A Complete Guide to BUSINESS REGISTRATION IN INDONESIA for Foreign Entrepreneurs

Indonesia has become one of the most attractive destinations in Southeast Asia for international founders looking to launch new ventures in a fast-growing economy. With a population exceeding 270 million, a strategic location, and a pro-investment government, it is no surprise that business registration in Indonesia has gained global interest.
However, while the government actively welcomes foreign investment, it does so with clear rules that balance national development with local economic protection. Foreign entrepreneurs are encouraged to build large, scalable businesses, while smaller enterprises are preserved for Indonesian citizens. Understanding these regulations is essential before starting the process.
One of the most illustrative examples is the distinction between a café and a restaurant. Foreigners cannotopen a café with fewer than 40 seats because it is classified as a small business. Only Indonesians may legally operate such establishments. But once a business has 40 seats or more, it becomes a restaurant, a category fully open to foreign ownership.
This principle appears across many industries: Indonesia wants foreign investors who contribute to employment, innovation, and economic scale — not those competing with local family-run businesses.
To establish any foreign-owned business, entrepreneurs must use a specific legal structure: the PMA company.

Understanding the PMA COMPANY: Structure, Capital, and Requirements

A PMA company (Penanaman Modal Asing) is the only legal format for foreigners who want to own a business in Indonesia. Whether you plan to open a restaurant, launch a digital agency, or offer consulting services, this structure is mandatory.

Minimum founders

A PMA company must have at least two shareholders, and at least one of them must be a foreign national. The second founder may be either foreign or Indonesian. This dual-shareholder rule applies to all foreign-owned businesses, regardless of size or industry.

Minimum capital requirement: 10 billion IDR

To form a PMA company, founders must declare a minimum authorized capital of 10 billion Indonesian rupiah. This capital can be divided between the founders in any proportions — 50/50, 70/30, 90/10 — as long as the total meets the legal requirement.

Documents needed for registration

One of the advantages of business registration in Indonesia is its relatively simple documentation process. No special financial statements, visas, or bank accounts are required at the start. Founders need only:

Passport copy
Email address
Indonesian phone number
A proposed company name consisting of three words, each at least three letters long

Name availability can be checked through the official government database: ahu.go.id.

Choosing a registered office

Before registration, it is strongly recommended — and in some sectors practically necessary — to secure a real office or operational location. Indonesian banks conduct office verification to confirm the legitimacy of new companies. While virtual offices are sometimes accepted, they do not work with every bank, especially if the company intends to open accounts with institutions that enforce strict verification procedures.

Banks commonly request:

Company deed and articles of association
Registration certificate (SK)
Business license (NIB)
Director’s KITAS
Passports of all shareholders
Office lease agreement
Local phone number
Corporate email address

Because of this, many entrepreneurs secure their physical office before beginning the banking stage.

INVESTOR KITAS and Its Role in Company Formation

Although business registration in Indonesia can be completed remotely, corporate banking cannot. To open a bank account, the company’s director must be physically present in Indonesia and must hold a valid investor KITAS.

Other shareholders are not required to have residency permits. However, they may choose to obtain an investor KITAS if they want the right to stay and manage the company long-term.

Requirements for obtaining an investor KITAS

An investor KITAS is a two-year residency permit issued to a shareholder who holds at least 10 billion IDRin shares within a PMA company.

This rule has an important consequence: If two people (for example, a director and a commissioner) both want investor KITAS permits, the company must declare 20 billion IDR in authorized capital.

Benefits of the investor KITAS

Two-year temporary residency
Personal bank account
Vehicle registration
Multiple entry / exit privileges
Simplified renewal procedures

Since a director must hold an investor KITAS to open and manage corporate bank accounts, most PMA companies appoint a foreign director early in the process.

Step-by-Step BUSINESS REGISTRATION IN INDONESIA Process

The formation of a company consists of two main stages: notarial registration and OSS registration.

Notarial registration

A registered Indonesian notary prepares the company deed and submits it to the AHU system (Ministry of Law and Human Rights). Once approved, the company receives its SK — Certificate of Establishment.

During this stage, the notary also verifies the company name, shareholders, capital, business activities, and office address.

OSS registration

After the company receives its SK, the next step is to register with OSS (Online Single Submission). This government platform connects the company’s address, activity codes, and legal documents.

OSS issues the NIB (Business Identification Number) — the core license required for all operational activities.

Important note about business activity codes (KBLI)

A PMA company can list multiple activity codes in its articles of association. However, in OSS, it must select at least one main business activity.

If a company chooses more than one main activity, it must hold 10 billion IDR of capital for each primary code, and it must file separate investment reports for each one.

This rule ensures that companies maintain adequate capital for each area of business they operate.

Investment reporting (LKPM)

After completing the OSS stage, PMA companies must file LKPM reports — quarterly investment reports. These filings demonstrate progress in capital realization and operational activity.

Tax Benefits for New Foreign-Owned Companies

Indonesia offers a favorable tax regime for new businesses. PMA companies with total revenue under 4.8 billion IDR qualify for a 0.5% final tax rate on gross turnover.

This incentive significantly reduces financial pressure during the early years of operation, helping companies establish stable cash flow before transitioning into the standard tax system.

Operational Restrictions for a PMA COMPANY

While the PMA company model offers full foreign ownership and legal stability, certain restrictions still apply:

PMA companies cannot engage in property rental

Foreigners — whether individuals or companies — cannot legally rent out property as a business. While a PMA company may lease property for its own operations, it cannot earn income from subleasing or renting.

Certain small-scale activities remain closed to foreigners

Industries classified as small or micro remain reserved for Indonesian citizens. Example: Cafés with fewer than 40 seats

Foreign entrepreneurs must ensure that their planned activity falls within permitted categories before starting business registration in Indonesia.

Some regions restrict specific business activities

Zoning policies vary across Indonesia. Certain districts prohibit specific industries due to environmental or cultural regulations. During the OSS stage, the business address must match the permitted activity codes for that area.

Why Indonesia Encourages Investment Through BUSINESS REGISTRATION IN INDONESIA

Indonesia’s long-term economic strategy is to attract meaningful, large-scale foreign investment that contributes to national development. By creating a clear legal structure, simplifying digital processes, and offering residency through the investor KITAS, the country signals that foreign entrepreneurs are welcome.

At the same time, Indonesia maintains protective regulations that safeguard the livelihoods of small local business owners. This balanced approach ensures sustainable growth and shared economic benefit.

Foreign entrepreneurs who understand these rules can build long-term, successful operations across hospitality, consulting, technology, e-commerce, education, manufacturing, and many other sectors.

Conclusion: Is BUSINESS REGISTRATION IN INDONESIA Worth It?

For many entrepreneurs, Indonesia offers the ideal combination of opportunity, affordability, and government support. Yes — the legal system includes strict rules, such as minimum capital, residency requirements, and activity code limitations. But these rules are designed to attract serious investors ready to build stable, growth-oriented businesses.

With the right preparation — and a clear understanding of PMA company formation, investor KITAS requirements, tax incentives, and sector limitations — foreign founders can launch successful ventures in one of the most dynamic economies in Asia.

What we do

We simplifie legal stay and business setup in Bali, providing visa services and expert support with care and professionalism.

We apply all visas in Bali

We help to choose and issue a visa that suits your period and purpose - be it a short trip (VOA), a longer stay (C1) or a multiple-entry (D1 or D12).

We apply all visas in Bali

We take care of the documents, submission and support - so that everything goes smoothly and without unnecessary stress.

We extend visas in Bali

We handle your visa extension smoothly - whether it's VOA, C1, D1, or D12.

We extend visas in Bali

We check your documents, submit everything on time, send reminders, and guide you through the process. You focus on living or working - we make sure your stay is legal and stress-free.