Company Incorporation in Indonesia

Entering and setting up a company in Southeast Asia’s largest economy is one of the top draws for investors, whether locally or internationally, despite the pandemic. Indonesia has been steadily growing as a destination with the growth of the middle class, free trade agreements, and opportunity to own land.

With 90 million Indonesians expected to be part of the middle class by 2030, consumerism will rise, opening doors for businesses to set foot into the country.

While the pandemic has dampened and slowed down the country’s economic growth, there are still business opportunities that companies and entrepreneurs can tap into. The three sectors that have shown potential for growth in 2021 and beyond are:

The pandemic has brought a focus to healthcare, with more individuals putting the onus on them to take care of their health. With this new emphasis and the introduction of the Positive Investment Lists, foreigners can own 100% of the shares in the following healthcare and pharmaceutical companies:

Did you know that Indonesia is experiencing a digital boom and that the government has pushed for digital transformation? With the digital economy expanding by 11% to US$44 billion from US$40 billion in 20219, it is a great time for investors to set up a digital or e-commerce company.

Some of such companies include:

The manufacturing sector in Indonesia is one of the biggest contributors to its economy at an estimated 20%. With the year-on-year growth of 4% since 2016, it presents a lucrative opportunity for investors to start a manufacturing business.

Here are some of the potential sectors for your manufacturing and production business:

Before you start a company in Indonesia, it is important to know the types of business entities that you can set up in the country.

For each type of business entity, there are certain set of requirements that the company has to fulfil before incorporation.

The documents required for PT and PT PMA are the same, although for KPPA, there have a set of different documents that you will have to provide.

The shareholder documents vary for each type of PT PMA company, whether foreign legal body, local legal body, or a personal foreigner. These documents are listed below:

There are 6 steps for company incorporation in Indonesia, which will take approximately 1-2 months for a complete registration.

Check your desired company name is available – you can use our free company name checker to do so! If the name is available, you may proceed to apply and register for your desired company name with the Ministry of Law and Human Rights.

Here are some tips when choosing a company name. Do not select names that:

The Deed of Establishment is to be applied online, together with the submission of the certificate of the bank account and official copy of the bank transfer advice. If the application is successful, you will receive a legalisation on the establishment of the company and can announce the establishment within the following 14 days.

The next step is to apply for the Certificate of Company Domicile where all Indonesian limited liability companies are required to hold.

After getting your Certificate of Company Domicile, you will need to obtain a valid tax ID for financial purposes with the local tax authority. The documents required for this application include:

The NIB is obtained from the Online Single Submission. This is a unique number that is assigned to your company as a form of identification (like an identification card!).

Different types of businesses require various business licenses. Depending on the nature of your business, you will need to apply for licenses before you are allowed to start your operations.

During the incorporation process, you may face some challenges, especially as a foreign entrepreneur. Some of these challenges include:

There are many regulations in Indonesia with new regulations and changes to existing regulations a common feature in the country. To keep up with these changes, it is recommended that a company hires a trusted incorporation and tax partner for a smooth incorporation process.

When opening a corporate bank account in Indonesia, there are different rules and requirements, depending on the banks. This may be confusing for a first-time foreign entrepreneur to assess which bank is best suited for the business.

In order to live and work in Indonesia, one has to have a valid working permit and KITAS. The Indonesian government has imposed strict employment limits on foreign workers, making it more difficult to obtain such permits to bring foreign talents from other countries.

The Indonesian government has recently issued the new positive investment list, which replaces the negative investment list. For the new list, the number of restriction sectors was reduced from 350 to 46. However, there are still certain sectors that a foreign entrepreneur could not invest in.

Setting up an Indonesia company can be difficult. Reach out to us for a free consultation for your incorporation and other corporate needs from taxation to visa application!