Choosing Indonesia to start or expand your business opens up a range of favorable opportunities. And for good reason — the country boasts steady economic growth, a rising middle class and population, a growing consumer market, and strong government support for foreign entrepreneurs. All of this creates advantageous conditions for new businesses to thrive. In this article, we’ll walk you through the key aspects of starting and running a business in Indonesia.
Step 1: Choose a legal entity
Foreign investors are required to register their business under the legal entity PT PMA (Perseroan Terbatas). Another available structure is KPPA (Kantor Perwakilan Perusahaan Asing), a representative office for foreign companies.
Choosing the right structure depends on the size of your enterprise, capital requirements, business goals, and other factors. You can learn more about each entity type and their requirements in this article.
Step 2: Preparation stage
Begin by collecting the necessary documents from the founders (passport scans, selfies with passport, proof of address, tax certificates from the country of residence). These will be submitted to a notary to draft the company’s Articles of Association.
Step 3: Submission to government agencies
Once the company is established at the notary and the Articles of Association (Akta Pendirian) are issued, the documents must be submitted to the relevant authorities. These include the Ministry of Law and Human Rights and the Indonesia Investment Coordinating Board (BKPM). Upon approval, you'll receive a certificate authorizing your company to operate in Indonesia.
Step 4: Obtain a Tax Identification Number (NPWP)
After registration, you must obtain a corporate Tax Identification Number (NPWP). This is required for tax filings, opening a bank account, and conducting legal business operations. It’s issued by the local tax office based on your company’s incorporation documents.
Step 5: Business licensing
Obtaining the proper licenses is essential. Business licenses validate that your company’s activities (KBLI classification) comply with industry standards and protect both consumers and employees. Common license types include:
SIUP – Trading license for commercial companies
IUI – Industrial license for manufacturing businesses
IMB – Building permit for construction projects
HO License – Location permit, ensuring the business operates in a designated area
Requirements vary by business sector and legal structure.
After company registration, the next step is opening a corporate bank account. Required documents include:
1. Articles of Association (Akta Perusahaan)
2. Business license (NIB)
3. Shareholder registry (SK)
4. Tax ID (NPWP)
5. Office lease agreement
6. Passport scans of shareholders and director
7. Personal tax numbers of shareholders and director
8. Contact details of director and shareholders
9. Completed bank forms
All Indonesian banks require the director to be physically present during account opening. Some banks may also require shareholders to be present — check in advance.
Running a business in Indonesia requires submitting regular reports to government bodies. Reporting obligations depend on your business size and structure. Core reports include:
1. Annual financial statement
✓ Mandatory for all companies and must be approved at the annual general meeting.
✓ Filing deadline: within 6 months after the end of the fiscal year.
2. Tax returns
✓ Monthly VAT reports – due by the 15th of the following month.
✓ Annual corporate tax return – due by April 30 of the following year.
3. Investment Activity Report (LKPM)
✓ Required quarterly for companies with foreign ownership. Submitted to BKPM.
4. Social security reporting
✓ Employers must regularly report and contribute to the BPJS national insurance scheme for employees.
5. Audit reports (for regulated industries)
✓ Certain sectors may require periodic audits and reporting.
The frequency of these reports depends on the business type, industry, and company size. It's strongly recommended to work with local accountants or consultants who are familiar with Indonesian regulations.
Opening a business in Indonesia may seem complex due to administrative procedures and specific legal requirements. However, with the right approach and understanding of local laws, you can successfully enter one of Southeast Asia’s most dynamic markets. You can contact our team at Good Luck Group for expert guidance from local consultants and legal advisors. We’ll help you avoid costly mistakes and streamline the process at every stage of your business journey.
