January 28, 2026

Starting a Business in Indonesia

Many UK entrepreneurs see Indonesia as a big opportunity. It has over 270 million people and a young workforce. Starting a business here can lead to success in many areas.

But, entering the Indonesian market is not easy. Andi Refandi, from Emerhub, says it’s not for beginners. We agree. Success requires understanding ownership rules, capital needs, and the right hiring model.

Reforms have made things better, like OSS Indonesia licensing. It can speed up processes and make things clearer. Still, you must match your activity with the right permits and duties.

When setting up in Indonesia, the structure is key. Start Company Formations helps with this. We support with incorporation, licensing, and practical choices. For staffing, we work with Immigration advisers to ensure compliance for key roles.

Understanding the Indonesian Market

When we look at Indonesia for UK founders, we focus on demand, not just news. The country’s size can make a niche product big, but only if it fits the right city and customer. Knowing Indonesia’s demographics and buying habits is key.

For teams planning to enter the Indonesian market, English is widely used in business. This makes talking to suppliers and partners easier. It also helps in hiring and understanding demand on the ground.

Key Economic Indicators

Indonesia has over 270 million people, making it a big market. It’s also a major economy in Southeast Asia, with growth supporting new businesses. This growth is seen in services, retail, tech, and lifestyle.

The growth of Indonesia’s middle class is important for pricing and product design. As people spend more, they look for premium products. But, they still value good deals, so products need to be well-priced and of high quality.

Population size and urban concentration, which influence distribution and staffing.
Income mix and spending power, linked closely to Indonesia middle class growth.
City-by-city momentum, as Jakarta, Surabaya, and Bali can behave like distinct markets.

Consumer Behaviour Trends

Consumer trends in Indonesia vary, even within the same sector. The country’s size can hide localised behaviour. So, we use market research to confirm demand, map competitors, and find a gap to fill.

Consumer trends also affect operations. Your business type and location influence licensing, taxes, and trading speed. This is important when planning to enter the Indonesian market with realistic timelines.

Test demand in one target city before scaling across islands and channels.
Check how customers compare price, trust, and convenience in your category.
Align the offer to local expectations, while keeping brand standards consistent.

Legal Framework for Business Operations

We start by understanding the rules for your business. The Investment Law 25/2007 is key, covering foreign capital and joint ventures. We also look at the Negative Investment List to see what foreign owners can do.

Choosing a structure depends on your business goals. Do you want to sell in Indonesia or support a parent company abroad? This choice helps decide between PT PMA Indonesia, a local PT Indonesia, or a representative office Indonesia.

Types of Business Entities

PT PMA Indonesia is best for full operations and local sales. It has clear rules for governance and capital. For local ownership, a local PT Indonesia might be better, especially with Indonesian partners.

A representative office Indonesia is good for a light presence. It must be in an office in the provincial capital and not earn income in Indonesia. It can’t sell goods or services locally or manage a subsidiary or branch.

Some sectors have special representative forms. BUJKA supports construction services, and JPTLA covers electricity support services. These have specific rules.

For trading support, KP3A promotes goods and shares import guidance. It supervises domestic sales and runs market research. KP3A PMSE allows online commerce with a WNI or WNA leader.

PT PMA Indonesia: operating company that can trade and generate revenue.
local PT Indonesia: option where local shareholding rules apply.
representative office Indonesia: liaison role only, with strict income and activity limits.

Licensing Requirements

Licensing is mainly through the OSS licensing system. It links your business line, location, and risk level to the permits you need. We help match your entity choice with your activities, as small changes can affect approvals.

Foreign-funded projects need BKPM investment approval. This checks your sector, capital plan, and compliance against the Negative Investment List. A good match makes filings smoother.

Regulatory Bodies

Several bodies shape compliance, depending on your sector. Investment policy and foreign investment governance are under the Investment Law 25/2007. Trade and industry rules are managed by ministries and regulators.

We focus on what matters for operators. This includes the regulator you report to, what to file, and what not to do. This is crucial for a representative office Indonesia, where revenue activity can lead to tax and regulatory issues.

Steps to Register Your Business

UK founders looking to register a company in Indonesia should follow a clear checklist. This ensures a smooth process, avoiding delays in licensing and banking. Keeping your documents organised helps with future questions.

Preparing Your Documentation

Begin with the Deed of Establishment Indonesia. This document is crucial for your Ministry of Law and Human Rights registration. It’s the first step to making your business operational.

Capital requirements can be a challenge. Andi Refandi advises that IDR 2.5 billion (about USD 150,000) is the minimum paid-up capital needed. You’ll also need a notary statement for this. For BKPM investment approval, you might need IDR 10 billion (about USD 700,000) for foreign investors.

Draft and confirm your Deed of Establishment Indonesia with the notary
Prepare shareholder, director, and address documents for Ministry of Law and Human Rights registration
Compile capital support papers, including the notary statement for paid-up capital
Set a reporting calendar, as investment reports may be due every 3 or 6 months depending on whether a permanent business licence has been obtained

Completing the Application Process

After legalising your entity, align your activity codes and apply for the OSS business licence. This is crucial for what you can invoice, hire for, and import or distribute.

Then, get the NPWP tax number for smooth tax and invoicing duties. With these in place, opening a corporate bank account Indonesia becomes easier. Banks will ask for your core incorporation and tax records.

Submit the Ministry of Law and Human Rights registration outcome into your operational file
Apply for the OSS business licence with the right business classification and supporting data
Secure the NPWP tax number to support day-to-day tax administration
Prepare bank KYC packs to open a corporate bank account Indonesia with fewer follow-up queries

Choosing the Right Location

We see your company’s location as a key decision, not just a choice. A good Indonesia location strategy can influence how quickly you grow, the permits you need, and how you reach customers. It’s about setting up your business for success.

It also impacts your budget early on. The office address in Indonesia can influence your lease, timelines, and what you can do before you start making money.

Major Cities for Business

Setting up in Jakarta is great for founders needing to work with regulators, banks, and big companies. It makes meetings easier when you’re building partnerships and handling formal procurement.

Choosing Bali for your company is good if you’re in hospitality, wellness, or creative services. Here, the customer experience is key. We still plan carefully to ensure your address, staff, and licenses match your activities.

Surabaya is worth considering for strong ties to East Java’s supply chains and logistics. It’s practical for trading, light manufacturing, and regional distribution. It also keeps costs more stable.

Considerations for Startup Spaces

Before signing, we check how your entity type and licence path fit with your space. BKPM Regulation 4/2021 requires a KPPA representative office in a provincial capital office building. This can limit your options and affect costs.

Make sure your address supports bank onboarding and licensing checks.
Plan for changes in headcount, meeting rooms, and secure storage, not just a desk for the first month.
Find a balance between visibility and access and the cost of rent, fit-out, and commuting for your team and clients.

Taxation in Indonesia

For UK founders, tax planning in Indonesia is best when done with licensing and banking. It’s wise to get the NPWP Indonesia and a corporate bank account early. This way, you can invoice, pay suppliers, and handle payroll without any hold-ups.

This approach also ensures you meet Indonesian tax obligations from the start. You’ll have clear records for filings and audits.

Corporate Tax Rates

Corporate income tax is a big part of Indonesia’s tax rules. But, the rate is just one part. The real challenge is setting up the right taxpayer profile. This lets you submit returns on time and make correct payments.

Getting an NPWP Indonesia is crucial for tax filings and financial transactions. If your company has overseas owners, you’ll need extra paperwork. This is especially true for directors or shareholders outside Indonesia.

Confirm which entity type will file and pay corporate income tax.
Secure NPWP Indonesia so you can issue invoices and open tax accounts.
Align bookkeeping, payroll, and bank statements to support Indonesian tax obligations.

Value-Added Tax (VAT)

VAT in Indonesia affects your daily pricing, invoicing, and cash flow. Once you’re registered, you must follow VAT rules for sales and purchases. You need to keep proper tax invoices and reconcile output and input VAT.

For many businesses, getting ready for VAT depends on planning. You should sequence licensing, bank account access, and tax ID steps together. This makes reporting smoother and reduces problems when you grow.

Employment Laws and Regulations

For many UK founders, the people plan is where timelines shift. Hiring in Indonesia is governed by Indonesian labour law. This law affects costs, reporting, and day-to-day management.

Andi Refandi often points to a core Investment Law principle: local hiring priority. This principle shapes how roles are scoped, teams are built, and headcount grows.

Labour Contracts

Clear contracts help avoid disputes and keep payroll predictable. Indonesian labour law requires you to choose between fixed-term and permanent contracts. There are rules on probation, renewals, and termination steps.

If you plan to appoint a director, a KITAS director route is often more practical than broader work permits. In contrast, hiring foreign employees Indonesia can be harder, especially if a local candidate could do the job.

Write role descriptions that match actual duties and reporting lines.
Keep salary, allowances, and working hours consistent across HR files and payroll.
Document training plans to support local hiring priority and knowledge transfer.

For foreign hires, Ministry of Labour Indonesia requirements focus on two points. You must show the vacancy cannot be filled locally and provide proof of the proposed specialist’s qualifications.

Authorities may also look at team composition. A common staffing expectation is an indicative ratio of local to foreign workers of about 2:1 to 5:1. However, the minimum is often treated as subjective in practice.

Minimum Wage and Benefits

Minimum wage varies by region, so Jakarta’s rate won’t match Bali or Surabaya. This is important when comparing office locations, shift patterns, and allowance structures during hiring in Indonesia.

Benefits include social security contributions, overtime, holiday leave, and religious holiday allowance. Getting these right supports retention and reduces risk under Indonesian labour law.

If you do need foreign employees Indonesia, align pay and benefits with the role’s seniority and compliance file. It also helps to show how the hire supports local hiring priority while meeting Ministry of Labour Indonesia requirements. This is especially important when the immigration track is not as straightforward as a KITAS director appointment.

Accessing Funding and Investment

Funding in Indonesia starts with a clear plan. We look at cash flow, timing, and the rules for your sector. We make budgets early because banks and regulators want to know how and when the money will come.

Andi Refandi says a common benchmark is IDR 10 billion (USD 700,000) for a BKPM approval plan. For incorporation, teams often prepare IDR 2.5 billion (USD 150,000) in evidence of paid-up capital. This is usually backed by a notary statement.

Understanding BKPM Regulation 4/2021 is key. Foreign investment entities are seen as large-scale and need to meet certain investment values. The regulation also sets a minimum paid-up capital for PMA at IDR 10,000,000,000, unless laws or regulations say otherwise.

Some industries have higher requirements. For example, construction works need IDR 25,000,000,000 minimum under Government Regulation 5/2021. Certain foreign business entities and representative offices are exempt from these rules, affecting how you enter the market.

Local Banks and Financial Institutions

After setting up your structure, opening a corporate bank account in Indonesia is crucial. Banks will check your shareholder details, business activities, and fund sources. They will also consider your licensing position and account controls.

Plan your cash flow to match your BKPM approval milestones, not just your launch date.
Ensure your capital proof supports your paid-up capital PT PMA and avoids funding gaps.
Understand Indonesia’s investment requirements, including sector limits and reporting duties.

Government Grants and Incentives

Incentives can boost your numbers, but they must be part of your plan from the start. We check eligibility early because fiscal incentives in Indonesia depend on location, business type, and investment size. Non-fiscal incentives focus on licensing ease, land access, and faster processing.

We remember the practical sequence: incentives are easier to defend when your financing, staffing, and procurement plans match your declarations. This alignment helps meet Indonesia’s investment requirements and keeps your project bankable without overpromising on timelines.

Creating a Business Plan

A solid business plan for Indonesia turns dreams into real choices. We first figure out what you’ll sell, who will buy it, and why they’ll pick you. This also affects your structure: whether you’re a Local PT, a PT PMA, or a representative office.

Market Research Essentials

Effective market research in Indonesia looks at real demand, not just guesses. We examine local buying habits, price points, and how easily customers can switch brands. We also map out your sales channels, from marketplaces to distributors.

Doing a competitor analysis in Indonesia should be detailed and specific. We compare what you offer, service levels, store locations, online reviews, and delivery times. This helps you find a unique spot in the market without copying others.

Define your ideal customer and the problem you solve
Test demand with interviews, pilots, or pre-orders
Confirm your business classification early, as it can affect licences and scope

Financial Projections

Once your numbers match your research, financial projections become a useful tool. We model your revenue, costs, staffing, rent, logistics, and taxes. Clear assumptions make it easier to adjust when things change.

For foreign founders, planning your PT PMA’s capital is crucial. You need to match your funding milestones and cash reserves with your licensing and operating plans. We also align your budget with your chosen entity, ensuring compliance and growth.

Build best, base, and worst-case scenarios
Track cash flow monthly, not just annual profit
Set spend controls tied to sales and staffing triggers

Cultural Considerations

In Indonesia, culture is not just a soft extra; it’s a key advantage. Teams that understand Indonesian business culture often see better results. They make faster progress in hiring and partnerships.

English is widely used in business, helping UK teams. But, knowing the culture is just as important.

Understanding Indonesian Business Etiquette

Good manners are seen as reliability in Indonesia. UK teams should be polished yet flexible. Arrive prepared, listen well, and avoid quick answers.

Confirm plans in writing after meetings. Use clear, calm language. This helps keep things smooth.

For negotiations, keep proposals clear but open to discussion. Respectful pace and phrasing are key. They help when talks get tough.

Start with formal introductions; let familiarity grow naturally.
Use concise agendas, then allow for questions and alignment.
Show consistency: small follow-ups are often more valuable than big promises.

Building Relationships and Networking

Many deals rely on trust built over time, not just on paper. Building relationships in Indonesia works best with regular contact and respect for local ways. This reduces problems with suppliers, landlords, or regulators.

Networking in Indonesia is most effective when it’s purposeful and gives back. UK founders should join events, stay in touch, and support partners with clear info. This is especially important during negotiations.

Marketing Your Business

Effective marketing in Indonesia starts with listening, not shouting. We treat it as a localisation project, grounded in market research. This research helps us understand category demand, price sensitivity, and competitor moves.

This approach sharpens messaging and reduces wasted spend during go-to-market Indonesia.

Digital Marketing Strategies

Digital marketing Indonesia works best when it reflects how people discover, compare, and share products each day. With mobile-first habits and fast-changing trends, we map the customer journey before we choose channels or creative. This keeps offers clear for Indonesian middle class consumers who expect speed, value, and trust.

Brand localisation Indonesia also matters in the details: language choices, tone, and even how benefits are prioritised. We often test variations of positioning so the same product promise lands well across cities and provinces.

Search and marketplace optimisation based on real queries and category keywords
Short-form video and creator partnerships that match local norms and humour
Retargeting and CRM flows to build repeat purchase, not just first clicks

Traditional Marketing Approaches

Offline tactics still play a role in marketing in Indonesia, especially when credibility is vital. Retail presence, community events, and trade partnerships can support reach while your brand builds familiarity. Done well, these channels reinforce brand localisation Indonesia rather than competing with it.

For go-to-market Indonesia, we look for simple ways to connect online intent with offline action. That might mean in-store trials, point-of-sale education, or field teams that collect feedback and feed it back into your digital plan. This ensures digital marketing Indonesia stays aligned with what customers actually say and do.

Navigating Bureaucracy

Indonesian administration might seem overwhelming at first. But, it becomes simpler when we follow steps in order and keep records organized. The Online Single Submission (OSS) platform is key for many applications. It requires accurate information and supporting files.

Planning ahead makes OSS Indonesia permits useful for smoother progress.

Dealing with Permits and Licences

Business licensing in Indonesia is not a one-form affair. Different businesses need different approvals. For example, a trading company might need different permits than a food business or a tourism operator.

We see each permit as part of a sequence. This way, one missing document won’t hold up the whole process.

The BKPM process also influences the timeline for foreign investment. This is especially true for certain shareholding, capital, or activities that require extra checks. To stay on top, we use a simple checklist and ensure the right business classification before submitting anything.

Match your business activities to the correct codes and scope.
Prepare clean scans of core documents and supporting certificates.
Track submission status and respond fast to system or officer queries.

Understanding Local Regulations

National reforms aside, local regulations in Indonesia still impact daily operations. Zoning, signage, environmental rules, and building use can differ by province and city. These details often fall outside the main online process.

We look for these requirements early. This ensures your site choice and operational plan stay in line.

Regulatory compliance in Indonesia works best when it’s routine, not reactive. We establish a habit of monitoring renewal dates, keeping procedures up to date, and documenting key decisions. This way, your team can handle inspections or updates calmly and clearly.

Import and Export Regulations

When we plan to trade across borders, we face real challenges. These include ports, paperwork, and managing cash flow. For UK founders, importing into Indonesia seems straightforward but can become costly with classification and permits.

Exporting from Indonesia also has its own set of challenges. Buyer demands and shipping terms can greatly affect profit margins.

Customs Duties

We view duties as a detailed calculation, not a guess. A good landed-cost model includes tariff rates, freight, insurance, port charges, and any necessary licences. Customs compliance in Indonesia is crucial because small mistakes can lead to delays and extra costs.

It’s also important to understand trade barriers in Indonesia. These can include controlled imports, labelling rules, and pre-shipment checks. Knowing these early on makes importing into Indonesia more manageable.

Confirm HS classification and supporting product specs
Check permit needs, standards, and labelling requirements
Set responsibilities under the chosen Incoterms
Keep a clear audit trail for invoices, packing lists, and certificates

Free Trade Zones

Indonesia’s free trade agreements can lower duty costs. But, only if the rules of origin are met and the paperwork is correct. We suggest checking eligibility at SKU level and including it in pricing. This way, the benefits are real, not just hoped for.

Free trade zones can also offer advantages in storage and processing. Yet, compliance still applies to the goods. Even with incentives, trade barriers in Indonesia can exist through licensing, quotas, or sector-specific controls. So, careful planning is key for customs compliance and reliable delivery.

Technology and Innovation

Indonesia’s digital growth is speeding up. It’s a good path for UK founders who aim to grow big but keep risks low. Startups in Indonesia benefit from lots of mobile users, a young population, and policies that support the online world.

We guide you to pick the right business type. This could be software, a platform, or a service. The innovation market in Indonesia values focus. But, it also needs clear goals and rules from the start.

Startups in the Tech Space

Indonesia tech startups often start with payments, logistics, education, and B2B tools. Working with local partners and managing data well makes things easier. It’s key to plan your income streams first and then set up your team and systems.

Product fit: local language, price sensitivity, and low-friction onboarding
Operations: customer support, dispute handling, and service-level standards
Compliance: data management, consumer protection, and tax readiness

E-commerce Opportunities

E-commerce in Indonesia is growing, but there’s also more rules. The Minister of Trade Regulation 31/2023 sets out rules for e-commerce. It talks about a KP3A PMSE, which is a local office for an overseas company.

This setup is good for overseas e-commerce platforms that need a local presence. It helps with coordination and following local rules without starting full operations right away. Getting the structure right is key for handling merchants, customer complaints, and international processes smoothly.

The Role of Start Company Formations

For UK founders, Indonesia might seem simple but can be tricky. Start Company Formations makes it easier. We offer clear steps and hands-on help to set up your business.

We start by understanding your goals and structure. Our Indonesian business registration help guides you. We help you choose between a PT PMA and a representative office. This ensures your plan fits your business needs.

Comprehensive Services Offered

We help with entity structuring and documentation, including the Deed of Establishment and Ministry filings.
Our OSS licensing assistance ensures your licenses and submissions are smooth from start to finish.
We plan for compliance, including capital expectations and reporting, with timely investment reports.
We prepare you for operations, like NPWP planning, corporate bank accounts, and office addresses.
Our business immigration advisers help with founder or key personnel stay and work needs, including KITAS.
We offer specialist licensing for gaming and FX & crypto, for your international strategy.

We make the process human and practical. Our Indonesian business registration help focuses on what matters to officials and banks. For sensitive or urgent licensing, our OSS assistance prevents data issues and missed steps.

Contact Information: 0204 504 1544

Call 0204 504 1544 to talk about your Indonesia plan with Start Company Formations. We’ll discuss your options, timelines, and the right steps for company formation in Indonesia, including immigration advice.

Challenges and Opportunities

Every market has its trade-offs. In Indonesia, startups face challenges early on in budgeting, licensing, and team planning. We set clear expectations from the start. This ensures your launch plan is realistic and keeps the momentum going.

Common Obstacles for Startups

For many founders, the first hurdle is meeting BKPM capital requirements. Getting investment approval often depends on a detailed investment plan worth around IDR 10 billion (USD 700,000). You also need to show proof of paid-up capital.

In practice, figures like IDR 2.5 billion supported by a notary statement (as mentioned by Andi Refandi) are common. For a PMA, BKPM Regulation 4/2021 requires IDR 10 billion minimum paid-up capital. Government Regulation 5/2021 is mentioned for construction works, needing IDR 25 billion.

Foreign ownership restrictions in Indonesia can influence your business structure. This is especially true for restaurants or guesthouses, where foreign shareholding is often capped at 49–51%. This might lead to a local partner model.
Hiring foreigners in Indonesia requires Ministry of Labour documentation. There’s also a practical need to hire locals, often in ratios of 2:1 to 5:1 per foreign hire.
Nominee arrangements come with risks. If a local person holds the company on paper, control can shift quickly if the relationship breaks down.

Capitalising on Emerging Trends

Constraints don’t remove opportunities; they just narrow the path. Founders often perform better when they align their business model with emerging sectors in Indonesia. Building compliance into the timeline is key, rather than treating it as a final step.

This approach helps make sharper choices on scope, staffing, and partnerships. It keeps foreign ownership restrictions and BKPM capital requirements in sight. With proper planning, hiring foreigners in Indonesia can complement strong local recruitment. Indonesia’s startup challenges become manageable, not overwhelming.

Networking and Support

In Indonesia, the right introductions can really help with hiring, checking suppliers, and dealing with banks. For UK founders, networking is not just a nice thing to do. It’s a key way to avoid delays.

When there are rules about foreign ownership, working with local partners is crucial. InCorp Indonesia, an Ascentium Company, uses its connections to help founders get through approvals smoothly. This shows that having good advisers and doing your homework is essential for a smooth market entry.

Local Business Associations

Local associations can quickly connect you to the business world in places like Jakarta, Surabaya, and Bali. They help you find reliable service providers and understand local business norms. These groups also make it easier to deal with permits and stay in line with local rules.

Online Communities for Entrepreneurs

Online groups for entrepreneurs in Indonesia can also be very helpful. Just make sure to check the advice you get before acting on it. These platforms are great for finding referrals, checking timelines, and learning about current bank and regulator demands. Used correctly, they can enhance your networking and support as you grow in Indonesia.