Indonesia Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in indonesia, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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The Government of Indonesia has taken substantial steps to simplify and liberalize its investment climate, making it easier for foreign investors to establish businesses in the country. Reforms under the Omnibus Law on Job Creation, implemented through Government Regulation No. 5/2021 and revised through 2023, have significantly shortened the process for registering a foreign-owned company (Perseroan Terbatas Penanaman Modal Asing or PT PMA). As of 2024, a PT PMA can be established in approximately 4 to 6 weeks, compared to several months in previous years.

A PT PMA is a limited liability company that includes any level of foreign ownership—either partially or wholly foreign-owned. This legal entity is open to foreign individuals, foreign companies, and foreign governments investing in Indonesia. PT PMAs are the most common legal structure for foreign direct investment and are required for most types of commercial activity involving foreign participation.

Key requirements for establishing a PT PMA include:

  • Minimum Investment Plan of IDR 10 billion (approximately USD $700,000), excluding land and buildings. This can be in the form of capital equipment or cash.

  • Minimum Paid-In Capital of IDR 2.5 billion (around USD $170,000), which must be deposited after the company’s establishment. A notarized capital statement is required.

  • At least two shareholders, which may be individuals or corporate entities.

The company registration process is fully integrated with Indonesia’s Online Single Submission (OSS) system, streamlining licensing, registration, and post-establishment compliance. The typical sequence for setting up a PT PMA includes the following steps:

  • Company Name Approval: The proposed name must consist of three non-obscene words and be approved by the Ministry of Law and Human Rights.

  • Deed of Incorporation: Prepared before a public notary and must include the company’s Articles of Association.

  • Legal Entity Approval: The Ministry of Law and Human Rights approves the company’s legal status following submission of the notarial deed.

  • Tax Identification Number (NPWP): Required for banking, licensing, and taxation.

  • Domicile Letter: A document certifying the physical address of the business.

  • Business Identification Number (NIB): Functions as a unified company registration, customs, and import license number. Issuance through the OSS also includes automatic issuance of a standard Business License and Location Permit.

Depending on the business activity, additional sectoral licenses—such as commercial, tourism, education, or health licenses—may be required before the company can begin operations.

Foreign-owned companies must submit an investment plan and obtain approval from the Investment Coordinating Board (BKPM). The BKPM is the primary licensing body for investment projects and facilitates investor engagement with relevant ministries and local governments.

Indonesia has also shifted from a Negative Investment List (DNI) to a more liberalized Positive Investment List, introduced under Presidential Regulation No. 10 of 2021 and amended by Presidential Regulation no. 29 or 2021. This regulation opens over 200 sectors—including telecommunications, energy, logistics, and manufacturing—to 100 percent foreign ownership, unless explicitly restricted. The list categorizes business fields into:

  • Fully open to foreign investment

  • Open with specific requirements or limitations

  • Open to large enterprises with compulsory partnerships with cooperatives and micro, small and medium-sized enterprises (MSMEs)

  • Closed to foreign investment (e.g., narcotics, gambling, endangered wildlife)

While the Positive Investment List broadens market access, some strategic sectors remain reserved for domestic enterprises or state-owned entities. Foreign investors should consult the latest BKPM guidance or legal counsel to confirm sector-specific limitations.

To enhance investor confidence and ensure transparency, the Indonesian government continues to expand the capabilities of the OSS platform and provide multi-language investment guidelines through the Ministry of Investment/BKPM and official investment portals.

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