business setup costs. Whether you’re exploring real estate development in Indonesia or looking to establish a new venture, Indonesia provides a supportive ecosystem for business growth. Take the next step to unlock the potential of one of Southeast Asia’s most dynamic markets. Our team of business incorporation specialists can assist you with the following: Company Registration Business License Fill out the form below to contact our team and discuss your business setup plan in Indonesia. Read Full Bio Verified by Ales Cina Consulting Manager at InCorp Indonesia Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights. Frequently Asked Questions 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. What duties do investors have when they own shares in a company that has been liquidated? Shareholders must appoint a liquidator during the shareholders’ meeting approving liquidation. If no liquidator is appointed, the Board of Directors assumes the role. Creditors can submit claims within two years of the liquidation announcement, provided there are proceeds available. If proceeds have been distributed, shareholders must return them proportionally to settle creditor claims. Whereas employee termination packages vary based on employee status, service years, and reason for liquidation. Can a PMA company hire expats in Indonesia? Yes, PMA companies in Indonesia can hire expatriates, but certain positions are restricted by the Ministry of Manpower. Expatriates need both working and stay permits, and employers must employ Indonesian counterparts for each expatriate employee, typically at a ratio of at least one Indonesian counterpart per expatriate. Get in touch with us. Lead Form Updates 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 Setup Understanding Differences between Semarang and Jakarta Read more Issues with Finding Suppliers in Indonesia and How to Tackle Them Read more Business Licensing within Agricultural Sector in Indonesia Read more