Guide to Company Registration in Indonesia

Why Indonesia

Indonesia represents one of Southeast Asia's most compelling investment destinations. With a population exceeding 275 million, it offers the largest consumer market in the region and a growing middle class with increasing purchasing power. The country's strategic location along major shipping routes, abundant natural resources, and young workforce make it attractive for manufacturing, services, and technology ventures alike.

The Indonesian government has made significant efforts to improve the investment climate. The Omnibus Law on Job Creation, implemented through various government regulations, has streamlined business licensing and opened more sectors to foreign investment. The Online Single Submission (OSS) system now centralizes most registration and licensing processes, reducing the bureaucratic complexity that once characterized doing business in Indonesia.

That said, Indonesia's regulatory environment remains detailed and sector-specific. Foreign investors must navigate capital requirements, business classification codes, and ownership restrictions that vary by industry. This guide provides a practical framework for understanding the registration process and making informed decisions about market entry.

Types of Business Entities

Foreign investors have several options for establishing a presence in Indonesia. The choice depends on your business objectives, timeline, and level of commitment to the market.

1. PT PMA (Foreign-Owned Limited Liability Company)

A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the standard vehicle for foreign direct investment. This structure allows foreign individuals or entities to hold shares in an Indonesian company and conduct commercial activities. The PT PMA is an Indonesian equivalent of foreign-owned private limited company and can invoice clients, import goods, sign contracts, and generate revenue in Indonesia.

Key characteristics of a PT PMA include:

• Foreign ownership up to 100% in most sectors under the Positive Investment List. Some sectors have ownership caps or require local partners.
• Minimum paid-up capital of IDR 2.5 billion (approximately USD 150,000).
• Total investment plan exceeding IDR 10 billion per business activity (KBLI code) per project location, excluding land and buildings.
• Minimum two shareholders, which can be individuals or corporate entities from any country.
• At least one director and one commissioner. The director must be domiciled in Indonesia (typically holding a KITAS work permit in case of foreigner).

A PT PMA is appropriate for investors who plan to conduct substantive business operations, hire employees, or generate revenue from Indonesian customers.

2. PT (Local Limited Liability Company)

A PT (Perseroan Terbatas) with 100% Indonesian ownership has lower capital requirements and can operate as a micro, small, or medium enterprise. However, any foreign shareholding, regardless of percentage, converts the company to PT PMA status with corresponding capital obligations.

Local PT companies are classified by paid-up capital:

• Micro enterprise: up to IDR 1 billion
• Small enterprise: IDR 1 billion to IDR 5 billion
• Medium enterprise: IDR 5 billion to IDR 10 billion
• Large enterprise: above IDR 10 billion

Foreign workers can only be employed by medium and large enterprises, which is one reason why many foreign investors establish PT PMA structures even when local partners are involved.

3. Representative Office (KPPA)

A Kantor Perwakilan Perusahaan Asing (KPPA) allows a foreign company to establish a non-commercial presence in Indonesia. Representative offices can conduct market research, build relationships with potential partners, and coordinate with the parent company abroad. However, they cannot generate revenue, sign commercial contracts, or issue invoices to Indonesian clients.

Representative offices are useful for companies that want to explore the market before committing to a full PT PMA registration. The license is valid for three years initially, extendable for up to five years total. After this period, the company must either establish a PT PMA or exit.

Specialized representative offices exist for specific sectors:

• KP3A: Foreign trade company representative office, for import coordination and distributor supervision
• BUJKA: Foreign construction services representative office, can participate in projects through joint ventures with local contractors
• KPPA Migas: Representative office for oil and gas companies, requires Ministry of Energy recommendation

Foreign Ownership and the Positive Investment List

Indonesia's approach to foreign ownership changed significantly in 2021 with the introduction of the Positive Investment List under Presidential Regulation No. 10/2021, later amended by Presidential Regulation No. 49/2021. This replaced the former Negative Investment List (DNI) framework.

The fundamental principle is now openness: all business sectors are open to 100% foreign investment unless specifically stated otherwise. The exceptions fall into several categories:

Fully Open Sectors

Most manufacturing, technology, professional services, and business support activities allow 100% foreign ownership. This includes software development, IT consulting, wholesale trade (in most categories), export-oriented manufacturing, and various service industries.

Sectors with Ownership Caps

Certain industries permit foreign investment but limit ownership percentages. Examples include some transportation services, media and broadcasting, and specific financial services. The ownership cap varies by sector and may require partnership with Indonesian shareholders.

Sectors Reserved for MSMEs or Cooperatives

Some business activities are reserved for micro, small, and medium enterprises or cooperatives. These are typically activities that the government wishes to protect for local entrepreneurs. Foreign investors cannot enter these sectors directly but may partner with qualifying Indonesian businesses under certain conditions.

Closed Sectors

A small number of activities remain closed to all private investment, including certain defense industries, gambling, and activities that conflict with public order or national security.

The Role of KBLI Codes

Foreign ownership eligibility is determined at the five-digit KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) code level, not by broad sector descriptions. The KBLI is Indonesia's standard business classification system, and every company must declare the specific codes corresponding to its business activities.

Selecting the correct KBLI code is critical because it determines:

• Maximum foreign ownership percentage allowed
• Capital requirements (the IDR 10 billion investment threshold applies per KBLI per location)
• Risk classification under the OSS system (low, medium, or high)
• Licensing requirements and which government agencies are involved
• Eligibility for tax incentives under priority sector designations

A common mistake is selecting a KBLI code that seems to match the business description but carries different ownership restrictions than expected. Two activities that appear similar commercially may fall under different KBLI codes with different rules. Verification before incorporation prevents costly restructuring later.

You can view the latest KBLI 2025 codes here.

Capital Requirements Under 2025 Regulations

BKPM Regulation No. 5 of 2025, effective October 2025, introduced significant changes to PT PMA capital requirements. The new framework separates paid-up capital from total investment value, reducing the upfront cash requirement while maintaining overall investment commitments.

A. Paid-Up Capital

The minimum paid-up capital (modal disetor) for a PT PMA is now IDR 2.5 billion, approximately USD 150,000. This is the amount that must be deposited into the company's bank account at incorporation. The previous requirement was IDR 10 billion, making this a 75% reduction in the initial cash requirement.

Important restrictions apply to the paid-up capital:

• The funds must remain in the company bank account for at least 12 months from the date of deposit.
• During this period, the capital can be used for legitimate business purposes including purchasing assets, constructing facilities, and covering operational expenses.
• The capital cannot be withdrawn or transferred for non-business purposes during the 12-month period.
• Compliance is monitored through the OSS system, and violations result in administrative sanctions.

B. Total Investment Value

The total investment plan (nilai investasi) must exceed IDR 10 billion per KBLI code per project location, excluding land and buildings. This requirement has not changed. The total investment includes the paid-up capital plus planned expenditures on equipment, facilities, working capital, and other business investments.

Both requirements must be satisfied simultaneously. A company cannot incorporate with only the IDR 2.5 billion paid-up capital if it does not have a credible plan to reach IDR 10 billion in total investment.

C. Sector-Specific Variations

Some sectors have different investment calculation rules:

• Food and beverage services: The IDR 10 billion threshold applies per the first two digits of the KBLI code, per city or regency. This allows operators to open multiple outlets within one investment plan.
• Wholesale trade: Investment is calculated per the first four digits of the KBLI code.
• Construction services: Investment is calculated per the first four digits of the KBLI code.
• Technology startups in Special Economic Zones: May qualify for reduced investment thresholds under specific programs.

Certain regulated sectors such as banking, insurance, and telecommunications have their own capital requirements that exceed the general PT PMA minimums.

Summary: PT PMA vs Representative Office in Indonesia

Company Incorporation Process in Indonesia

PT PMA registration follows a defined sequence of steps, each building on the previous. The process is now largely integrated through the Online Single Submission (OSS) system, though certain steps still require coordination with specific government bodies.

Step 1: Preparation and Planning

Before starting the formal registration, investors should complete several preparatory tasks:

1. KBLI verification: Confirm the exact five-digit KBLI codes for all planned business activities. Cross-reference these against the Positive Investment List to verify foreign ownership eligibility and identify any special conditions.
2. Shareholder structure: Determine the ownership structure, including the identity of shareholders (individuals or corporate entities), their citizenship or jurisdiction of incorporation, and their respective ownership percentages.
3. Management appointments: Identify who will serve as director and commissioner. The director position requires Indonesian residency, which typically means the appointed person must obtain a KITAS work permit. Commissioners provide oversight but do not manage daily operations.
4. Business address: Secure a registered business address in Indonesia. This can be a physical office with a lease agreement or a virtual office arrangement, depending on the nature of operations and local zoning requirements. Some KBLI codes require physical office space. If you are setting up a business in Bali, it is advisable to opt for a physical office because of recent crackdown on businesses with virtual office addresses and the ones that don't meet the capital requirements. Having a physical office shows you are actually looking to start legit business operations.
5. Capital structuring: Prepare the investment plan showing how the company will meet both the IDR 2.5 billion paid-up capital and IDR 10 billion total investment requirements.

Our local experts can advise you on these requirements and handle the registration process on your behalf. For more details, fill out the form here and schedule a free consultation. 

Step 2: Company Name Reservation

The proposed company name must be submitted to the Ministry of Law and Human Rights (Kemenkumham) for approval. Indonesian company naming rules require:

• The name must consist of at least three words.
• PT PMA companies may use English names, while local PT companies must use Indonesian names.
• The name cannot duplicate or closely resemble existing company names or registered trademarks.
• The name cannot be misleading or contrary to public morality.
• Names of government institutions or protected terms cannot be used.

Name approval typically takes one to three business days. It is advisable to prepare alternative names in case the first choice is rejected.

You can also check for business name availability using our Indonesian company name search tool. 

Step 3: Deed of Establishment

An Indonesian public notary prepares the Deed of Establishment (Akta Pendirian), which serves as the company's founding document. The deed must be in Indonesian and contains:

• Articles of Association governing the company's internal operations
• Business activities and corresponding KBLI codes
• Shareholder details and ownership percentages
• Authorized, issued, and paid-up capital amounts
• Director and commissioner appointments
• Registered office address

For corporate shareholders domiciled outside Indonesia, supporting documents (articles of association, board resolutions, powers of attorney) must be notarized in the country of origin and legalized or apostilled, then translated into Indonesian by a sworn translator.

Our team will help prepare the deed in compliance with local regulations to avoid any issues during the setup process.

Step 4: Ministry Approval

The notary submits the Deed of Establishment electronically to Kemenkumham for approval. The ministry reviews the documents for compliance with Indonesian company law. Upon approval, Kemenkumham issues a Ministerial Decree (Surat Keputusan or SK) that officially recognizes the company as a legal entity.

This step typically takes three to seven business days, assuming documents are complete and properly formatted.

Step 5: Tax Registration

After receiving the Ministerial Decree, the company must register with the Directorate General of Taxes to obtain a Tax Identification Number (NPWP). This registration can be completed through the local tax office or online. The NPWP is required for all subsequent business activities, banking relationships, and additional licensing.

Under 2025 procedures, NPWP registration now occurs after the deed is issued and ministry approval obtained, rather than simultaneously with incorporation.

Step 6: OSS Registration and NIB

The company is registered in the Online Single Submission (OSS) system, which is managed by the Ministry of Investment/BKPM. Upon successful registration, the system issues a Business Identification Number (Nomor Induk Berusaha or NIB).

The NIB serves multiple functions:

• Company registration certificate (replacing the former TDP)
• Import identification number (API) if importing is a declared activity
• Customs access number (NIK)
• Enrollment in social security programs (BPJS)

The OSS system classifies business activities by risk level based on the declared KBLI codes:

• Low risk: The NIB alone serves as the business license. Operations may commence immediately.
• Medium risk: Requires a Standard Certificate, which may be verified by the OSS system or issued by the relevant sector ministry.
• High risk: Requires additional technical permits from sector-specific ministries before operations can begin.

Step 7: Sector-Specific Licenses

Depending on the business activities, additional licenses may be required beyond the NIB. Common examples include:

• Construction services license (IUJK) from the Ministry of Public Works
• Food and drug registration (BPOM) for food, beverages, cosmetics, or pharmaceuticals
• Tourism business license for hospitality and tourism services
• Environmental permits (AMDAL or UKL-UPL) for industrial activities
• Halal certification for applicable products
• Broadcasting or telecommunications licenses from the relevant ministries

The OSS system indicates which additional licenses are required based on the company's KBLI codes. Some licenses can be obtained through OSS, while others require direct application to sector ministries.

Timeline and Practical Considerations

The overall timeline for PT PMA registration depends on the complexity of the business, the completeness of documentation, and the licenses required.

For straightforward cases with low-risk KBLI codes and complete documentation, a PT PMA can be operational within four to six weeks. Complex cases involving multiple KBLI codes, high-risk classifications, or sector-specific permits may take eight to twelve weeks or longer.

Administrative Requirements Under 2025 Regulations

BKPM Regulation No. 5 of 2025 introduced several administrative changes that affect the registration timeline:

• Each shareholder must have a distinct phone number registered with the AHU (Legal Entity Administration) system.
• The company itself must have a separate phone number distinct from shareholder numbers.
• NPWP registration for the director occurs after deed approval, not concurrently.
• Supporting business activities that generate revenue must be explicitly listed in the Articles of Association.

These requirements add minor administrative steps but help ensure data accuracy in government systems.

Post-Registration Compliance

Registering a PT PMA is the beginning, not the end, of regulatory compliance. Indonesian companies must maintain ongoing reporting and compliance obligations.

LKPM Reporting

The Investment Activity Report (Laporan Kegiatan Penanaman Modal or LKPM) must be submitted quarterly through the OSS system. The report documents investment realization, including capital deployment, asset purchases, and employment figures.

LKPM compliance is monitored systematically. Under current regulations, if a company reports zero capital realization for four consecutive quarters, the OSS system may automatically suspend the business license. Reactivation can be complex and time-consuming.

Tax Compliance

PT PMA companies are subject to Indonesian corporate income tax at the standard rate of 22%. Monthly and annual tax filing obligations include:

• PPh 21: Employee income tax withholding and reporting
• PPh 23: Withholding tax on payments to third parties for services
• PPh 25: Monthly corporate income tax installments
• PPh 29: Annual corporate income tax return
• VAT (PPN): Monthly reporting if registered as a taxable enterprise (PKP)

The Tax Effective Rate (TER) system, introduced in 2024, simplifies employee income tax calculations but requires proper implementation by employers.

Employment Compliance

Companies must enroll employees in both BPJS programs:

• BPJS Kesehatan (health insurance): 5% of salary, with 4% paid by employer and 1% by employee
• BPJS Ketenagakerjaan (employment insurance): Approximately 10-11% of salary paid by employer, covering work accident insurance, death benefit, old-age savings, and pension

Additional employment obligations include THR (Tunjangan Hari Raya), a mandatory religious holiday allowance equal to one month's salary, typically paid before Eid al-Fitr.

Foreign Worker Permits

Employing foreign workers requires a separate permit process:

• RPTKA: Foreign Worker Employment Plan, approved by the Ministry of Manpower
• IMTA: Work permit for each foreign employee
• KITAS: Limited stay permit allowing the foreign worker to reside in Indonesia
• DKP-TKA: Compensatory fund payment of USD 100 per foreign worker per month

Foreign workers must have Indonesian understudies for knowledge transfer purposes, with certain exceptions for senior management positions.

Common Mistakes to Avoid

Experience with PT PMA registrations reveals recurring issues that delay or complicate the process:

Incorrect KBLI Selection

Choosing a KBLI code that does not precisely match the intended business activities can result in foreign ownership restrictions, unexpected licensing requirements, or rejection during the OSS registration process. Generic or overly broad KBLI classifications are no longer accepted.

Underestimating Document Requirements

Foreign shareholders must provide legalized and translated corporate documents. The legalization process (notarization, apostille, or embassy authentication depending on the country of origin) takes time. Starting document preparation early prevents delays.

Capital Structure Errors

The relationship between paid-up capital and total investment is frequently misunderstood. Meeting the IDR 2.5 billion paid-up capital does not satisfy the IDR 10 billion investment requirement. Both conditions must be met, and the investment plan must be credible.

Ignoring Post-Registration Obligations

Companies that focus only on registration and neglect LKPM reporting risk automatic license suspension. Tax filing deadlines are monthly and annual, not optional. Employment compliance begins with the first hire.

Treating Virtual Offices as Permanent Solutions

While virtual offices can satisfy initial registration requirements, some KBLI codes require physical office presence. Local governments may also impose zoning requirements that affect where certain businesses can operate.

How ASEAN Companies Can Help

Navigating Indonesia's regulatory environment requires accurate information, proper documentation, and attention to procedural details. We provide end-to-end support for foreign investors establishing PT PMA companies in Indonesia.

Our services include:

• KBLI Analysis: We verify your business activities against current regulations, confirm foreign ownership eligibility, and identify optimal KBLI codes for your investment structure.
• Document Preparation: We coordinate the preparation, legalization, and translation of all required documents, ensuring they meet Indonesian standards.
• Registration Management: We handle the complete registration process from name reservation through NIB issuance, liaising with notaries, ministries, and the OSS system on your behalf.
• Sector-Specific Licensing: We identify and secure additional licenses required for your business activities, managing applications to relevant sector ministries.
• Ongoing Compliance: We provide support for LKPM reporting, tax filing coordination, and employment compliance to maintain your company in good standing.

Whether you are entering Indonesia for the first time or expanding existing operations, we offer practical guidance based on current regulations and direct experience with the registration process.

Contact us to discuss your Indonesia market entry plans.

This guide is for general informational purposes and does not constitute legal advice. Regulations change frequently, and specific situations may require professional consultation. Information reflects regulations in effect as of February 2026.