A Practical Guide to Setting Up Manufacturing Facilities in Indonesia

For a Japanese manufacturer, Indonesia remains a high-potential production base. Yet in practice, many manufacturing projects slow down not because of market uncertainty but because of misalignment between site selection, licensing sequence, and facility readiness. 

This guide outlines how manufacturers typically approach entry into Indonesia, where execution often requires greater attention, and how production facilities are established and operated in line with local regulatory and operational realities. 

Strategic Considerations for Japanese Manufacturers Entering Indonesia 

Indonesia is a long-standing industrial partner with decades of operational history across multiple sectors. Japan currently ranks as the fourth-largest investor in Indonesia, with total investment reaching USD 45.6 billion. This reflects sustained industrial collaboration and provides Japanese manufacturers with a familiar institutional and regulatory environment. 

The Japanese manufacturing industry is particularly well established in automotive and related supply chains. Japanese manufacturers have developed multiple production facilities, served millions of customers, and expanded into local hybrid vehicle production, aligning with Indonesia’s sustainability objectives. 

For new or expanding manufacturers, the strategic question is no longer whether Indonesia is viable, but how to structure entry so that production timelines remain realistic and compliant.

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Best Industrial Locations for Japanese Manufacturers in Indonesia 

Location selection in Indonesia should prioritize operational stability over cost, helping Japanese manufacturers feel assured of consistent production conditions. 

Greater Jakarta and West Java 

This area continues to serve as the core manufacturing corridor for Japanese companies. 

• Access to major ports and international airports 
• Established industrial estates 
• A workforce experienced in manufacturing operations 

These factors help reduce logistics friction and operational uncertainty. 

Bekasi and Cikarang 

Bekasi and Cikarang are among the highest concentrations of Japanese manufacturers in Indonesia. 

• Direct toll-road connectivity to Jakarta and Tanjung Priok Port 
• Industrial estates designed for manufacturing use 
• A dense network of Japanese suppliers and service providers 

Within this corridor, MM2100 Industrial Town has long been associated with Japanese manufacturing activity. Its tenant base spans automotive components, electronics, food manufacturing, and precision industries, offering a familiar operating environment for Japanese manufacturers prioritizing stability. 

Other Growing Regions 

Some manufacturers are gradually expanding into Banten and Central Java. 

• Greater land availability 
• Competitive labor conditions 
• Suitable for phased or labor-intensive expansion models 

In practice, manufacturers tend to move faster when entering locations where Japanese industrial ecosystems are already established.

Legal Requirements for Setting Up a Manufacturing Company in Indonesia 

Indonesia’s manufacturing licensing framework now operates under a risk-based system, as set out in PP 28/2025. The focus has shifted from document collection to risk classification and regulatory alignment. 

Risk-Based Licensing Through OSS 

Manufacturing licenses are processed through the OSS system, which acts as a centralized platform for registration and operating approvals. Licensing requirements vary based on the scale and impact of the activity. 

Integrated Basic Requirements 

Legal status, environmental considerations, and facility readiness are assessed as part of a unified process. This approach reduces fragmented approvals and encourages earlier regulatory planning. 

Clearer Process and Authority 

PP 28/2025 clarifies the roles and responsibilities of authorities and typical licensing timelines, helping manufacturers anticipate processing times and plan accordingly, thereby reducing uncertainty in setup schedules. 

Ongoing Compliance 

Licensing is not static. Manufacturers are expected to maintain compliance in line with their business risk profile as operations evolve. 

Taken together, the updated framework rewards manufacturers who align regulatory planning with operational design from the outset. 

Establishing and Operating a Manufacturing Facility in Indonesia 

Once regulatory direction is clear, the focus shifts to execution. This is often where timelines are most sensitive. 

Align Setup Planning with Licensing Flow 

Facility planning should progress alongside licensing. 

• Confirm activity scope before finalizing layouts 
• Align construction and installation with regulatory milestones 
• Avoid late changes that trigger reassessment 

Prepare for Operational Readiness 

A completed facility is not always operational. 

• Utilities, access, and layout should support production flow 
• Machinery installation and testing require realistic lead times 
• Workforce onboarding should match equipment readiness 

Plan Imports and Supply Chains Early 

Imported machinery and components often determine commissioning schedules. 

• Identify import requirements early 
• Align delivery with installation timelines 
• Reduce dependency-driven delays 

Maintain Compliance During Operations 

Operational changes may affect licensing status. 

• Monitor reporting obligations 
• Track production or capacity changes 
• Update approvals when expansion occurs 

Many Japanese manufacturers rely on local expertise during this phase to manage regulatory coordination while internal teams focus on production quality and efficiency.

Set Up Your Manufacturing Operations with InCorp 

Manufacturing setup in Indonesia is rarely about urgency. It is about sequencing decisions correctly. InCorp Indonesia (an Ascentium Company) supports Japanese manufacturers across: 

• Business Setup: Assistance with company establishment, activity structuring, and alignment with Indonesia’s risk-based OSS framework. 
• Business License: Support for obtaining and maintaining manufacturing-related licenses under the updated regulatory regime, including changes during expansion. 
• Ongoing Compliance Support: Guidance on post-setup obligations to help maintain operational continuity as production scales. 

The goal is not merely acceleration, but ensuring stability from day one. Complete the form below to confidently transition from investment decision to stable production.

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