Indonesia is Southeast Asia’s largest economy and one of its most compelling destinations for foreign capital. In 2024, total investment realisation reached IDR 1,714.2 trillion, exceeding the government’s target by 103.9%, with Foreign Direct Investment (FDI) accounting for IDR 900.2 trillion (52.5%), as per the official BKPM press release. The government’s continued regulatory reforms, including the landmark BKPM Regulation No. 5 of 2025, have further reduced barriers to entry for international investors.
For any foreigner seeking to establish a legally compliant, commercially operational presence in Indonesia, understanding the correct corporate structure and registration process is the most critical step. This guide provides a precise, regulation-verified overview of foreign company registration in Indonesia, covering entity types, capital requirements, the step-by-step incorporation process, and post-registration obligations.
What Foreign Company Registration Options Are Available in Indonesia?
There are two primary vehicles for setting up a company in Indonesia as a foreigner legally:
-
Representative Office
A non-commercial extension of a foreign parent company permitted to conduct market research, liaison, and promotional activities only. It cannot generate revenue or enter into sales contracts.
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Subsidiary Company (PT PMA)
A foreign-owned limited liability company that is fully authorised to conduct commercial operations, generate revenue, hire employees, and enter into contracts within Indonesia. It is the default structure for any investor intending to operate commercially.
Each of these structures serves distinct business purposes and comes with specific regulatory conditions that must be met to establish a foreign company in Indonesia.
Foreigners may also explore nominee arrangements to incorporate a local PT company, although these arrangements must be approached cautiously and in full compliance with prevailing laws.
Can a Foreigner Open a Company in Indonesia?
Yes. Indonesian law explicitly permits foreign nationals and foreign entities to establish a business in Indonesia through the PT PMA structure. Under Presidential Regulation No. 10 of 2021 (the Positive Investment List), foreigners may hold up to 100% ownership in hundreds of business sectors, including manufacturing, technology, logistics, consulting, and hospitality, among others.
Certain sectors, however, impose ownership caps or require local partnership, including small-scale retail, broadcasting, and select agricultural activities. Before incorporating, investors must verify their intended business activity against the Positive Investment List using the relevant KBLI code in Indonesia’s Standard Business Classification system. Every PT PMA must register at least one 5-digit KBLI code, which determines:
- The permissible level of foreign ownership
- The risk classification of the business activity (Low, Medium-Low, Medium-High, or High)
- The type and number of additional licenses required beyond the NIB
The OSS-RBA serves as the central platform for all business registration, licensing, and compliance filings in Indonesia.
What Is a Representative Office in Indonesia and Its Key Features?
A Representative Office (RO) in Indonesia is best suited for foreign companies that wish to assess the Indonesian market prior to a full commercial entry. RO’s are restricted to non-revenue-generating functions and serve as extensions of their parent companies abroad in indonesia.
Core Characteristics:
- No minimum capital requirement
- Cannot generate income or engage in sales contracts
- Can hire both local and foreign staff
- Renewable two-year license
Representative offices in Indonesia are registered with the Investment Coordinating Board (BKPM) and managed under the Online Single Submission (OSS) system.
What Are the Types of Representative Offices in Indonesia?
Indonesia classifies representative offices into the following categories:
a. Foreign Representative Office
- Supervises or coordinates the business interests of its parent company
- Must not engage in direct profit-generating activities
- Required documents include a letter of appointment, articles of association, and proof of identity for the appointed representative
b. Foreign Construction Representative Office
- Permitted to handle high-risk or high-tech construction projects in partnership with local entities
- Requires a valid construction permit from the country of origin and endorsement from the Indonesian Embassy
- Valid for three years, subject to renewal
c. Foreign Trade Representative Office
- Engages in promotion, marketing support, and contract negotiation on behalf of the principal foreign entity
- Must obtain a Trade Business License (SIUP3A), which may be temporary, permanent, extended, or modified based on operational needs
All representative offices are registered through the Online Single Submission (OSS) system and must be renewed periodically. A representative office cannot issue invoices, receive payments, or enter into commercial contracts. Any foreign company wishing to transition from a representative office to a commercially active structure must establish a separate PT PMA.
Setting Up a Foreign-Owned Company in Indonesia: PT PMA Requirements
A PT PMA is a domestic legal entity under Indonesian law. It holds the same legal standing as any Indonesian company, is fully subject to Indonesian corporate law, and functions as a tax resident. It may be wholly or partially foreign-owned depending on the applicable KBLI sector.
Corporate Structure Requirements
To register a PT PMA, the following structural requirements must be satisfied:
- Minimum two shareholders, both individual and corporate shareholders are permitted; at least one may be a foreign national or foreign entity
- At least one director responsible for day-to-day operations; may be a foreign national holding a valid KITAS (Temporary Stay Permit)
- At least one commissioner oversees directors on behalf of shareholders; may be local or foreign
- The simplest PT PMA structure has two individuals, one serving as shareholder-commissioner, the other as shareholder-director
Capital Requirements (BKPM Regulation No. 5 of 2025)
A significant regulatory update took effect on 2 October 2025 under BKPM Regulation No. 5 of 2025, which revised the capital framework for PT PMA registration:
| Requirement | Amount | Notes |
| Minimum paid-up capital | IDR 2.5 billion (~USD 150,000) | Must be deposited into the company’s Indonesian bank account at incorporation. Cannot be withdrawn for the first 12 months except for operational or capital expenditure. |
| Total investment plan | > IDR 10 billion (~USD 600,000) | Per business activity (5-digit KBLI code) per project location. Excludes land and buildings (except in property, agriculture, and accommodation sectors). |
Important clarification: These are two separate requirements, not interchangeable. The IDR 2.5 billion paid-up capital is the minimum deposited share capital; the IDR 10 billion investment plan represents the total committed investment realised progressively over the company’s operational life, reported quarterly via LKPM reports to BKPM.
KITAS for Foreign Directors and Investors
Foreign nationals serving as directors or commissioners in a PT PMA require a KITAS (Temporary Stay Permit) to legally reside and work in Indonesia. The Investor KITAS specifically requires proof of shareholding in a PT PMA with a minimum investment of IDR 10 billion, per Minister of Law and Human Rights Regulation No. 3 of 2025. Foreign directors who do not hold an Investor KITAS may qualify for a work-based KITAS under the applicable immigration rules.
Step-by-Step PT PMA Registration Process in Indonesia
The following is the current registration sequence under the OSS-RBA system, aligned with BKPM Regulation No. 5 of 2025 and Government Regulation No. 28 of 2025 on Risk-Based Business Licensing:
Step 1: Company Name Reservation
Propose a minimum of three words (each with at least three characters). The name must be in the Latin alphabet. The Ministry of Law and Human Rights checks availability via the AHU Online portal. Each shareholder and the company must also register a distinct Indonesian phone number at this stage (a requirement introduced under BKPM Reg. 5/2025).
Step 2: Deed of Establishment
A licensed Indonesian notary drafts the Deed of Establishment in Bahasa Indonesia. This document contains the Articles of Association, shareholder details, subscribed capital, and business activities (KBLI codes). All shareholders must sign.
Step 3: Ministry of Law and Human Rights Approval
The notary submits the notarised Deed of Establishment to the Ministry of Law and Human Rights for legal entity ratification. Upon approval, the Ministry issues a Decree, formally constituting the PT PMA as a legal entity.
Step 4: Tax Identification Number (NPWP)
Following legal entity ratification, the company registers for an NPWP with the Directorate General of Taxes. Under BKPM Reg. 5/2025, the director must now obtain their own personal NPWP before the company NPWP can be issued, a procedural change that adds time to the process.
Step 5: Business Identification Number (NIB) via OSS
The NIB (Nomor Induk Berusaha) is applied for through the OSS portal. The NIB is the single most important document in the Indonesian business registry. It simultaneously serves as the company’s:
- Business registration certificate
- Import license (API)
- Customs identification number
- Enrollment confirmation in the BPJS social security programs
For Low and Medium-Low risk KBLI activities, the NIB itself constitutes the operating license, and the company may commence operations immediately. For Medium-High and High-risk activities, additional sector-specific licenses are required before operations begin.
Step 6: Sector-Specific Licenses (if applicable)
Depending on the business sector, additional permits may be required from the relevant ministry, such as BPOM certification for food/pharmaceutical products, a construction service license (IUJK) for construction, or an OJK license for financial services.
Step 7: Corporate Bank Account & Capital Deposit
Open a corporate bank account at an Indonesian commercial bank. Deposit a minimum of IDR 2.5 billion in paid-up capital. Funds must remain in the account for 12 months unless utilised for operational or capital expenditure purposes.
Step 8: KITAS for Foreign Personnel (if applicable)
Foreign directors, commissioners, or employees requiring Indonesian residency must apply for the appropriate KITAS through the Directorate General of Immigration.
Estimated Timeline: Under the current OSS-RBA framework and BKPM Reg. 5/2025, the full PT PMA registration process takes approximately 10 working days for straightforward, low-risk applications in Jakarta, and up to 4-8 weeks for higher-risk sectors or applications requiring additional licensing.
What Documentation Is Required for Indonesia Company Registration?
The following documentations are typically required for both representative offices and PT PMAs:
- Articles of Association and company charter
- Letter of appointment from the parent company
- Identification documents of appointed representatives
- Taxpayer Registration Number (NPWP)
- Business Identification Number (NIB) from OSS
- Sector-specific licenses, such as SIUP3A or construction permit
How to Verify a Company’s Registration Status in Indonesia?
Company registration status in Indonesia can be verified via:
- OSS (Online Single Submission) portal
- Directorate General of Legal Administrative Affairs (AHU) database
- Official documentation such as NIB and company certificates
These platforms enable foreign stakeholders to confirm the legitimacy and registration standing of business entities operating in the country.
Strategic Considerations in Selecting the Right Business Entity Type in Indonesia
Choosing between a representative office and a PT PMA in Indonesia depends on several strategic factors:
| Factor | Representative Office | PT PMA |
|---|---|---|
| Business Objective | Market exploration, liaison | Revenue generation, operations |
| Capital Requirement | None | IDR 10 Billion (Min) |
| Permitted Activities | Non-commercial | Full commercial operations |
| Tax Residency | No | Yes (25% CIT) |
Investors with long-term commercial plans are encouraged to establish a PT PMA in Indonesia, whereas those conducting preliminary research or maintaining a local presence may find a representative office more suitable.
Conclusion
Indonesia remains one of Southeast Asia’s most compelling destinations for foreign investment, and with BKPM Regulation No. 5 of 2025 reducing the minimum paid-up capital for a PT PMA to IDR 2.5 billion, the barrier to entry has never been lower for serious investors.
Choosing the right structure, PT PMA for full commercial operations or a representative office for market exploration, is the single most consequential decision a foreign investor makes at market entry. Getting it right from day one determines your compliance standing, tax position, and operational freedom in Indonesia for years ahead.
3E Accounting Indonesia has helped hundreds of foreign investors establish, operate, and grow their businesses in Indonesia with confidence. From PT PMA registration and KBLI classification to NIB issuance and ongoing compliance, our specialists manage every step so you focus on building your business, not navigating bureaucracy.
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Frequently Asked Questions
As per BKPM Regulation No. 5 of 2025, the minimum paid-up capital is IDR 2.5 billion (USD 150,000), with a total investment plan exceeding IDR 10 billion per business activity. Both requirements must be met.
For low-risk KBLI activities, registration takes approximately 10 working days. Higher-risk sectors requiring additional licensing typically take 4-8 weeks. Timeline depends on business classification, documentation readiness, and sector-specific requirements.
The standard corporate income tax (CIT) rate is 22%, applicable to PT PMA entities as domestic tax residents. Publicly listed companies meeting minimum float criteria qualify for a reduced 19% rate.
A PT PMA is a fully commercial entity authorised to generate revenue, hire staff, and enter into contracts. A Representative Office is restricted to non-commercial activities, market research, and liaison, and cannot invoice or receive payments.
Yes. Foreign nationals serving as directors or commissioners in a PT PMA must hold a valid KITAS (Temporary Stay Permit). The Investor KITAS requires proof of shareholding in a company with a minimum IDR 10 billion investment.
The NIB (Nomor Induk Berusaha) is Indonesia’s Business Identification Number, issued through the OSS portal. It functions simultaneously as a business registration certificate, import license, and customs ID, and is mandatory before commencing any business activity.
For international investors, the preferred structure is a PT PMA, as it provides full operational rights and legal recognition as a limited liability company. Local investors typically opt for a Local PT. Both structures offer limited liability protection and organisational flexibility.
Abigail Yu
Author
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
