Business Setup

Business Registration

5 Steps to Set Up Business in Indonesia

Are you considering incorporating or expanding your business to Indonesia? Explore our comprehensive guidelines below to navigate the process of establishing your business in this thriving Southeast Asian country.

Why Indonesia?

Not only the natural wonders, Indonesia is a vast and burgeoning market teeming with business potential. With a rapidly growing population exceeding 270 million, it offers a massive consumer base hungry for a wide range of products and services. Its strategic location in Southeast Asia makes it a gateway to the ASEAN region, and its expanding middle class is driving increased consumer spending!

Several factors contribute to the appeal of business expansion to Indonesia:

  • Large Consumer Market: Indonesia has a sizable and growing population, providing a substantial consumer market for various goods and services.
  • Natural Resources: The country is rich in natural resources, making it attractive for industries such as mining, agriculture, and energy.
  • Infrastructure Development: Indonesia has been investing in infrastructure development, including transportation and communication networks, which can facilitate business operations.
  • Government Initiatives: The government has implemented economic reforms to improve the business environment, including efforts to simplify regulations and streamline bureaucratic processes.
  • Strategic Location:Indonesia's strategic location in Southeast Asia makes it a hub for regional trade and commerce.

Type of Business Entities

In general, there are three primary types of business entities available for incorporation in Indonesia:

Local Investment Company (Local PT/PT PMDN)

An Indonesian LLC designed for local entrepreneurs aiming to establish a legal entity and participate in commercial activities.

At least 2 shareholders (all must be Indonesian citizens or Indonesian companies), 1 Local Director, and 1 Local Commisioner.

Foreigners can apply as directors, but ownership of shares is not permitted.

Capital Requirements
  • Small-scale: IDR 50 million - 500 million
  • Medium-scale: IDR 500 million - 10 billion
  • Large-scale: above 10 billion
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Foreign Investment Company (PT PMA)

An Indonesian LLC tailor-made for foreign investors looking to register a company and engage in commercial activities under Indonesian Laws.

At least 2 shareholders (individuals or entities), 1 Resident Director, and 1 Commisioner.

Join venture with Indonesian parties may be required for specific business fields that cannot be fully owned by foreigners.

Capital Requirements
  • Classified as Large-scale companies, a PMA must have a Capital investment exceeding IDR 10 billion
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Representative Office (KPPA)

A suitable choice for foreign entities wanting to establish a presence in Indonesia without engaging in commercial activities.

No capital requirements.

Applicable in most sectors or industries in Indonesia.

Business lisence is initially valid for 3 years, extendable twice, each for 1 year, totalling 5 year.

The Chief Representative Office must be appointed by the parent company abroad.

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What is PT?

PT, short for 'Perseroan Terbatas’, represents the most prevalent business entity utilized by both local and foreign entrepreneurs in Indonesia. A PT is essentially an Indonesian Limited Liability Company structured with a share capital system. The company's capital is divided into shares, and each shareholder's responsibilities are proportionate to their share ownership.

In the context of a PT, shares serve as the foundational capital, enabling them to be traded among shareholders. This structure not only facilitates business operations but also provides a framework for investment and ownership dynamics within the company.

Establishing a Limited Liability Company (LLC) in Indonesia involves several key steps and considerations. Here are some key points to keep in mind:

  1. Legal Requirements:
    • Ensure compliance with the prevailing laws and regulations related to business and company formation in Indonesia.
    • Familiarize yourself with the Company Law (Undang-Undang Nomor 40 Tahun 2007) and other relevant regulations.
  2. Minimum Requirements:
    • A minimum of two shareholders is required to establish an LLC in Indonesia. Shareholders can be individuals or legal entities.
    • At least one director is required, who can be a foreign national or an Indonesian citizen.
  3. Local Partner or Nominee:
    • In some cases, foreign investors may be required to have a local partner or use a nominee structure to comply with the foreign ownership restrictions.
  4. Business Fields and Restrictions:
    • Certain business fields are restricted for foreign ownership or require special permits. Check the Positive Investment List (Daftar Positif Investasi) to determine the eligibility of your business.
  5. Company Name:
    • Choose a unique and acceptable company name. The name approval process is part of the company registration process.
    • Company name must contain a minimum of three words.
  6. Capital Requirements:
    • Determine the minimum capital required for your business. The capital must be deposited in an Indonesian bank and proof of deposit is required during the incorporation process.
  7. Notarial Deed of Establishment:
    • Draft the company's Articles of Association (Anggaran Dasar), which outlines the company's structure, purpose, and operational guidelines.
    • Engage a notary public in Indonesia to notarize the Articles of Association and other required documents.
    • The notary will prepare the Deed of Establishment (Akta Pendirian Perseroan Terbatas) based on the Articles of Association and other required documents.
  8. Approval from the Ministry of Law and Human Rights:
    • Submit the Deed of Establishment to the Ministry of Law and Human Rights for approval.
  9. Tax Identification Number (NPWP):
    • Obtain a Tax Identification Number for the company.
  10. Business Registration Number & the license from OSS system:
    • Apply for a Business Registration Number (Nomor Induk Berusaha/NIB) from the OSS system and obtain the necessary business licenses and permits from relevant government authorities.
  11. Registration with the Indonesia Investment Coordinating Board (BKPM):
    • Foreign-owned companies may need to register with the BKPM, especially if they are engaged in certain sectors or activities.
  12. Post-Incorporation Obligations:
    • Fulfill ongoing compliance requirements, such as filing annual reports and paying taxes.
  13. Bank Account:
    • Open a bank account in Indonesia for the company's financial transactions.

What Can Emicon Do For You

Set Up Your Business Now

We understand that establishing a business in Indonesia involves navigating through a complex legal and regulatory landscape. Our dedicated team is committed to providing comprehensive support to ensure a smooth and successful entry into the Indonesian market.

Let us be your trusted partner in turning your business aspirations into reality in Indonesia. 

Feel free to reach out for personalized guidance tailored to your specific needs. We look forward to assisting you on your journey to business success in Indonesia.

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