How to Start a Business in Indonesia in 2023? Know the Latest Changes

How to Start a Business in Indonesia in 2023? Know the Latest Changes

  • InCorp Editorial Team
  • 9 August 2023
  • 6 minute reading time

There is no better time than 2023 when starting a business in Indonesia as a foreigner. The Indonesian government has recently implemented various more business-friendly policies to improve the country’s investment climate.

Suppose you are a foreign investor looking to invest and conduct business in Indonesia. In that case, you can be relieved that business incorporation in Indonesia is getting much easier and more convenient today.

Starting a Business in Indonesia as a Foreigner in 2023: Know the Latest Changes

Starting business as a foreigner

Registering a Company

If the company registration process previously required at least two months to be completed, the case is different in 2023. A foreign investor can have their company registered in between one and 1.5 months.

Moreover, if you plan to establish your business in Jakarta, you must not submit Company Domicile (SKDP). This regulation has been running effectively since May 2019.

Working Immediately with an Investor KITAS

If you are a foreign investor who will fill the positions of a shareholder, director, or commissioner, an Investor KITAS is available for you. The good news is that this stay permit allows you to work immediately.

Furthermore, an Investor KITAS has noteworthy benefits, including easy application and waiver of work permit government fee (DPKK).

There are two options available for Investor KITAS. As a foreign investor, you can choose whether to apply for the 1-year KITAS or 2-year KITAS. Both types of KITAS allow you to enter and leave Indonesia multiple times as long as your KITAS remains valid.

To enjoy the benefits of an Investor KITAS, you must invest a minimum of IDR 1 billion in sponsored shares. And the company is required to have an invested capital of more than IDR 10 billion. Businesses can Start Operations Right Away.

As if the two changes elaborated above were not enough, your business can start operating immediately as long as it has secured a Business Identification Number (NIB) that can be applied through the Online Single Submission (OSS) system, which has been upgraded to OSS 1.1. In other words, no additional licenses are required.

Forty-five business fields have been added, namely call center, event organizer, travel agency (ticketing), and education and training (among others). For more details, please get in touch with our business consultants.

How to Register a Company in Indonesia in 2023?

For your business to be able to operate in Indonesia, you will need to register a company. For a seamless start, you need to choose a legal entity.

The most common options of legal entities available for foreign investors in Indonesia are Foreign Limited Liability Companies (PT PMA), Local Limited Liability Companies (PT,) and Representative Offices.

More about PT PMA

Starting a business in Indonesia

Since most foreign investors would choose to incorporate a PT PMA in Indonesia, we will elaborate more about the nature of PT PMA.

The foreign ownership for a PT PMA ranges from as little as 1% to 100%. To know more about foreign ownership in Indonesia, you should read through the Negative Investment List or consult with our specialist. Moreover, a PT PMA can employ foreign workers.

What are the Requirements for Setting up a PT PMA?

For a PT PMA to operate in Indonesia, it should consist of at least one director and one commissioner (one of which must be an Indonesian), plus two shareholders (can be foreign or local individuals or corporations, or a combination of both).

A PT PMA requires at least IDR 10 billion of capital investment, with a minimum paid-up capital of also IDR 10 billion as well.

A domicile letter is still required for company registration in Indonesia except for Jakarta. Knowing that a residential address is strictly prohibited for business in Indonesia is essential. To avoid the high cost of building a new office, you can always opt for a virtual or serviced office in Indonesia.

How to Establish a PT PMA via OSS?

As briefly mentioned above, to streamline the establishment process of a business entity, you have to apply via the OSS to obtain the NIB and other relevant licenses.

In short, the process is as follows:

  1. Approval of company name: it should consist of three words that are not vulgar or obscene.
  2. Deed of Incorporation: it should include an Article of Association, and a notary must be present.
  3. Approval of legal entity: After the notary submits the Deed of Incorporation, the Ministry of Law and Human Rights will approve.
  4. Registration of Tax ID (NPWP): A valid NPWP is required for securing other companies’ licenses, banking activities, and fulfilling tax obligations.
  5. Domicile Letter: Required to show the location of your business.
  6. Application of NIB: A unique company profile number that guarantees an immediate operation, provided that no additional licenses are needed. Alongside NIB, Business License(s) and Location Permit will also be granted one day following the registration via OSS. NIB also serves as an import license and customs identification number to be used for the customs clearance process.
  7. Application of other licenses: Depending on the business sector, additional permits such as commercial and tourism licenses may be required before operation.

Read more: How to Obtain KITAS Indonesia for Investment in Surabaya and Batam

Taking Care of Permits and BankAccountst to Relocate to Indonesia

After your business is successfully incorporated in Indonesia, you must secure stay and work permits for your foreign employees and ensure a bank account. If you are unsure about the process of both, you are welcome to discuss it with us.

Be Aware of Changes that May Take Placeshortlye

Implementation of Omnibus Law

Despite the recent business-friendly policies, many complicated regulations hampering foreign investments remain. Through the implementation of the Omnibus Law, thousands of laws are to be amended, including taxation and labor.

No more Negative Investment List

The Negative Investment List in Indonesia may soon be replaced by a Positive Investment List, also known as a Priority List. More business sectors will welcome foreign investments, such as automotive, coal gasification, electronics, and export-oriented and import-substitution.

How InCorp Can Assist in Starting a Business in Indonesia

It is essential to note that policies and regulations may constantly change in Indonesia to encourage more foreign direct investments. You can refer to this guide on business incorporation in Indonesia.

However, you are recommended to contact our business experts to get the most updated policies and regulations related to starting a business in Indonesia as a foreigner in 2023.

In addition to providing fresh guidance, our specialist can assist you in delivering market-entry and corporate secretarial services.

If you require further information and reliable assistance in starting a business in Indonesia, particularly in company registration, business licenses, visas, permits,s and product registration, among others, reach out to us by filling in the form below.

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.