Company Registration in Indonesia for Foreign Investors

Expanding your business to Indonesia offers immense potential, especially for Indian investors seeking growth in Southeast Asia. With its fast-growing economy, strategic location, and strong diplomatic ties with India, Indonesia is becoming a top choice for global expansion.

Indonesia provides access to a large, youthful consumer base, low manufacturing costs, and streamlined digital registration through the OSS system. With many sectors open to 100% foreign ownership, it offers a smooth entry point for Indian companies looking to incorporate a company in Indonesia and scale across the ASEAN region.

Indonesia, the largest economy in Southeast Asia, is rapidly becoming a global investment hotspot. It ranks 1st in Southeast Asia by GDP (over USD 1.439 trillion in 2024) and 4th globally in terms of population, with more than 285 million people, most of whom are young, digitally active, and consumption-driven.

1. Booming Economy and Market Potential

This demographic and economic strength makes Indonesia a high-opportunity market for Indian companies in sectors like IT, FMCG, manufacturing, and fintech. According to World Bank projections, Indonesia’s GDP is set to grow by 5.1% to 5.4% in 2025, signaling ongoing stability and expansion.

Indian businesses can benefit from lower operational costs, strategic access to ASEAN markets, and a welcoming environment for foreign investment, making company registration in Indonesia both viable and rewarding.

2. Strategic Advantages of Indonesia's Location in Southeast Asia

Situated between the Indian and Pacific Oceans, Indonesia serves as a bridge between major Asian and global markets. Its maritime location supports efficient shipping and logistics, offering strategic access to countries like Singapore, Malaysia, and Australia.

Jakarta and Batam have emerged as business-friendly zones offering infrastructure and tax incentives, making them ideal hubs for company formation in Indonesia.

3. India-Indonesia Bilateral Trade Agreements and Economic Relations

Indonesia and India share close diplomatic and economic relations. Under the India-ASEAN Free Trade Agreement, trade between the two nations crossed USD 121 billion in FY 2023–24, driven by reduced tariffs, smoother customs procedures, and growing sectoral cooperation.

As a result of these strong ties, Indian businesses benefit from:

• Government-backed support through diplomatic missions
• Bilateral trade delegations and councils
• Simplified entry and cooperation frameworks for expansion into Indonesia

4. High-Growth Sectors for Foreign Investment in Indonesia

Foreign investors benefit from fast-growing sectors like renewable energy, digital technology, education, pharmaceuticals, and infrastructure. For example, Indonesia’s digital economy is expected to hit USD 130 billion by the end of 2025.

These opportunities make company registration in Indonesia a strategic move for long-term growth.

Before registering, Indian investors must choose the structure that fits their goals and regulatory needs.

1. Foreign-Owned Company (PT PMA)

PT PMA, or Foreign Investment Limited Liability Company (Perseroan Terbatas Penanaman Modal Asing), is the most common and preferred business structure for foreign investors in Indonesia. It allows up to 100% foreign ownership in permitted sectors such as e-commerce, IT services, and manufacturing.

PT PMAs are fully operational entities. This means they can conduct all business activities, from issuing invoices and opening corporate bank accounts to hiring both local and foreign employees. However, to establish a PT PMA, foreign investors must meet the minimum capital investment requirement of IDR 10 billion (approximately INR 55–60 lakh), which can include both cash and fixed assets.

2. Representative Office (KPPA)

A KPPA (Kantor Perwakilan Perusahaan Asing), or Representative Office of a Foreign Company, is a legal entity that allows foreign businesses to establish a presence in Indonesia for non-commercial purposes. It can be used to conduct market research, build local relationships, supervise operations, or promote the parent company, but it cannot engage in direct sales or generate revenue.

KPPAs are ideal for Indian businesses testing the waters before a full-scale investment. They’re easier to register and don't have a minimum capital requirement.

3. Limited Liability Company (PT - Local Company)

A PT (Perseroan Terbatas) is a standard local company structure meant for Indonesian nationals. It requires 100% local ownership and is not available for foreign investors unless restructured into a PT PMA. PTs can engage in commercial activities and are suitable for fully domestic operations.

4. Sole Proprietorship (Usaha Dagang/UD)

A UD (Usaha Dagang) is a sole proprietorship intended for small-scale local businesses. It is owned and managed by a single Indonesian individual and does not have a separate legal identity from its owner. This structure is not open to foreign ownership and is limited in terms of scalability and liability protection.

Which Structure Is Right for You?

To help you make an informed decision, here is a side-by-side comparison of PT PMA and KPPA based on key business factors relevant to foreign investors.

PT PMA vs. KPPA: Comparison for Foreign Investors

Criteria	PT PMA (Foreign-Owned Company)	Representative Office (KPPA)
Commercial Activity	Permitted – Can conduct business, trade, and offer services	Not permitted – Limited to non-commercial functions (liaison, promotion, etc.)
Capital Requirement	Minimum IDR 10,001,000,000 (approx. INR 55–60 lakh)	No minimum capital required
Profit Generation	Allowed – Can issue invoices and generate revenue	Not allowed – Cannot earn revenue or engage in transactions
Office Requirement	Physical office required for certain sectors (e.g., real estate, construction)	Virtual office permitted (subject to zoning rules)
Staffing	Can hire local and foreign employees	Limited to the Chief Representative Officer and one assistant under KITAS
Foreign Ownership	Up to 100% foreign ownership (sector-specific)	100% foreign ownership allowed (non-commercial purpose only)
Best Suited For	Businesses ready to operate commercially in Indonesia	Companies conducting market research or brand promotion before investment
Permitted Activities	Trading, manufacturing, services, and investment	Feasibility studies, advisory, and company representation

If you're considering company registration in Indonesia as a foreign investor, it’s essential to understand the regulatory ecosystem that governs business setup, approvals, and sector-specific compliance..

1. Indonesia Investment Coordinating Board (BKPM)

The Ministry of Investment, formerly known as BKPM (Badan Koordinasi Penanaman Modal), is Indonesia’s primary agency for overseeing and facilitating Foreign Direct Investment (FDI).

As of 2021, BKPM was integrated into the Ministry of Investment, gaining ministerial status to streamline investment policies and improve international investor relations.

This Ministry serves as a one-stop service for foreign investors, guiding them through business licensing, sectoral approvals, and post-registration compliance. It also ensures alignment with the Positive Investment List, which outlines sectors open or restricted to foreign ownership.

Foreign companies, including those from India, must register through the Online Single Submission Risk-Based Approach (OSS RBA) platform, managed by the Ministry. The OSS system simplifies registration, licensing, and legal compliance for setting up a company in Indonesia efficiently and digitally.

2. Online Single Submission (OSS) System for Simplified Registration

Introduced in 2018, the Online Single Submission (OSS) system is a centralized digital platform for handling business licensing and registration in Indonesia. It was designed to streamline the setup process, reduce bureaucracy, and promote ease of doing business.

In 2021, the system was upgraded to the OSS Risk-Based Approach (OSS RBA), which tailors licensing requirements based on the risk level of business activities, making compliance more targeted and efficient.

Through the OSS RBA system, foreign investors can conveniently apply for:

• Business Identification Number (NIB)
• Commercial and operational licenses
• Tax registration
• Company data verification

This digital transformation has significantly reduced registration time and bureaucracy, making it easier to incorporate a company in Indonesia through the OSS platform

3. Positive Investment List: Sectors Open and Restricted to Foreign Investors

Indonesia has replaced the former Negative Investment List (DNI) with the more progressive Positive Investment List, which outlines sectors that are fully open, conditionally open, or restricted to foreign investment. This shift aims to attract global investors while safeguarding key national interests.

While many industries now allow 100% foreign ownership, certain sectors remain limited or closed to preserve domestic control.

Examples of restricted or conditionally open sectors include:

• Specific agricultural and plantation activities
• Media and broadcasting industries

Foreign investors, including Indian entrepreneurs, must consult the latest Positive Investment List to confirm sector eligibility before proceeding with company registration.

4. Foreign Ownership Rules for Companies in Indonesia

In many sectors, foreign investors can hold 100% ownership through a PT PMA (Foreign-Owned Company). However, ownership depends on the sector classification under the DNI.

Indian entrepreneurs must ensure that their intended business activities are fully or partially open to foreign ownership before proceeding with registration. Usually, industries like e-commerce, consulting, and IT permit complete foreign ownership.

Indian nationals planning company registration in Indonesia for foreign ownership must meet specific eligibility standards set by the government. These ensure transparency, legal compliance, and genuine business intent.

1. General Eligibility Criteria for Foreign Investors

To be eligible for company registration in Indonesia, Indian investors must:

• Be at least 17 years of age
• Have a valid passport and the legal capacity to enter into contracts.
• Not have any criminal or blacklisting records in Indonesia
• Comply with the Indonesia Investment Coordinating Board (BKPM) and Online Single Submission (OSS) regulations

Investors must be willing to follow all compliance obligations, including capital investment thresholds and tax registrations.

2. Specific Requirements for Indian Shareholders and Directors

For a foreign-owned company (PT PMA), at least two shareholders (can be individuals or companies) are required, along with:

• One director and one commissioner (either local or foreign)
• Indian shareholders must submit proof of identity, nationality, and contribution to the paid-up capital
• Directors should not have any legal bans or restrictions from holding such positions

These roles carry legal and financial responsibilities under Indonesian corporate law.

3. Business Sector Restrictions and Opportunities

Indonesia follows the Positive Investment List, replacing the earlier Negative Investment List (DNI). This updated framework classifies business sectors as fully open, conditionally open, or closed to foreign investment, aiming to promote transparency and attract international businesses.

While many sectors now allow 100% foreign ownership, some industries still have restrictions to protect national interests. These include:

• Media and broadcasting
• Agriculture
• Certain construction services

On the other hand, high-potential sectors like IT services, e-commerce, fintech, education, and manufacturing are fully open and actively encouraged for foreign investment.

Before proceeding with company registration, Indian entrepreneurs should consult the OSS system to confirm sector eligibility and any conditional requirements that may apply.

Accurate documentation is critical for successful company registration in Indonesia. Missing or incorrect documents can delay or void the application.

1. Documents Required from Indian Shareholders and Directors

For a valid application, Indian shareholders and directors must submit:

• Passport copies (notarized)
• Photograph and signature specimens
• Bank reference letter (showing financial standing)
• Power of attorney (if the procedure is being handled by a representative)
• Company documents (for corporate shareholders), such as the Certificate of Incorporation and Articles of Association

These documents are required for both OSS system entry and BKPM approval.

2. Appointing a Resident Director and Commissioner

While foreign nationals can be directors, many regions in Indonesia require a resident director, who holds a valid KITAS (limited stay permit).

• Commissioners may be foreign or local
• The resident director ensures legal accountability in Indonesia

This helps meet tax and compliance obligations while streamlining daily operations.

3. Minimum Capital Investment

For a PT PMA, the government mandates: Minimum investment of IDR 10 billion

This capital can be cash or fixed assets and must be documented in a Capital Statement Letter submitted during OSS registration.

4. Proof of Business Address

Every registered company must have a valid business address in Indonesia. Acceptable options include:

• Physical office lease agreement
• Virtual office (permitted in commercial zones only)
• Domicile letter from local authorities

This address is used to generate your company registration number in Indonesia via OSS and fulfill postal, tax, and inspection obligations.

Registering a company in Indonesia involves a clear, step-by-step process. Here’s a simplified breakdown:

Step 1: Choosing and Approving Your Company Name

Your company name must be approved by the Ministry of Law and Human Rights. It must meet the following conditions:

• Contain at least three distinct words
• Be written in Bahasa Indonesia
• Do not resemble existing registered company names
• Do not use restricted or offensive terms
• Include the legal suffix:
  • “Perseroan Terbatas” or “PT” for PT and PT PMA
  • No suffix needed for KPPA (as it's a representative office)

You must submit three proposed names for review. Once approved, this name will be used in all legal, tax, and OSS documentation.

Your selected business name and its related activities must indirectly align with the KBLI (Indonesia Standard Industrial Classification). The KBLI code helps define and classify the business scope under Indonesian law and is essential during OSS registration.

Step 2: Preparing the Deed of Establishment and Articles of Association with a Notary

You must engage a certified Indonesian notary to draft the Deed of Establishment. As part of this process, your company must also determine and include the appropriate KBLI (Indonesia Standard Classification of Business Fields) code, which defines the nature of your business activities and is required for OSS registration and licensing.

The Deed must include:

• Approved company name and line of business
• Selected KBLI code
• Shareholding structure (foreign and/or local)
• Paid-up capital and investment structure
• Details of directors and commissioners

Your company's operations are outlined in the Articles of Association, which function similarly to a company constitution. Both documents (Deed of Establishment and the Articles of Association) are prepared in Bahasa Indonesia.

Step 3: Securing Approval from the Ministry of Law and Human Rights

After the notary finalizes the Deed of Establishment and Articles of Association, these documents are submitted electronically to the Ministry of Law and Human Rights (Kementerian Hukum dan HAM).

Upon successful verification, the Ministry issues:

• An official Certificate of Incorporation, and
• The SK Kemenkumham (Ministerial Decree of Legalization)

This SK Kemenkumham serves as formal proof that your PT PMA is now a legally recognized entity in Indonesia. It is a mandatory document for proceeding with further registrations, including tax ID and OSS licensing.

Step 4: Obtaining Your Domicile Letter or Virtual Office Address

Every company in Indonesia must provide a registered business address.

You can either:

• Rent a physical office space
• Use a virtual office, particularly common for startups or early-stage companies

Then, apply for a Domicile Letter (Surat Keterangan Domisili) from the local municipality. This document is essential for further registrations.

Step 5: Registering for a Taxpayer Identification Number

After obtaining the Domicile Letter, your next step is to register the company with the local Tax Office to receive a Taxpayer Identification Number, known as NPWP (Nomor Pokok Wajib Pajak). This number functions similarly to an Indian PAN and is essential for tax filings, banking activities, and issuing invoices.

The application typically involves submitting key documents, including the Deed of Establishment, Domicile Letter, and the director’s tax identification (if available).

If the appointed director is a foreign national, they must possess a valid KITAS (Limited Stay Permit) to complete the NPWP issuance. In cases where the KITAS is still being processed, a temporary local director may be appointed to fulfill this requirement and prevent delays in the company registration timeline.

This step ensures your company is recognized by the Indonesian tax authority and can operate legally within the country.

Step 6: Obtaining Your Business Identification Number (NIB) via the OSS RBA System

The Online Single Submission (OSS) system is used to issue your official Indonesian company registration number, or NIB (Nomor Induk Berusaha).

NIB functions as:

• Company registration number
• Import identification number (if applicable)
• Business license and tax registration number

How to check the company registration number in Indonesia?

To verify the status of your Indonesian company, you can search for your NIB on the official OSS website using either the registered company name or the NIB number itself. The NIB is issued in a standardized alphanumeric format, which makes it easy to track, validate, and present to banks, clients, or government agencies. This transparency helps ensure your company’s legal standing in Indonesia at any given time.

Step 7: Fulfilling Your Minimum Investment and Paid-Up Capital Requirements

To register in Indonesia, Indian investors must comply with the minimum investment regulations outlined by the Ministry of Investment (formerly BKPM). The total required investment is:

• IDR 10 billion (approximately INR 55–60 lakh)

This total investment amount includes two key components:

• Minimum paid-up capital: IDR 2.5 billion (approx. INR 13–15 lakh) – This amount must be deposited into the company’s corporate bank account at the time of incorporation and is used to fund initial operations.
• Remaining investment commitment: IDR 7.5 billion – This balance is declared as a future investment commitment, which can be fulfilled progressively through operational spending, equipment, infrastructure, or working capital.

A capital statement letter confirming both the paid-up capital and total investment plan must be submitted through the OSS RBA system. This step is crucial to qualify for business licenses, work permits, and regulatory clearances.

Understanding the total cost involved in company registration in Indonesia is crucial for effective planning. For Indian nationals forming a PT PMA (Foreign-Owned Company), the expenses include a mix of government charges, legal documentation, and optional services.

Below is a breakdown of common costs involved:

Cost Item	Amount (IDR)	Approx. in INR	Details
Notary and Legal Documentation	10–15 million	55,000–80,000	Deed drafting, Articles of Association, etc.
Name Approval and Deed Registration	1–2 million	5,500–11,000	Ministry of Law and Human Rights fees
BKPM & OSS Registration	Free	Free	Government platform access and submission
Tax ID (NPWP)	Free	Free	Issued by the local Tax Office
Business Identification Number (NIB)	Free via OSS	Free	Multi-purpose registration number
Virtual Office (Optional)	5–10 million/year	27,000–55,000/year	For businesses without a physical office
Other Costs (Accounting, Legal, etc.)	5–15 million/year (varies)	27,000–82,000/year	Ongoing tax filing, audits, consultations, etc.

Proper financial planning helps ensure a smooth setup process and long-term compliance for your Indonesian entity.

After successful company registration in Indonesia, foreign-owned companies must follow regular compliance rules to stay legally active and avoid penalties.

1Opening a Corporate Bank Account in Indonesia

A corporate account is necessary for transactions, payroll, and capital deposits.

Requirements include:

• Deed of Establishment
• NPWP (tax number)
• NIB (Indonesia company registration number)
• Foreign Director’s ID and passport

2. Obtaining Essential Business Licenses (Izin Usaha)

Depending on your business activities, your company may require specific licenses such as:

• Industrial licenses
• Trading licenses
• Sector-specific permits (e.g., food, logistics, construction)

These are applied through the OSS portal and linked to your NIB. Ensure you stay compliant with periodic renewals and operational approvals.

3. Annual Tax and Compliance Obligations (LKPM Reports)

Tax and investment reporting obligations must be met by your PT PMA:

• Annual and monthly tax returns to the Indonesian Tax Office
• LKPM (Investment Activity Reports) are submitted quarterly or semi-annually to BKPM
• Financial statements are audited annually for certain sectors or sizes

Non-compliance may lead to sanctions or license suspension, so timely reporting is critical.

4. Work Permits (KITAS) for Indian Expatriates

To legally work in Indonesia, Indian directors or managers must obtain a KITAS (Limited Stay Permit).

Steps include:

1. Apply through the Ministry of Manpower
2. Submit RPTKA (Manpower Plan)
3. Sponsor KITAS via your PT PMA

KITAS is usually valid for 6–12 months and renewable. It also allows access to local facilities and is required for resident directors.