institutions to know when doing business in indonesia

Institutions You Should Know When Doing Business in Indonesia

  • InCorp Editorial Team
  • 15 February 2018
  • 5 minute reading time

Doing business in Indonesia can be complicated for foreigners. Not only you have to deal with a different culture, but you also need to work with various institutions. To get you one step ahead, we are listing here some of the popular agencies. These are going to play big roles in the following processes:

  • Company Registration
  • Business and Working Visas
  • Accounting and Taxation
  • Business Licenses and Product Registrations

Doing Business in Indonesia: Institutions to Know

1. Halal Product Assurance Organizing Agency (BPJPH)

This is an agency that provides halal certifications in the country. The MUI used to handle the job until the enactment of the Halal Product Law in 2014. BPJPH formally assumed the task in October 2017.

Why Should You Care?

Halal is both a big and sacred business in Indonesia. The country wants to establish itself as the ultimate halal hub in the world. Thus, all non-registered halal products in Indonesia will become non-halal in 2019.

2. BKPM (Badan Koordinasi Penanaman Modal)

BKPM is the Investment Coordinating Board of Indonesia. It is an institution responsible for anything related to the development, growth, and sustainability of foreign investments in the country. Moreover, it helps develop policies, standards, and processes that encourage a healthy investment environment for investors. It works with other institutions for marketing and creation of an investment map for the country.

Why Should You Care?

While it wants foreigners to put their money in Indonesia, the agency has to make sure it is according to its investment map and that it is in accordance with the law. For this reason, BKPM is one of the first agencies you should reach out if you want to open a company here.

Speaking of opening a foreign company, Indonesia has only a few options for you. The most popular is called PT PMA. In hindsight, you need to form a corporation with certain locals who shall be part of the shareholders.

Based on Regulation No. 13/2017, the Principal License (known as Izin Prinsip) was replaced by the Investment Registration (Pendaftaran Investasi) at the beginning of the year 2018.

The regulation is a follow up of Presidential Regulation No. 91/2017 on the Acceleration the Implementation of Business Execution that aims at speeding up the bureaucratic process. The Investment Registration is valid for one year and it is renewable for five years.

3. Directorate General of Taxes (Direktorat Jenderal Pajak)

Some places have simpler taxes; others don’t. Indonesia belongs to the latter category. There are so many tax rates, conditions, and requirements for compliance. Either way, for all your concerns, you work with the Directorate General of Taxes.

Why Should You Care?

The country can impose harsh penalties that include an imprisonment and/or a huge fine for any tax-related violation. These include failing to submit your returns promptly. Further, in Indonesia, it doesn’t matter whether you’re a foreign tax resident or non-resident: as long as you have business in the country, you will pay taxes.

The institution is also essential in your day-to-day labour concerns. You are responsible for withholding taxes of your employees. One of your registration requirements is a tax identification number.

Learn more about Accounting and Tax Reporting in Indonesia.

4. Directorate General of Immigration (Imigrasi)

All foreigners in Indonesia go through this government agency. It performs a variety of functions, such as the issuance of work permits, as well as business visas.

Why Should You Care?

Only those who have work permits can work in the country, and only foreigners with KITAScan search for an employment. Being married to an Indonesian doesn’t mean you can get some employment. Moreover, Indonesia usually requires sponsorships for business or work visas. These can be individuals such as spouses, or companies, non-profits, and other types of organisation. It depends on the visa you wish to have.

Get to know more about Work Permit in Indonesia from A to Z.

5. National Agency of Drug and Food Control (BPOM)

Product registration is a must for quite a number of items. These include medical devices, food and beverages, beverages, and personal care. The ones who oversee their regulation, testing, and compliance is the National Agency of Drug and Food Control. This institution can implement justice, but it can work alongside with the police department.

Why Should You Care?

If you’re distributing, importing, or selling any of these products in Indonesia, whether it is in Jakarta or Bali, your business license is not enough. You also need proof that they are duly registered in the country.

How to register your product in Indonesia? Read our In-Depth Look into Indonesia’s Product Registration and Regulation.

Final Thoughts

Catching up with all the regulations and dealing with multiple agencies can take a toll on any foreigners who are interested in doing business in Indonesia. The good news is you can simplify it.

Cekindo can help you process all your requirements and save you the hassle of dealing with these institutions. We have a dynamic team of business consultants, tax specialists, and lawyers, to name a few, who can help you.

Get in touch with us now at +62 21 3006 1585 (Jakarta office) and +62 361 209 0299 (Bali office), or simply fill in this form. You can also email us at

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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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.

Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.