How to Start a Business in Indonesia: Step-by-Step Guide
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Published on October 28, 2025 · 6 min read · by Yongky Yulius

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Indonesia has become an increasingly attractive place for entrepreneurs looking to expand in Southeast Asia.

With its large population, growing middle class, and improving investment climate, the country offers strong business potential.

For many entrepreneurs and investors, starting a business in Indonesia can open doors to a vibrant and fast-growing market.

The legal and administrative processes for starting a business in Indonesia, while potentially intricate for foreign individuals, are entirely navigable.

This guide breaks down the key steps to help you get your business started with confidence.

Why Should Entrepreneurs and Investors Consider Indonesia?

With a population of over 270 million and a growing middle class, Indonesia presents a promising environment for consumer-driven ventures.

Urbanization and digitalization trends are also fueling growth in sectors like retail, food & beverage, real estate, and tech-based services, making it an attractive destination for both local and foreign entrepreneurs.

Indonesia’s strategic location in Southeast Asia further enhances its appeal.

Ongoing government initiatives, such as the National Strategic Projects, Special Economic Zones (SEZs), and the Online Single Submission (OSS) system, are designed to simplify licensing, improve logistics, and incentivize investment in key sectors.

These government initiatives reflect a dedication to enhancing business ease, fostering innovation, promoting sustainability, and encouraging regional growth.

For aspiring business owners, Indonesia offers not just opportunity, but momentum.

Step-by-Step Guide to Starting a Business in Indonesia

Here’s a clear breakdown of the steps foreigners need to follow to set up a legitimate and operational business in Indonesia.

1. Understand the Investment Regulations

Before anything else, expats must check whether their intended business activity is open to foreign ownership.

Indonesia uses a Positive Investment List, which outlines sectors that are fully open, conditionally open, or restricted to foreign investors.

If your business falls under a restricted category, you may need to partner with a local entity.

2. Choose the Right Legal Structure

For most foreign entrepreneurs, setting up a PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the most viable option.

A PT PMA allows foreign ownership and direct business operations in Indonesia.

It also provides access to legal work and stay permits.

Regulation for foreign company

3. Meet Capital Requirements

To establish a PT PMA, the Indonesian government requires a minimum total investment plan of IDR 10 billion (approximately USD 650,000).

This requirement demonstrates your business’s long-term commitment to the country.

4. Reserve Your Company Name and Prepare the Legal Deed

Once you’ve finalized your business structure and sector, the next step is reserving your company name.

For PT PMA, the name must be unique (typically three words) and can be in English.

Afterward, a local notary will draft your Deed of Establishment (Akta Pendirian), which outlines your company’s structure, shareholders, and board.

This document must be legalized by the Ministry of Law and Human Rights (Kemenkumham) to gain legal standing.

5. Obtain a Domicile Letter and Tax Identification Number (NPWP)

Your company needs a legal business address in Indonesia.

After securing a lease or office space, you’ll receive a Domicile Letter from the local urban village office (Kelurahan).

This letter is essential for a Tax ID (NPWP) application at the local tax office, which officially registers your business for tax purposes.

6. Register and Get Your Business Identification Number (NIB)

Indonesia’s Online Single Submission (OSS) system centralizes business licensing.

By registering your company through OSS, you will receive a Business Identification Number (NIB), a crucial license that doubles as your company’s business license, import-export license, and registration for social security (BPJS).

The NIB simplifies formerly complicated processes into a single digital step.

7. Apply for Sector-Specific Business Licenses

Depending on your industry, you may be required to obtain additional permits, such as a SIUP (Trading Business License), IUI (Industrial Business License), or BPOM (Food & Drug License).

These are typically applied for after obtaining your NIB and must be secured before operations can legally commence.

8. Open a Corporate Bank Account

After securing all legal documents (Akta, NPWP, and NIB), you can now open a corporate bank account with a local or international bank in Indonesia.

This account is essential for financial operations, payroll, and investment capital injection.

9. Obtain a Work and Stay Permit (KITAS)

As an expatriate business owner or executive, you’ll need a KITAS (Temporary Stay Permit) sponsored by your company.

Options include an Investor KITAS or Director KITAS, depending on your role.

The process involves securing a RPTKA (Expatriate Placement Plan) and an IMTA (Work Permit) if employing foreign staff.

10. Hire Local Employees and Register with BPJS

Once your company is active, you’re legally required to register employees for BPJS Kesehatan (Health Insurance) and BPJS Ketenagakerjaan (Employment Insurance).

You should also prepare employment contracts that follow local labor laws and withhold PPh 21 (Income Tax) accordingly.

11. Ensure Ongoing Legal and Tax Compliance

Running a business in Indonesia requires continuous compliance.

This includes submitting Investment Activity Reports (LKPM), monthly and annual tax filings, license renewals, and potential external audits depending on your sector and scale.

Staying compliant ensures business continuity and protects against penalties.

Launching Your Business in Indonesia: What to Expect

Business success

Launching your business in Indonesia marks the exciting beginning of a new chapter filled with opportunity and growth.

With the legal groundwork complete, you’re now ready to tap into one of Southeast Asia’s most dynamic and rapidly expanding markets.

Indonesia’s youth population, digital adoption, and strong consumer demand provide fertile ground for innovation and long-term success.

From the start, you’ll find that Indonesian customers respond well to businesses that are approachable, community-driven, and culturally aware

Building strong relationships, both online and offline, can create lasting brand loyalty.

Whether through local partnerships, community events, or digital marketing, there are many ways to connect with your audience and make a positive impact.

Daily operations may involve adapting to local customs and preferences, which is part of the learning curve, but also part of the adventure.

Embracing these nuances will not only help your business run smoothly but also demonstrate respect and openness to the local environment.

With a proactive mindset and a clear strategy, launching your business in Indonesia can be a rewarding journey that sets the stage for long-term success.

To support your business launch, it is crucial to find the right location.

A strategic and prestigious business address can enhance your brand image and operational convenience from day one.

For that reason, we recommend two premium commercial properties in BSD City—Latinos Business District and Capital Cove—designed to meet the needs of modern entrepreneurs and growing companies.