How to Start a Business in Indonesia as a Foreigner
Published 23 September 2026. Reading time: 9 minutes. The Indonesian Lawyer.
A foreigner starts a business in Indonesia by setting up a PT PMA, a limited liability company with foreign shareholding, registered through the OSS system with a notarial deed, a KBLI business classification that is open to foreign capital, and a paid-up capital commitment of at least IDR 10 billion per business line, excluding land and buildings. The company then applies for its NIB, tax number, sector licenses and, if the foreign owner will work in Indonesia, an investor KITAS. Most straightforward setups take four to eight weeks from a complete document set to a working NIB.
Table of contents
- Which legal structure to use
- Check your KBLI code before anything else
- Step by step: registering a PT PMA
- Costs and timeline
- Tax, LKPM and ongoing compliance
- Work permits and visas for the owner
- The most expensive mistake
- FAQ
Which legal structure to use
Almost every foreigner who wants to run an ongoing business in Indonesia, not just scout it, needs a PT PMA (Perseroan Terbatas Penanaman Modal Asing), a limited liability company that can take up to 100% foreign shareholding in most sectors. The two other structures you will hear about serve narrower purposes:
- Representative office (KPPA): legal for market research, liaison work and promoting a foreign parent company. It cannot invoice Indonesian customers or sign local sales contracts. Useful for six to twelve months of testing a market before committing capital.
- Nominee arrangement: an Indonesian citizen holds shares on your behalf, usually dressed up as a local PT with a side agreement. Indonesian law does not recognise or enforce these side agreements for land or share ownership. If the nominee dies, divorces, or simply decides to keep the company, you generally have no court remedy. We turn this structure away when clients ask for it.
A PT local company, owned entirely by Indonesian citizens, is not an option for a foreign founder, though it becomes relevant if you later bring in an Indonesian co-founder and want to understand ownership splits, which is a separate question from this page.
Check your KBLI code before anything else
Every business activity in Indonesia maps to a KBLI code (Klasifikasi Baku Lapangan Usaha Indonesia), and the KBLI list, not general impressions about "restricted sectors," is what actually decides whether your activity is open to foreign capital, capped at a shareholding percentage, or closed to PT PMA altogether. Construction, certain retail trade, some tourism activities and a handful of others carry caps or extra licensing requirements that change from time to time as regulations are updated. This is the single most skipped step in DIY setups, and it is why we run a KBLI check before drafting anything, in Jakarta, Medan, Surabaya or anywhere else the founder is based.
A practical example: a foreign founder in Medan wanting to open a specialty coffee export business needs a different KBLI code, and a different licensing path, than one opening a coffee shop for walk-in customers, even though both involve coffee. The two activities sit in different sectors with different foreign ownership treatment.
Step by step: registering a PT PMA
The sequence below is the same whether the company will operate from Jakarta, Medan, Surabaya, Bandung, Batam, Semarang, Yogyakarta, Makassar or Lombok. What changes by city is where you sign, which local government office issues certain sectoral permits, and how fast your bank branch processes the corporate account.
- Name reservation. Reserve a unique PT name through the Ministry of Law and Human Rights system. Names must follow a set format and cannot duplicate an existing registered name.
- Draft the Deed of Establishment. An Indonesian notary drafts the deed, which sets out shareholders, share capital, company purpose (tied to your KBLI codes) and management structure. This must be signed in Indonesian, so a certified translation or a bilingual notary is standard practice for foreign shareholders who do not read Indonesian.
- Ministry approval. The Ministry of Law and Human Rights ratifies the deed, giving the PT PMA legal personality.
- Domicile and NPWP. Register the company's business address and obtain the company tax number (NPWP).
- NIB through OSS. The Online Single Submission system issues the Business Identification Number, which doubles as your import license, customs access registration and, for low-risk activities, your operating license in one document.
- Sectoral and location licenses. Depending on the KBLI code, you may need additional approvals, for example environmental permits, health ministry sign-off for a clinic, or a building permit if you are constructing or renovating (see PBG and SLF requirements, which apply nationally, not just in resort areas).
- Corporate bank account. Banks ask for the deed, ministry approval, NIB, NPWP and, in most branches, an in-person visit from the appointed director. In cities with fewer international bank branches, such as Medan or Makassar, choosing a bank with existing PT PMA clients speeds this up considerably.
For a full walkthrough of the registration mechanics, our guide to how to set up a PT PMA in Indonesia covers the paperwork in more detail than fits here.
Costs and timeline
Costs vary by notary, by city and by how many sectoral licenses your KBLI code triggers. The ranges below are typical, not fixed, and you should confirm current government fees before budgeting precisely.
| Item | Typical range | Notes |
|---|---|---|
| Minimum paid-up capital | IDR 10 billion per KBLI line | Excludes land and buildings; some sectors set a different minimum |
| Notary and legal fees for setup | Varies by firm and scope | Ask for a fixed quote covering deed, NIB and NPWP together |
| Name reservation and ministry fees | Government tariff, modest | Set by regulation, rarely negotiable |
| Company domicile / virtual office | Depends on city and building | Some KBLI codes require a physical office, not a virtual one |
| Timeline to working NIB | 4 to 8 weeks | Longer if the KBLI code needs sectoral approval or the deed needs revision |
| Investor KITAS (if applicable) | Separate process, weeks not days | Can run in parallel with company registration in some cases |
Tax, LKPM and ongoing compliance
A PT PMA is a full taxpayer from the day the NPWP is issued, whether or not it has started trading. Corporate income tax sits at a standard 22% rate, with a reduced rate available to smaller qualifying companies under current rules, so confirm which band applies to your revenue before assuming the standard rate. VAT registration becomes mandatory once turnover crosses the statutory threshold, and monthly tax filings are due even in months with zero activity.
Separately, and often forgotten, every PT PMA must file LKPM (Laporan Kegiatan Penanaman Modal), an investment activity report, on a quarterly basis to the investment authority, reporting capital realisation, employment numbers and any operational problems. Missing LKPM filings is one of the more common compliance failures we see in newly formed companies, and repeated non-filing can affect license renewals later. If your firm handles the deed but not ongoing LKPM and tax filing, ask who will file it before you sign.
Work permits and visas for the owner
Owning shares in a PT PMA does not automatically give you the right to live or work in Indonesia. You need a matching visa:
- Business visa: for meetings, due diligence trips and signing the deed. Not valid for ongoing work in the company.
- Investor KITAS: tied to a minimum shareholding, allows the shareholder to live in Indonesia and act as a director without a separate work permit in some cases, renewable annually or for longer terms depending on the investment value.
- Work KITAS: required for any foreign employee, including a foreign director who is not also a qualifying shareholder, and needs a supporting RPTKA (foreign manpower utilisation plan) from the company first.
These sit alongside company registration but are a separate application track with their own document set. See our page on work permit and residence visa applications in Indonesia for the current document list and validity periods.
The most expensive mistake: registering the company under the wrong KBLI code to save time, then trying to add the correct activity later, or discovering a foreign ownership cap only after paid-up capital has already moved into the company account. Amending a deed, re-submitting to OSS, and in some cases returning committed capital or restructuring shareholding, costs far more in fees and months than a proper KBLI check at the start. Confirm the code, and the ownership cap attached to it, before you draft anything.
FAQ
Can a foreigner own a business in Indonesia without an Indonesian partner?
Yes, in most sectors a PT PMA can be 100% foreign owned, with no requirement for an Indonesian shareholder. Some KBLI codes cap foreign ownership at a set percentage or require a local partner, so the answer depends on the specific business activity, not on foreign ownership rules generally.
How much capital do I need to start a business in Indonesia as a foreigner?
The standard benchmark is IDR 10 billion in paid-up capital per KBLI business line, excluding the value of land and buildings. Some sectors set a different minimum, and small-scale or specific investment categories may have separate rules, so this figure should be confirmed against your exact business activity before you commit funds.
How long does it take to register a PT PMA?
A straightforward PT PMA with a common KBLI code and a complete document set typically takes four to eight weeks from signing the deed to holding a working NIB. Sectors needing extra ministry approval, or deeds that need revision after a first submission, take longer, sometimes several months.
Do I need to visit Indonesia to set up a PT PMA?
Some steps can be handled remotely by power of attorney, but at minimum most banks require the appointed director to appear in person to open the corporate account, and immigration processes for the investor KITAS generally require the applicant's presence at some stage. Plan for at least one trip.
What is the difference between a PT PMA and a representative office?
A PT PMA is a full legal entity that can invoice customers, hire staff and hold licenses to trade. A representative office (KPPA) can only conduct market research and liaison work for a foreign parent company and cannot generate revenue in Indonesia. Businesses that intend to sell anything locally need a PT PMA, not a representative office.
Is a nominee structure a legal way to start a business in Indonesia?
No. A nominee arrangement, where an Indonesian citizen holds shares on a foreigner's behalf, is not enforceable in Indonesian courts even when backed by a private side agreement. Foreigners who use this structure have no reliable legal recourse if the nominee refuses to transfer shares or assets back. A properly structured PT PMA is the lawful route to majority or full foreign ownership.
If you are weighing up a PT PMA against other structures for your specific KBLI code and city, send the details over WhatsApp at +62 877-9626-0478 or through our contact page. The first consultation is free, and we will tell you plainly whether your business plan fits the structure you have in mind, before you sign anything with a notary.