Company registration in Indonesia
Indonesia is one of Southeast Asia’s most attractive destinations for foreign investors. With a population of over 270 million, stable economic growth, and ongoing government reforms to improve the ease of doing business, Indonesia offers significant opportunities across sectors such as real estate, F&B, healthcare, tourism, consulting, and professional services.
However, company registration in Indonesia is highly regulated. For foreigners who want to invest, work, retire, or live in Indonesia, understanding the correct legal structure and compliance requirements is essential. A single mistake at the registration stage can lead to operational delays, tax exposure, or even license revocation.
Why Company Registration Matters for Foreigners
Foreign nationals cannot freely operate a business in Indonesia without a legally registered entity. Indonesian law requires that business activities be conducted through a recognized legal structure registered with the Ministry of Law and Human Rights (Kemenkumham), the Online Single Submission (OSS) system, and relevant technical ministries.
Proper company registration ensures:
- Legal certainty to operate in Indonesia.
- Eligibility to open corporate bank accounts.
- Ability to sponsor work permits (KITAS).
- Compliance with tax and reporting obligations.
- Protection of shareholders and directors.
For professionals such as entrepreneurs, property developers, business owners, property managers, F&B operators, directors, and investment consultants, legal compliance is not an option, but a necessity in business.
Types of Companies Available for Foreigners
1. PT PMA (Foreign-Owned Limited Liability Company)
A PT PMA is the most common and legally secure structure for foreign investors. It allows foreign individuals or companies to own shares in an Indonesian company, subject to the Positive Investment List.
Key characteristics:
- May be wholly owned by foreign parties (depending on business classification).
- Minimum investment requirements apply (in accordance with BKPM regulations).
- Entitled to conduct business activities actively.
- May sponsor foreign directors and employees.
- Must have at least 2 shareholders.
This structure is ideal for real estate businesses, property management, restaurant and cafe chains, tourism, export-import, handicrafts, hospitality, wellness centers, and international trading companies.
2. Representative Office (KPPA / KP3A)
A representative office is suitable for market research or liaison activities but cannot generate revenue in Indonesia.
Limitations:
- No commercial transactions allowed
- Cannot issue invoices
- Restricted scope of activities
This option is often used by foreign companies exploring the Indonesian market before establishing a PT PMA.
Common Mistakes Foreign Investors Must Avoid
- Choosing an incorrect KBLI code.
- Using nominee shareholders without legal safeguards.
- Underestimating capital and investment requirements.
- Operating before licenses are fully issued.
- Ignoring post-establishment obligations such as LKPM and tax reporting.
These mistakes can result in fines, license suspension, or forced business closure.
Ongoing Compliance After Registration
Registering a company is only the beginning. Indonesian law requires ongoing compliance, including:
- Investment Activity Reports (LKPM). Click here
- Monthly and annual tax reporting. Click here
- Annual General Meeting of Shareholders (GMS). Click here
- Updates for changes in shareholders, directors, or business activities. Click here
A professional legal and tax advisor is essential to ensure long-term business sustainability.
Why Work with Indoned Consultancy
At Indoned Consultancy, we specialize in assisting foreign investors with end-to-end company registration and compliance in Indonesia. Our team of legal, tax, and licensing experts understands the practical realities faced by foreign entrepreneurs and professionals.
We support clients across:
- Company registration (PT PMA & Representative Office).
- Business licensing and OSS compliance.
- Real estate and property-related businesses.
- Work permits and investor KITAS.
- Ongoing legal and tax compliance.
If you are planning to start or expand your business in Indonesia, professional guidance is essential. Contact Indoned Consultancy today for a free consultation. Let our experts help you register your company correctly, legally, and strategically—so you can focus on growing your business in Indonesia with confidence.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
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FAQ
In general, PMA stands for Foreign Direct Investment while PMDN stands for Domestic Direct Investment. From the perspective of the meaning, in short, PMA is an investment activity to conduct business in the territory of the Republic of Indonesia which carried out by foreign investors, both those who use foreign capital wholly or in joint ventures with domestic investors. Then, PMDN is an investment activity to conduct business in the territory of the Republic of Indonesia which carried out by domestic investors using domestic capital.
Basically, subjects in domestic investors are Indonesian citizens (WNI), Indonesian business entities, the Government of Indonesia, or regions that make investments in the territory of Indonesia. Meanwhile, foreign investors are foreign citizens, foreign business entities, and/or foreign governments making investments in the territory of the Republic of Indonesia.
With the new regulations and system changes, the process of establishing a company, both PT PMDN or PT PMA, does not take a long time. It takes at least 10-15 working days after the complete document requirements are fulfilled.
Yes. To be able to carry out the establishment process of PT PMA, the authorized capital that must be written in the deed of establishment is Rp. 10 billion excluding the value of land and buildings. In making the deed of establishment, the Notary appointed by us will provide a statement letter to the shareholders who sign that they will deposit the said amount of capital. However, the statement will usually not include the fulfillment period. After the company is established, the company will carry out investment reporting on a regular basis which will later become one of the proofs for the company's activities with its capital.
Generally, the set-up company process is divided into 2 stages. Where, the first stage is the establishment stage. Where at this stage, you will process your company's basic documents and permits, such as: deed of establishment, legalization document, Company NPWP (Taxpayer ID Card), Business Identification Number, Company Bank Account Opening and other documents according to your sector and business field. Furthermore, the second stage is the operational stage. At this stage, before and/or during your company's operations, you are required to fulfill the company's obligations. Such as, payment of related taxes, fulfilling operational permits, reporting LKPM (Investment Activity Report), BPJS Employment and Health Registration, and other obligations according to the sector and business field.
BPJS stands for Social Security Administering Board, which is a special institution tasked with administering health and employment insurance for the public, civil servants, and private employees. BPJS has 2 types, namely: BPJS Healthcare and BPJS Employment. Where every registered company that has employees is required to register its employees in the BPJS program, both BPJS Healthcare and BPJS Employment.
LKPM stands for Investment Activity Report. It is a report on the progress of investment realization and problems faced by business actors that must be prepared and submitted periodically.
Yes, you do. When you do the establishment of a company, a correspondence address is fundamental. It is needed because later all correspondence documents from the government or related agencies will be sent to your company's office/correspondence address. In addition, a company is required to have a domicile which is one of the requirements for making a deed of establishment.
Do you have a location in mind where you plan to establish your company in general? For example, are you planning to do it in Bali, such as in Kuta, Ubud, Sanur or Jimbaran area? We have several specific place references that may help you determine the location of your company office. Just please let us know.
At the stage of the company establishment process, you are not required to come to Indonesia. Although it is no required to come, you may visit Indonesia with the visa which the service we can assist you to have it.
Some process in the establishment company can be carried out by giving your power of attorney to one of our team whom handles the process of establishing your company. Our team is experienced enough in their field therefore the necessary matters will be prepared and informed to you.
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