How Do You Register Register A Company In Indonesia? A Step-by-Step Guide

Indonesia stands out as a promising destination for company incorporation in Southeast Asia. With its large consumer base, strategic trade routes, and steady economic reforms, it has caught the attention of both domestic entrepreneurs and international investors.

That said, company registration in Indonesia is not without its challenges. Understanding the legal process on how to register a company in Indonesia, dealing with local regulations, and securing the necessary licenses can feel overwhelming, especially if you’re unfamiliar with the system.

This guide aims to make the process clearer, it breaks down each step: from legal requirements to post-registration obligations, to help you get started on solid ground.

What Types of Entities Can You Register in Indonesia?

Determining the correct business structure is an imperative step when company setup in Indonesia.  

 

1. PT (Perseroan Terbatas) – Local Limited Liability Company

Perseroan Terbatas is a legal entity that provides limited liability protection to its shareholders, meaning personal assets are shielded from company liabilities.

Features-

• Minimum of two shareholders, one director, and one commissioner
• Must be 100% locally owned
• Suitable for a wide range of commercial activities 

 

2. PT PMA (Penanaman Modal Asing) – Foreign-Owned Company

It grants foreign nationals and entities the legal right to own shares in a local company, subject to sectoral restrictions stated in the Positive Investment List.

Key features:

• Can be fully or partially foreign-owned
• Requires minimum paid-up capital, typically around IDR 10 billion
• Must engage in approved business sectors
  

 

3. CV (Commanditaire Vennootschap) – Limited Partnership

A CV is a business partnership generally used by small and medium-sized enterprises (SMEs). It consists of two types of partners-

• Active partners 
• Silent partners 

 A CV is not a separate legal entity, meaning partners can be personally liable for debts.

 

4. Representative Office (Kantor Perwakilan)

A foreign company registration in Indonesia market may establish a Representative Office.

There are several types of representative offices, including:

• General Representative Office (KPPA)

• Trading Representative Office (KP3A)

• Construction Representative Office (BUJKA)

This option is suitable for businesses that are in the early stages of entering Indonesia.

What are The Advantages and Benefits of Business Registration in Indonesia?

Indonesia, as Southeast Asia’s largest economy, offers a compelling environment for both local and international businesses. Company registration in Indonesia opens the door to a host of strategic advantages. 

 

1. Legal Recognition and Protection

A recognised legal entity in Indonesia can- 

• Open bank accounts for the company 
• Sign contracts by using company’s name
• Helps in enjoying the benefit of limited liability.
  

 

2. Access to the Local Market

Company registration Indonesia helps you trade freely across the country, which is home to 270 million people.

 

3. Eligibility for Business Licences in Indonesia 

Most sectors in Indonesia require official registration before you can apply for licenses. 

 

4. Hiring Legally and Growing Team 

Only registered companies can formally hire staff, issue employment contracts, and enroll workers in Indonesia’s social security programmes (BPJS). This is essential for building a team and growing your business sustainably.

 

5. Foreign Ownership Opportunities (PT PMA)

Set up a PT PMA for foreign owned company registration Indonesia. This enables full profit repatriation, legal hiring of foreign professionals and sector-focused investments.. This enables full profit repatriation, legal hiring of foreign professionals and sector-focused investments.

 

6. Boosted Credibility 

Register a company in Indonesia appears more trustworthy to customers and to potential partners, investors, and even banks. This credibility can be the difference between landing a key contract or losing out to competitors.

 

7.  Eligibility for Funding 

Banks and financial institutions typically require proof of company registration in Indonesia before offering loans, credit facilities, or payment gateways. Similarly, many investors will not consider a business that is not officially established.

 

8. Tax Compliance equals long term stability 

While taxes may sound like a burden, being registered ensures you’re operating transparently and this can benefit you long-term. Proper documentation makes it easier to:

• Deduct business expenses

• File accurate financial reports
• Avoid fines or future legal complications

• For growing companies, being on the right side of the law is vital for stability and scalability.

Company registration in Indonesia is a legal requirement plus a strategic advantage. It gives your company structure, legitimacy, and the ability to fully participate in one of Asia’s most dynamic economies. Registration is a smart first step toward long-term success.

How to Register a Company in Indonesia?

Setting up a company in Indonesia involves a structured legal process. Below is a simplified, yet professional guide outlining the main steps required to legally register a business in the country.

 

Step 1: Reserve a Company Name

The first formal step involves reserving a unique company name through the Ministry of Law and Human Rights (MOLHR). Your company name must:

1. Be in Bahasa Indonesia
2. Consist of at least three distinct words
3. Avoid any similarity to existing company names
4. Not violate public norms or sensitivities

Once approved, this reserved name becomes the official identity under which your business will operate.

 

Step 2: Draft and Notarise the Deed of Establishment

The next stage is preparing the Deed of Establishment, which includes your company’s:

1.Name and address

2.Business activities

3.Share capital and ownership structure

4.List of shareholders, directors, and commissioners

This document must be prepared and notarised by a licensed notary in Indonesia. It serves as the foundation of your business’s legal standing.

 

Step 3: Obtain Legal Entity Status

Following notarisation, the deed is submitted online to MOLHR for approval. Once approved, your company officially becomes a legal entity under Indonesian law, entitled to operate commercially.

 

Step 4: Secure a Domicile Letter

A Domicile Letter is then obtained from the local sub-district office (kelurahan). This letter confirms your business address and is essential for further registrations, including tax ID and business licences. It typically requires a valid lease or property ownership document.

This structured process ensures your company operates in full compliance with Indonesian legal and regulatory requirements. For most foreign investors or first-time entrepreneurs, seeking support from legal advisors or business consultants can help streamline the process and avoid delays.

 

Step 5: Tax Registration and Identification

Once your company is officially incorporated, the next step is to register with the local Tax Office (Kantor Pelayanan Pajak – KPP) to obtain the necessary tax documentation. This includes:

NPWP (Nomor Pokok Wajib Pajak): This is the company’s Tax Identification Number and is mandatory for all legal entities operating in Indonesia.

PKP (Pengusaha Kena Pajak): If your company exceeds a certain revenue threshold or intends to charge VAT, you must also register as a taxable entrepreneur to obtain VAT collector status.

Both registrations are essential for complying with Indonesian tax laws and for opening a corporate bank account.

 

Step 6: Obtain the Business Identification Number (NIB)

The Business Identification Number, or NIB (Nomor Induk Berusaha), is obtained through the Online Single Submission (OSS) platform. The NIB serves as an umbrella identifier, replacing the need for several prior standalone registrations. It functions as:

• The company’s official registration number
• A customs identification number (if the business involves import/export activities)
• An automatic enrolment tool for social security programmes (BPJS Kesehatan and BPJS Ketenagakerjaan)

This digital system streamlines the licensing process and provides your business with a single reference ID for most administrative needs.

 

Step 7: Apply for Operational and Sectoral Licences

Depending on the nature of your business, additional permits and operational licences may be required. These can include:

• General commercial licences, such as the SIUP (Business Trading Licence) and TDP (Company Registration Certificate)
• Sector-specific permits, applicable to industries like construction, education, finance, or healthcare
• Environmental licences, such as UKL-UPL or AMDAL, required for businesses with potential environmental impact

Most of these can be applied for and managed through the OSS system, allowing simultaneous submissions and improved processing times.

Related read: Guide to Indonesia Company Registration

What are The Key Considerations Before Company Incorporation in Indonesia?

Before Company registration in indonesia, especially,  registering PT PMA in Indonesia, you must comply with several critical legal and regulatory requirements. 

 

1. Minimum Capital Requirements

A PT PMA must have a minimum authorized capital of IDR 10 billion (approx. USD 650,000), as mandated by BKPM. This capital should be reflected in the Articles of Association. Not all of it needs to be deposited upfront, but the company must show capacity to meet it.

 

2. Shareholders and Directors

• Minimum of two shareholders, individuals or entities; foreign ownership is permitted within sector-specific limits.
• Must appoint at least one Director (handles operations) and one Commissioner (supervises governance).
• No nationality restriction, but foreign nationals require a work permit (KITAS).

 

3. Registered Business Address

• A PT PMA must have a physical commercial address in a properly zoned area.
• Must provide a valid lease or ownership agreement.

In some areas, like Jakarta, virtual offices are permitted for certain businesses, but restrictions vary by municipality and sector.

What Are Some Common Challenges And How To Avoid Them?

1. Restricted Sectors for Foreigners – Some industries limit foreign ownership or require a local partner; always verify before proceeding.
2. Missing Documentation – Incomplete paperwork can cause delays; consult a legal advisor to ensure accuracy.
3. Local Bureaucratic Differences – Municipalities may interpret rules differently; engage someone familiar with local regulations.
4. Inconsistent Processing Times – Approvals may take longer in certain regions; factor this into your planning timeline.
5. Changes in Regulations – Policies may shift without broad notice; stay updated through reliable legal sources.
6. Language Barriers – Key documents and communications are in Bahasa Indonesia; having a bilingual partner is highly beneficial.

Conclusion:

Incorporate company in Indonesia presents significant opportunities, especially given its dynamic economy and strategic location in Southeast Asia. However, managing the regulatory landscape requires a clear understanding of legal requirements, sectoral restrictions, and administrative procedures.

Frequently Asked Questions