How Can an International Company Register in Indonesia?

The horizon of Jakarta looks different each year, shaped by cranes and construction that speak to Indonesia’s ambitions. With a GDP of nearly USD 1.4 trillion and a population exceeding 283 million, Indonesia has not only become the world’s 16th-largest economy but also one of its fastest-growing emerging markets.

The government’s Omnibus Law on Job Creation (Law No. 11 of 2020) and the Online Single Submission (OSS) system have changed a once-byzantine licensing regime into a more accessible process. However, the steps remain intricate; registering a foreign-owned entity, called a PT PMA (Perseroan Terbatas Penanaman Modal Asing), requires precise adherence to capital requirements, notarial procedures, and ministerial approvals. As of 2023, foreign direct investment (FDI) stood at USD 21.6 billion, underscoring the enduring magnetism and challenges of doing business in the country.

 

How Can an International Company Register in Indonesia?

The process of registering a foreign-owned company (commonly a PT PMA) involves the following steps: entity selection, name reservation, notarial deed, capital verification, and obtaining a license. Failure to meet any of these can result in delays, regulatory risk, or inability to operate. With foreign direct investment (FDI) in Indonesia totalling around USD 21.6 billion in 2023, the stakes are real.

• Entity structure choice

  Selecting the correct legal form for PT PMA, branch office, or representative office determines ownership rights, repatriation of profits, and the regulatory burden.

 

• Name reservation & notarial deed

  The company name must be approved by the Ministry of Law and Human Rights; a local notary drafts the deed of establishment in Bahasa Indonesia.

 

• Capital verification

  Evidence of paid-up capital is needed and must be transferred through an Indonesian bank.

 

• Licensing via OSS and NIB issuance

  Once the deed is ratified, investors obtain the Business Identification Number (NIB) via the OSS portal, which serves as a master licence.

 

• Sectoral and regional approvals

  Depending on the business field, additional permits at the provincial or sector level may be required.

 

What Legal and Regulatory Frameworks Apply to Foreign Direct Investment in Indonesia?

Indonesia’s comprehensive investment law is Investment Law No. 25 of 2007, which guarantees equal treatment for both domestic and foreign investors and outlines broad investor protections. The more recent Government Regulation No. 5 of 2021 introduced a risk-based licensing system, categorising business activities into low, medium and high risk.

The central investment agency, the Investment Coordinating Board (BKPM) under the Ministry of Investment, administers foreign capital registration and oversight. Indonesia has signed more than 65 double taxation avoidance agreements (DTAs) to reduce tax burdens for foreign investors.

 

• Investor protection provisions

  The law ensures protection against expropriation, non-discriminatory treatment, and the free transfer of dividends (subject to local taxation).

 

• Risk-based licensing

  Businesses are classified into risk tiers: low-risk sectors may only require a NIB, while higher-risk sectors require complete permits, environmental approvals, and additional scrutiny.

 

• Positive/Negative Investment Lists

  Indonesia maintains a list of sectors open, conditionally open or closed to foreign investment, updated periodically by presidential regulation.

 

• Compliance with labour & environment law

  Foreign firms must comply with Law No. 13 of 2003 on labour, Law No. 32 of 2009 on the environment, and other sectoral regulations.

 

• Digital-first submission system

  The OSS portal enables registration for NIB, business licence, and import/export via a single online platform, reducing paperwork and time.

 

What Is the Step-by-Step Process for PT PMA Registration?

Typically, the registration process for a foreign-owned limited company (PT PMA) commences with the reservation of the company name, followed by the execution of the deed of establishment before an Indonesian notary, and subsequently, ratification by the Ministry of Law. After completing these steps, the NIB is issued through OSS, tax registration occurs, and operational licences follow. If well-prepared, this can take around 4-6 weeks, although sector-specific permits may extend the timeline.

 

According to the Indonesian statistics bureau, in Q1 2025, foreign direct investment (FDI) reached approximately USD 13.67 billion, a 12.7% year-on-year increase, underscoring investor confidence linked to smoother processes.

• Name approval and reservation

  Submit three potential names to the Ministry of Law; approval ensures uniqueness and adherence to the appropriate format under Indonesian corporate rules.

 

• Deed of Establishment

  Drafted in Bahasa Indonesia by a registered notary, it includes shareholders, directors, capital, objectives, and share structure.

 

• Ratification & legalisation

  The Ministry of Law legalises the notarial deed, thereby converting the draft company into a legal person.

 

• NIB issuance via OSS

  Once ratified, the OSS portal issues the Business Identification Number, which becomes the master licence for business, imports and tax.

 

• Operational licence and bank account

  Depending on the industry, operational licences from line ministries and the opening of bank accounts complete the practical setup.

 

What are the Capital and Ownership Thresholds Foreign Investors Must Contend With?

Foreign investment regulations require minimum capital commitments. Historically, a PT PMA has required a minimum paid-up capital of IDR 10 billion (around USD 650,000), though actual requirements vary by sector and region. Investors must provide proof of funds and meet the capital injection timeline. Ownership restrictions vary by industry: manufacturing and many services permit up to 100% foreign ownership, whereas industries such as retail and education may impose restrictions on foreign equity.

 

In 2023, foreign investors contributed significant sums to Indonesia’s industrial sectors, with the basic metal goods, mining, and equipment industries being major recipients of investment flows exceeding IDR 1,207.2 trillion that year.

• Minimum paid-up capital

  Where required, capital must be verifiable and deposited in an Indonesian bank, and delays may block registration.

 

• Foreign equity limits

  The Positive Investment List sets maximum foreign shareholding levels, with some sectors capped at 100%, others at 49%, or requiring a local partnership.

 

• Proof of capital realisation

  Companies must file reports with BKPM showing that actual investments match declared amounts; scaling must occur over time.

 

• Local partnership requirements

  In restricted sectors, foreign investors often must engage a local partner, which affects governance, repatriation and control.

 

• Capital injection timeline

  Many sectors require capital to be injected within a specified time frame after establishment; failure to do so may trigger penalties or licence revocation.

 

• Capital injection timeline

  Many sectors require capital to be injected within a specified time frame after establishment; failure to do so may trigger penalties or licence revocation.

 

What Tax, Compliance, and Operational Responsibilities Follow Registration?

Once the company is operational, it must fulfil its tax obligations under the Indonesian tax system: corporate income tax currently stands at 22%, value-added tax (VAT) is 11%, and turnover above IDR 4.8 billion requires VAT registration. Businesses must maintain accounts in Indonesian Rupiah and file annual audited financial statements if their annual turnover exceeds certain thresholds. Indonesia’s FDI inflows in 2023 totalled USD 21.6 billion, demonstrating the significant scale of international business activity in the country.

 

Operational compliance also includes labour obligations, environmental monitoring, regional licences and periodic investment realisation reports to BKPM. Failure to comply can result in fines or suspension of the licence.

• Corporate income tax

  Standard rate: 22%. Lower rates may apply for listed companies or those in specific industries.

 

• VAT and turnover threshold

  VAT at 11 % and registration is mandatory when annual turnover exceeds IDR 4.8 billion; monthly returns are subsequently required.

 

• Currency and language of accounts

  All official books must be in Bahasa Indonesia and denominated in Rupiah; foreign currency translations are for internal use only.

 

• Labour and social security compliance

  Employers must enrol employees in national social security schemes (BPJS Ketenagakerjaan) and ensure that expatriates hold valid work permits (KITAS/KITAP).

 

• Investment realisation reporting

  PT PMAs must report to BKPM on the deployment of declared funds and the project’s progress; failure to report can lead to enforcement action.

 

Which Sectors and Regions are Most Attractive to Foreign Companies in Indonesia?

Specific sectors have seen disproportionately high levels of foreign investment in Indonesia. For instance, in 2022, the country’s basic metals sector attracted large FDI volumes, with the government reporting overall investment realisation of IDR 1,207.2 trillion that year.

The nickel processing and electric-vehicle battery supply chains are particularly notable. Indonesia is the world’s top nickel producer and has established major industrial parks, such as the Morowali Industrial Park in Central Sulawesi, with an investment of US $34.3 billion by 2024.

 

Regionally, Java continues to dominate economic output (57 % of GDP in 2023), yet other provinces (Sulawesi, Maluku, Papua) are growing faster as infrastructure expands.

• Nickel and EV-battery manufacturing

  Indonesia has banned the export of raw nickel ore and is promoting the value-added processing of nickel, attracting major global battery manufacturers.

 

• Mega-industrial parks and SEZs

  Zones such as Batam, Kendal and Morowali offer tax holidays, duty exemptions and infrastructure for foreign manufacturers.

 

• Digital economy and cloud infrastructure

  Major global tech firms (e.g., Microsoft) announced multi-billion-dollar investments in cloud and AI infrastructure in Indonesia, recognising its developer base of over 3 million.

 

• Logistics and infrastructure corridor investment

  Indonesia’s infrastructure pushes seaports, highways, and the new capital city (Nusantara) plan opens opportunities in construction, logistics, and supply chains.

 

• Tourism and service expansion

  Post-COVID, foreign investment in tourism infrastructure has surged; Bali, for example, is re-regulating development due to concerns about overtourism.

 

Why does Indonesia Present Both Significant Opportunities and Noteworthy Challenges for Foreign Investors?

The opportunities are manifold, as Indonesia has a large and youthful population (70% under 40 years old), a strategic location linking the Indian and Pacific oceans, membership in the G20 and ASEAN, and ongoing government reforms aimed at attracting high-quality foreign investment. Indonesia’s internet economy alone reached roughly USD 77 billion in 2022 and is projected to exceed USD 130 billion by 2025.

 

However, several challenges persist, including regional regulatory variations, bureaucratic delays in certain provinces, evolving tax and ownership regulations, and infrastructure gaps in less developed provinces. Companies that succeed typically implement strong local governance, engage advisors, and build for the long term rather than seek rapid returns.

• Youthful demographic dividend

  With a labour force expected to expand through the 2030s, Indonesia offers a competitive workforce for manufacturing and services.

 

• Strategic trade and supply-chain positioning

  Situated between major shipping lanes, Indonesia is well-positioned to serve ASEAN and beyond; its export network is diversified across Asia, Europe, and the Americas.

 

• Evolving regulatory environment

  Reforms are apparent, but investors must remain agile as policy, investment lists and incentive regimes continue to evolve.

 

• Infrastructure and connectivity gaps

  While major hubs are world-class, many regions still require investment in logistics; supply chains must accommodate this unevenness.

 

• Cultural and administrative adaptation

  Successful foreign firms emphasise cultural sensitivity, build local partnerships and abide by local norms in governance, labour relations and community engagement.

 

Conclusion

A generation of young workers is entering the labour force just as Indonesia’s economy crosses the trillion-dollar threshold. Factories are running at fuller capacity, industrial zones are pushing outward toward new coastlines, and Jakarta has begun to court the world’s most ambitious companies with a more confident policy hand. For manufacturers searching for the next centre of gravity, for technology firms looking to reach hundreds of millions of new consumers, and for investors who want stability in a shifting global order, Indonesia has become a country that can no longer be skipped on the map.

Yet, beneath the promise lies an operating landscape that remains layered, legalistic, and fast-evolving. Regulations shift, capital rules tighten, and regional compliance can vary widely. For international companies, succeeding in Indonesia is less about speed and more about precision, understanding sector thresholds, interpreting the Positive Investment List, anticipating BKPM reporting cycles, and ensuring every step aligns with Indonesia’s risk-based licensing framework.

In a market where opportunity is abundant but mistakes are costly, experienced guidance becomes essential. This is where 3E Accounting Indonesia helps by simplifying every step of Indonesia’s company registration, licensing, and compliance process, allowing businesses to focus on growth rather than bureaucracy.