Many foreign entrepreneurs are looking toward the opportunity of setting up a business in Indonesia. Being one of the largest countries in Southeast Asia, Indonesia offers plenty of opportunities with its rapidly growing economy, natural resources, and digital economy growth. 

Let’s delve deeper into the requirements and procedures to set up a business in Indonesia for foreigners.

Can Foreigners Start Business in Indonesia?

The answer is: yes, foreigners can definitely start their business in Indonesia. It primarily goes through a structure called PT PMA (Perseroan Terbatas Penanaman Modal Asing), which is a foreign-invested limited liability company. Another type of structure is a representative office. This is suitable for foreigners who want to do market research and build a presence before fully investing in setting up a business in Indonesia.

Advantages of Setting Up a Business in Indonesia

As one of the fastest-growing economies in Southeast Asia, Indonesia offers numerous advantages for foreigners looking to start a business. These advantages include:

• Strategic Location: Located in the crossroads of the Indian and Pacific Oceans, Indonesia sits along major international trade routes connecting Southeast Asia, Australia, and East Asia markets. This makes Indonesia an attractive spot for export-import activities and regional business expansion. 
• Rich Natural Resources: Indonesia is popular for its abundant natural resources, including coal, nickel, palm oil, rubber, and tin. Foreign businesses in mining, agriculture, energy, and manufacturing benefit from rich raw materials at competitive costs. This can reduce supply chain dependencies.
• Growing Market: Indonesia is one of the most populous countries in the world with the population of over 287 million people. With a fast-expanding middle class and strong domestic consumption, Indonesia creates strong opportunities on field like consumer goods, healthcare, food and beverages, etc.  
• Productive Workforce: Indonesia’s large population also comes with a large labor force of over 150 million productive workforce. Competitive wage levels relative to other Asian countries, combined with improved education and vocational training, makes it attractive for foreign companies.
• Digital Economy Growth: Indonesia’s digital economy growth is projected to reach over US$210 billion by 2030. With over 200 million internet users, high smartphone penetration, and a thriving startup ecosystem, it offers vast opportunities for fintech, e-commerce, and other tech ventures.

Read More: Business License in Indonesia: Everything You Need to Know

Types of Business Entities for Foreign Companies in Indonesia

There are several common types of businesses for foreign companies in Indonesia:

Foreign-owned Limited Liability Company (PT PMA)

One of the most common types of business entities for foreign investors in Indonesia is foreign-owned limited liability or PT PMA. It allows foreigners to have full or partial ownership with local partners. PT PMA becomes a popular choice for foreigners as they can fully own the company and hire foreign employees. However, PT PMA requires an Indonesian to fill the director or commissioner position.

Locally-owned Limited Liability Company

Locally-owned Limited Liability Company or Perseroan Terbatas (PT) is one of the most popular business types among Indonesian entrepreneurs. This popularity is due to their minimum capital requirements and faster setup time than foreign-owned companies. Compared to PT PMA, foreigners can’t fully own PT. This is why PT is mainly suitable for local entrepreneurs. 

Representative Office

A representative office is a business type used by foreign companies to “test the waters” without engaging in revenue-generating activities. It allows foreign companies to conduct market research, explore business opportunities, and establish a presence before committing to a commercial entity. It’s typically easier to establish with fewer licenses and regulatory requirements. 

Read More: Tips to Choose the Best Virtual Office in Indonesia

How Much Does It Cost to Set Up a Business in Indonesia?

The cost of starting a business in Indonesia can vary. It depends on various factors, such as the type of business entity, location, licenses required, and other requirements. For example, setup fees for PT PMA can range from IDR 25 million to 60 million (~$1,600-4,000). Other than the setup fees, Indonesia also requires foreign companies to meet a minimum capital requirement. Based on the latest regulations, the minimum paid-up capital of PT PMA is reduced from IDR 10 billion to IDR 2.5 billion, which also includes an investment plan of more than IDR 10 billion per business classification (KBLI).

Requirements to Start a Business as a Foreigner

To start a company in Indonesia, there are several requirements that foreign entrepreneurs should fulfill to ensure compliance with local regulations. These requirements include:

• Obtain a business visa and work permit
• Select a legal business entity 
• Prepare ID of the founders (Passport for foreigners, KTP for Indonesian)
• Obtain approval for the name of your company
• Obtain the Deed of Incorporation, including Articles of Association. A notary needs to be present
• Obtain a letter of approval of the legal business entity granted by the Ministry of Law and Human Rights
• Register for a Tax ID (NPWP)
• Obtain a domicile letter that identifies the business’ location
• Obtain the unique company profile number (NIB), business license, and any necessary permits for the business

Read More: Business Registration Number in Indonesia: Definition and Process

How to Set Up Business in Indonesia as a Foreigner

Thinking of setting up a company in Indonesia as a foreigner? Here are several practical steps to follow:

Select The Legal Business Entity

Foreigners have several options of legal business entities, including foreign-owned limited liability companies or representative offices. Each business entity comes with their legal implications, tax obligations, and operational requirements. You can consider consulting legal experts to determine the most suitable business entity for your business.

Check the Positive Investment List

Before investing any money or time into registration, you must verify that your intended business sector is actually open to foreign ownership. The Indonesian government has the Positive Investment List, which outlines which industries allow foreign investment and what the maximum foreign ownership percentage is for each. Some sectors are partially or fully closed to foreigners, while others are more open to foreigners.

Prepare Your Capital

The amount of capital you need to to set up a business in Indonesia can be different depending on several factors. This includes the type of legal entity, the location of your business, the scale of operations, and any sector-specified requirements needed. For instance, a foreign-owned limited liability company (PT PMA) carries a minimum investment threshold of IDR 10 billion (approximately $610,000).

Prepare the Deed of Establishment

Next, you must prepare for the Deed of Establishment, which can be applied for online. This formal document outlines the company’s purpose, structure, and regulations and must be executed before a notary public. The Deed of Establishment is important to establish your company’s legal entity and a prerequisite for further registration process.

Obtain Required Licenses and Permits

Securing the necessary licenses and permits is essential to ensuring compliance with Indonesian regulations. This includes business licenses, work permits, visas, tax registration number (NPWP), business identification number (NIB), and certificate of domicile letter. Certain industries may also require operational licenses from the relevant government ministries. Consulting legal experts is strongly advised to identify and prepare the appropriate documentation.

Register Your Business

You can register your business through the OSS system (https://oss.go.id/). You will be asked to fill in detailed information about yourself and your business and submit various documents required to establish a business. This is essential not only for operational legitimacy but also for establishing credibility for your business.

Read More: Best Virtual Office in South Jakarta 2026 Recommendation

Launch Your Business in Indonesia with No Hassle with Effist’s Virtual Office Solutions

Setting up a business in Indonesia doesn’t have to be overwhelming. With Effist Suite Office‘s virtual office solutions, you get everything needed to establish a credible business presence without the cost of a physical office. With a prestigious business address, dedicated phone number handled by our skilled customer service team, and services ranging from mail handling to fully equipped meeting rooms, everything is in place for you to hit the ground running. Our professional secretarial, and administrative, paired with a welcoming business lounge, make Effist the smart choice for foreign entrepreneurs and businesses looking to establish themselves in Indonesia efficiently and affordably.For more information regarding our virtual office solutions, contact us via email contact@effist.com.

Written by
Muftia Parasati, S.S., Content Writer at Phincon, specializing in research-based and SEO-optimized content on business growth, workplace trends, and digital productivity topics. | Muftia LinkedIn Profile

Reviewed by
Erin Supriyanti, Center Manager at Effist, with over 10 years of experience in workspace operations, team management, and business support services. | Erin LinkedIn Profile

Editor: Irnadia Fardila