- Knowledge
Preface: Advantages of Registering an Indonesian Company
（1） Market and demographic dividend
1. A huge consumer market
Indonesia has a population of over 270 million (the largest in Southeast Asia), a rapidly expanding middle class, and strong consumer demand, making it suitable for industries such as retail, e-commerce, and financial services.
2. Economic growth potential
Indonesia's GDP has maintained an annual growth rate of about 5% (about 5.1% in 2023), and the scale of the digital economy is expected to exceed $130 billion in 2025, with more than 200 million Internet users.
（2） Policy and tax advantages
1. Foreign Investment Opening Policy
Simplification of Negative List: In 2021, the new version of the Investment Negative List (DNI) opened up multiple fields (such as healthcare, logistics, and new energy) to allow foreign investment to hold 100% of the shares.
Free Trade Zone Benefits: Special Economic Zones (SEZs) such as Batam and Bintang offer corporate income tax exemptions (minimum 10%) and import tariff exemptions.
2. Tax incentives
Corporate income tax: The standard tax rate is 22% (starting from 2023), and the tax rate for small and medium-sized enterprises is even lower (income<4.8 billion Indonesian rupiah, tax rate of 11%).
Tax holiday policy: Provide a 5-20 year tax holiday for key industries such as manufacturing, digital economy, and renewable energy.
（3） Resource and industrial advantages
1. Abundant natural resources
The world's largest producer of palm oil and nickel ore, with huge reserves of coal and natural gas, suitable for energy, mineral, and agricultural processing enterprises.
2. Advantages of manufacturing base
The labor cost is low (about 200-400 US dollars per month), and the government is promoting the "Indonesia 4.0" plan, focusing on the development of industries such as food and beverage, automotive, and electronics.
（4） Geographical location and trade convenience
1. Strategic hub position
Guarding international shipping routes such as the Strait of Malacca and the Sunda Strait, radiating to markets in Southeast Asia, Australia, and the Middle East.
2. Regional Trade Agreements
Join the ASEAN Free Trade Area (AFTA) and RCEP (Regional Comprehensive Economic Partnership) and enjoy tariff reductions from member countries.
Signed bilateral investment protection agreements (BITs) with China, Japan, South Korea, and other countries.
（5） Improvement of Business Environment
1. Simplified registration process
Through the "OSS system" (online single submission platform), company registration can be quickly completed (within 3-7 days at the fastest), and tax, social security, and other procedures can be integrated.
2. Foreign Investment Protection Mechanism
The New Investment Law (2021) guarantees equal rights for foreign-funded enterprises and allows land ownership (HGB certificate) for up to 80 years.
（6） Industry investment hotspots
1、 Types of Indonesian Companies
（1） Main company types
1. Foreign funded company (PT PMA - Penanaman Modal Asing)
Definition: Companies that allow foreign investors to hold shares must comply with Indonesia's Investment Law and Negative List (DNI) requirements.
characteristic:
The proportion of foreign ownership depends on the industry (some industries can be 100% controlled, while others require joint ventures).
Minimum registered capital: typically 10 billion Indonesian rupiah (approximately 650000 US dollars), which can be reduced to 2.5 billion Indonesian rupiah (approximately 160000 US dollars) in certain industries.
Applicable scenarios: foreign investment open fields such as manufacturing, mining, technology, and hotels.
2. Local company (PT Lokal - Perseroan Terbatas)
Definition: A company wholly owned by Indonesian citizens or local legal entities.
characteristic:
Shareholders must be at least 51% Indonesian nationals (natural persons or companies).
Minimum registered capital: 50 million Indonesian Rupiah (approximately 3200 US dollars).
Applicable scenarios: Retail, catering, small and medium-sized trade and other industries that restrict foreign investment.
3. Representative Office (KPPA - Kantor Perwakilan Perusahaan Asing)
Definition: Non profit branches of foreign companies in Indonesia, limited to market research or liaison activities.
characteristic:
It is not allowed to sell or sign contracts directly.
Valid for 1 year (renewable), requiring 100% ownership by the parent company.
Applicable scenario: The initial market exploration stage of multinational corporations.
4. Cooperative (Koperasi)
Definition: A membership based enterprise based on the principle of mutual assistance, suitable for small and medium-sized community economies.
characteristic:
At least 20 Indonesian natural person members.
Profit is distributed based on member contributions and enjoys tax incentives.
Applicable scenarios: agricultural cooperatives, handicraft consortia, etc.
（2） Other special entities
1. Joint Venture
Definition: Companies established through cooperation between foreign and local enterprises, with equity ratios negotiated according to industry policies.
Applicable scenarios: mineral development (requiring local shareholding), retail industry (foreign shareholding restrictions), etc.
2. Limited Partnership Enterprise (CV - Commanditaire Vennootschap)
Definition: Composed of at least one unlimited liability shareholder (partner) and one limited liability shareholder.
characteristic:
Unlimited partners manage the company and assume debt risks.
Easy registration, suitable for small family businesses.
3. Individual Merchant (UD - Usaha Dagang)
Definition: Sole proprietorship by natural persons, with unlimited liability.
Applicable scenarios: Small and micro retail, individual businesses in the service industry.
2、 Registration Conditions for Indonesian Companies
01. Company type
Foreign companies are usually registered in the form of PT PMA (Foreign Direct Investment Companies), allowing foreign ownership, but some industries have shareholding restrictions.
02. Shareholders' Requirements
At least 2 shareholders are required, which can be individuals or companies. The nationality of shareholders is not limited, and foreign investment can hold 100% of the shares (depending on the industry).
03. Directors and Supervisors
At least one director and one supervisor, who can be foreigners, need not reside in Indonesia.
04. Registered capital
The minimum registered capital is 10 billion Indonesian rupiah (approximately 700000 US dollars), and at least 25% of the paid in capital must be paid at the time of registration.
05. Registered address
A valid local registered address in Indonesia is required for receiving government documents and notifications.
06. Business Scope
The company's business scope needs to be clarified, and some industries require special licenses to be applied for.
07. Tax registration
After registration, it is necessary to apply for a tax identification number (NPWP) and complete tax registration.
08. Industry restrictions
Some industries have restrictions or prohibitions on foreign investment, and it is necessary to be aware of Indonesia's negative list of investments (DNI) in advance.
3、 Indonesian company registration materials
（1） Registration Materials for Foreign Investment Company (PT PMA)
1. Shareholder and Director Information
Natural person shareholders:
Copy of passport (authenticated by Indonesian embassy or consulate abroad).
Proof of address in the past 3 months (such as utility bills, bank statements, which need to be translated and notarized in English or Indonesian).
Shareholders of the company:
Parent company registration certificate, articles of association, board resolution (approving investment in Indonesian company).
Passport of the parent company director and proof of identity of the authorized signatory (to be notarized and authenticated).
2. Basic company information documents
Company Name: Provide 3 alternative names (in English or Indonesian) with the suffix "PT" or "PT PMA".
Articles of Association (Akta Pendirian):
It needs to be drafted by Notaris in Indonesia to clarify the registered capital, shareholder structure, business scope, etc.
Proof of Registered Address:
Lease agreement or office property ownership certificate (in Indonesian). If using an agency address, a guarantee letter must be issued by the agency.
3. Proof of Capital and Business
Investment plan: Explain the source of funds, business model, and expected number of employees.
Certificate of Registered Capital: A bank issued certificate of paid in capital deposit (at least 25% of registered capital).
4. Industry specific documents (if applicable)
License (izin usaha): If mining requires an IUP license, e-commerce requires filing with the Ministry of Communications (PSE).
Environmental Impact Assessment (AMDAL): Manufacturing and chemical industries are required to submit an Environmental Impact Assessment (EIA) report.
（2） Local Company (PT Lokal) Registration Materials
Shareholder identity: At least one Indonesian shareholder (copy of ID card KTP).
Articles of Association: Drafted by the Indonesian notary public and signed by shareholders.
Proof of registered capital: minimum 50 million Indonesian Rupiah (no actual payment required, but the source of funds must be declared).
Business scope: It shall not involve industries with foreign investment restrictions (such as alcohol sales and pharmaceutical distribution).
（3） General registration process and material submission
1. Name Search
Submit a name application through the online system of the Indonesian Ministry of Law and Human Rights (Kemenkumham) (approved within 1-3 working days).
2. Notarize the company's articles of association
Shareholders need to sign documents in person at an Indonesian notary office or have them processed by an agent through a Power of Attorney (POA).
3. Online application for NIB (Business License)
Submit materials through the OSS system and obtain NIB (1-5 working days).
4. Apply for industry license
Some industries require additional departmental approval (such as BPOM license for food production).
5. Tax registration
Apply for a tax number (NPWP) and a value-added tax number (PKP) from the tax bureau.
（4） Material compliance requirements
1. Translation and Notarization:
All foreign documents must be translated into Indonesian and authenticated by an Indonesian notary public or consulate.
2. Certification process:
Chinese documents: notarized by Chinese notary public → authenticated by Chinese Ministry of Foreign Affairs → authenticated by Indonesian Embassy in China.
Other countries: Similar to the "Level 3 Certification" process.
4、 Indonesian company registration process
Step 1: Company name approval (1-3 working days)
Submit three alternative names through the online system of the Indonesian Ministry of Law and Human Rights (Kemenkumham).
Name requirements: Starting with "PT", must not be duplicated with existing companies, and must not contain sensitive vocabulary (such as "Bank", "National").
Step 2: Draft the company's articles of association (Akta Pendirian) (1 week)
Entrust Notaris Indonesia to draft the articles of association, specifying:
Shareholders and equity structure, registered capital (PT PMA minimum of IDR 10 billion).
Business scope, registered address, and list of directors.
Document requirements:
Shareholder passport/ID card (to be authenticated by the Indonesian embassy or consulate).
Notarized translation of parent company documents (if shareholders of the company).
Step 3: Notarization and Legal Approval (2-3 weeks)
Shareholders or authorized representatives shall personally visit the Indonesian notary office to sign the articles of association (or through a power of attorney POA).
The notary office submits the documents to the Department of Law and Human Rights (Kemenkumham) for approval and obtains the company registration certificate (SK Kemenkumham).
Step 4: Apply for a Business License (NIB) (1-5 working days)
Submit through the Indonesian OSS system (online single submission platform):
Articles of Association, shareholder documents, and proof of address.
Proof of paid in registered capital (PT PMA requires at least 25% paid in).
After approval, obtain a business license (NIB), including a tax number (NPWP) and a social security number (BPJS).
Step 5: Industry License Application (depending on the industry)
General License: Automatically obtain basic business license through OSS system.
Special Industry License:
Step 6: Open a bank account (2-4 weeks)
Submission materials: NIB, Articles of Association, Director's Passport, Company Seal.
matters needing attention:
Foreign companies require directors to personally visit Indonesian banks for face-to-face interviews (some banks support remote video account opening).
Recommended banks: BCA (Central Asia Bank) Mandiri、CIMB Niaga。
Step 7: Tax and Social Security Registration
Activate the tax number (NPWP) and apply for a value-added tax number (PKP).
Register employee social security (BPJS Ketenagakerjaan&Kesehatan).
5、 Important precautions
1. Verification of paid in capital
PT PMA needs to pay the full registered capital within 5 years after registration and keep the bank certificate for future reference.
2. Local employee requirements
Foreign companies are required to hire at least one Indonesian director, with a foreign employee ratio of ≤ 10%.
3. Address compliance
The registered address must be the actual office location (virtual addresses can be rented in special economic zones).
