Foreigners looking to register a business in Indonesia typically ask about entity types, capital requirements, foreign ownership rules, required documents, tax obligations, and work permits. Understanding these points ensures smoother registration and full compliance.
Why Foreigners Choose Indonesia to Start a Business?
Indonesia is the largest economy in Southeast Asia with over 270 million people and a growing middle class. The country’s strategic location, market size, and supportive regulatory reforms make it a top choice for foreign investors. Yet, registering a business here involves understanding complex but navigable legal and operational requirements.
Also read: Why Indonesia Remains an Attractive Foreign Investment Destination
What Type of Company Should I Register?
The PT PMA (Foreign Investment Company) is the preferred business structure for most foreigners, offering full operational control and allowing up to 100% foreign ownership in many sectors. However, it comes with higher capital requirements.
Other options include:
- Representative Office (KPPA): No commercial activity allowed, suitable for research or liaison.
- Local PT: Can be formed with an Indonesian partner holding majority ownership.
What Is the Required Minimum Capital?
Establishing a PT PMA requires a total investment of IDR 10 billion. Representative offices have no capital requirement, while Local PTs vary depending on business size, often starting from IDR 50 million.
Can I Fully Own the Business as a Foreigner?
Yes—if your sector is open to foreign investment. Indonesia publishes a Positive Investment List that replaces the old Negative Investment List. Most sectors are open, but a few (like defense and media) remain restricted or closed.
Also read: Can a Foreigner Own 100% of a Business in Indonesia?
What Documents Are Required?
Foreign entrepreneurs must prepare:
- Proposed business name (min. 3 words)
- Deed of Establishment and Articles of Association (notarized)
- Proof of address in Indonesia
- Shareholder IDs/passports
- Investor and employment documents
- Capital proof
How Long Does It Take to Register?
With the OSS system, basic incorporation for a PT PMA typically takes 2–4 weeks, while a complete setup including licenses may take 4–6 weeks. Representative offices are usually ready in about 3 weeks.
What About Work Visas for Foreign Directors?
If you’re planning to be involved in operations:
- Working KITAS is required for foreign employees and directors.
- The Investor KITAS, which is valid for two years, facilitates long-term residency and requires an individual investment of IDR 10 billion.
- An Expatriate Placement Fund (DPKK) of USD 1,200/year must be paid per foreign employee.
Also read: Working in Indonesia as a Foreigner: A Complete Guide
Are There Hiring Rules for Foreign Workers?
Yes. Indonesia mandates:
- A 1:10 ratio of foreign to local employees
- Certain strategic or technical roles only for foreigners
- Compliance with Ministry of Manpower regulations
What Licenses Are Required After Setup?
After registration, you need:
- NIB (Business ID) from OSS
- NPWP (Tax Number)
- Sector-specific licenses:
- Tourism License
- Construction License (IUJK)
- BPOM for food/drug
- IUI for manufacturing
How Do I Open a Corporate Bank Account?
You’ll need:
- Deed of Establishment and Ministry approval
- NPWP and NIB
- Passport/KITAS of directors
- Initial deposit (~IDR 1 million)
Most accounts are opened within 1 business day once verified.
What Are My Tax Responsibilities?
Foreign-owned companies pay:
- Corporate Income Tax: 22%
- VAT: 11%
- Withholding Tax: 20% for non-residents (often reduced via treaties)
- Annual Filings: Corporate by April, Personal by March
Do I Need a Corporate Secretary?
Not mandatory, but strongly recommended for:
- Statutory compliance
- Handling board meetings
- Maintaining corporate documents
Mandatory for publicly listed companies.
What Are My Ongoing Compliance Obligations?
You must:
- File monthly and annual tax returns
- Renew business licenses
- Submit BKPM investment reports (for PT PMA)
- Maintain minimum capital in accounts
- Submit foreign employment reports
The Smartest Way to Register: Let InvestinAsia Guide You
Navigating Indonesia’s legal and bureaucratic processes can feel overwhelming, especially for first-time foreign investors. InvestinAsia provides comprehensive company registration services in Indonesia tailored to international clients. From structuring advice to document filing, licensing, and KITAS processing, our team ensures every step complies with the latest regulations.
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References:
PwC Indonesia. Investing in Indonesia: Tax and Regulatory Considerations. Retrieved from https://www.pwc.com/id/en/publications/tax/investing-in-indonesia.pdf.
Asean Briefing. How to Legally Employ and Pay Foreign Workers in Indonesia. Retrieved from https://www.aseanbriefing.com/news/how-to-legally-employ-and-pay-foreign-workers-in-indonesia/.
IZIN.co.id. Establishing a Foreign Company in Indonesia – Requirements and Process Explained. Retrieved from https://izin.co.id/indonesia-business-tips/2023/02/28/establishing-a-foreign-company-in-indonesia-requirements-and-process-explained/.
Indonesia Investments. How to Establish a Foreign Company (PT PMA) in Indonesia?. Retrieved from https://www.indonesia-investments.com/id/business/foreign-investment/establish-foreign-company-pt-pma/item5739.
