Starting a Business in Indonesia: Essentials in One Place

How to Set up a Business and Start Right Away in Indonesia: The Shortcuts

  • InCorp Editorial Team
  • 26 March 2020
  • 5 reading time

When talking about the world’s best investment destinations, it would be impossible not to include Indonesia. If you, as a foreign investor, are still wondering why starting a business in Indonesia is worth it, keep reading to find out.

Indonesia takes pride in being the largest economy in Southeast Asia. Moreover, in terms of purchasing power, Indonesia is now the 10th largest economy in the world. Added with a growing middle-class population, Indonesia is certainly the hot destination for foreign direct investments (FDI).

According to the Indonesia Investment Coordinating Board (BKPM), the investment realization in 2019 exceeded beyond expectations. As much as IDR 809.6 trillion was poured into the archipelagic country throughout the year, which went far beyond the target of IDR 792 trillion.

Now that you are intrigued about whether you can be the next successful foreign entrepreneur in Indonesia, you can. As long as you are on the right track, setting up and starting a business in Indonesia is seamless and hassle free.

Our business incorporation specialists have prepared a handy guide that contains all the essentials you need to know about setting up a business in Indonesia, all in one place.

Starting a Business in Indonesia: The Shortcuts

Company Registration

Before you think about anything else, you should think about the right entity that satisfies your business needs. In Indonesia, the common entities available for foreigners are:

 

After deciding the suitable business entity type, you need to pay attention to the following updates:

Business License, Import License, and Other Licenses

A business license, which can be applied through the OSS, is required for all kinds of business activities and business entities in Indonesia.

After registering online at the OSS, each business will automatically get a Business Identity Number (NIB) one day after the registration, provided that all required documents are completely submitted.

Alongside the NIB, a business license will also be granted if your business does not require other licenses (industrial license, tourism license, etc.), which depends on the business sector your company is engaged in.

Updates on licenses can be found below:

Foreign Employment

Foreign-owned companies and representative offices are permitted to employ foreign workers. Every foreigner who is to be employed, they are required to secure a work visa and a stay permit (KITAS).

Complete guidance and the latest updates on foreign employment in Indonesia can be found below:

 

Recruiting employees, both foreign and local, can be costly and time-consuming, not to mention challenging, since an in-depth understanding of labor laws and payroll regulations is a must. What is more, to ensure that you recruit only the most qualified candidates, an employee background check is something you want to consider.

Solutions to tackle recruitment challenges can be found below:

After Business Incorporation in Indonesia, What’s Next?

Now that your business is up and ready to run, your main focus should be on developing strategies to gain market presence, boost your brand, provide quality products and/or services to satisfy customers and earn profits, among others.

As such, focusing on non-generating tasks like accounting, tax filing and reporting and payroll processing is not necessary. They can be outsourced to experienced and knowledgeable specialists who know what they are doing. When outsourcing your business tasks, you can rest assured that all deadlines are met and compliance is fulfilled at all times, thus ensuring seamless business operations in Indonesia.

There are plenty of business tasks that you can outsource in Indonesia with the most important ones are as follows:

Setting up Your Business in Indonesia with Cekindo

If, after reading through all the essentials that you need to know about setting up a business and starting right away in Indonesia, you still have some questions or require further information, do not hesitate to contact us.

Our business incorporation specialists are more than happy to provide you with extensive guidance on starting a business in Indonesia. We also offer assistance in company registration, relocation to Indonesia, visa and permit application and business licenses, among others.

Fill in the form below to discuss your investment plan and setting up a business in Indonesia with our experts, who will respond to your message shortly.

 

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.