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Indonesia, Southeast Asia’s largest economy, is fast becoming one of the most attractive destinations for entrepreneurs and investors. With its vast domestic market of over 275 million people, strategic location, growing middle class, and expanding digital economy, Indonesia offers incredible opportunities for both local and foreign businesses.

In this detailed guide, we’ll walk you through everything you need to know about starting a business in Indonesia — from choosing a company structure and legal requirements to costs, permits, and practical tips for success.

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Why Start a Business in Indonesia?

Indonesia’s economy continues to grow steadily, driven by manufacturing, e-commerce, tourism, agriculture, and renewable energy. In 2025, the country’s GDP growth rate remains among the highest in Southeast Asia.

Here are some reasons why entrepreneurs are choosing Indonesia:

• Large and young population: Over 60% of Indonesians are under 35 years old.
• Growing digital economy: The e-commerce and fintech sectors are booming.
• Government support: The Indonesian government has simplified regulations to attract foreign investment.
• Strategic location: Located between Asia and Australia, Indonesia offers access to regional and global markets.
• Competitive costs: Labor, rent, and operating expenses are relatively affordable compared to neighboring countries.

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Business Structures in Indonesia

Before starting a business, it’s important to choose the right type of company structure. The most common business entities include:

1. PT (Perseroan Terbatas) – Limited Liability Company

This is the most common business structure in Indonesia. A PT company can be either:

• Local PT: 100% Indonesian-owned.
• PT PMA (Penanaman Modal Asing): A foreign-owned company structure that allows foreign investors to hold up to 100% ownership in many sectors.

A PT PMA is the preferred structure for most foreign entrepreneurs.

2. Representative Office (KPPA)

A representative office is suitable for companies that want to explore the market or manage existing partnerships in Indonesia without generating direct income.

3. Sole Proprietorship

Available only for Indonesian citizens, a sole proprietorship (Usaha Dagang or UD) is a simple form of business that does not offer liability protection.

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Steps to Start a Business in Indonesia

Starting a business in Indonesia involves several legal and administrative steps. While the process has been simplified in recent years, it’s important to follow the correct procedures.

Step 1: Choose Your Business Type and Sector

Before registration, you must select your business activities according to Indonesia’s KBLI (Business Classification Code). Some industries are open to full foreign ownership, while others may require local partners.

Step 2: Reserve Your Company Name

You can reserve your company name through the Ministry of Law and Human Rights (MOLHR) portal. The name must be unique and follow Indonesian naming rules.

Step 3: Prepare Legal Documents

You’ll need the following documents:

• Articles of Association
• Deed of Establishment (notarized)
• Shareholder and director information
• Business address proof

These documents must be notarized and submitted to obtain a Deed of Establishment (Akta Pendirian).

Step 4: Obtain Business Identification Number (NIB)

After your company is legally formed, register for a Business Identification Number (Nomor Induk Berusaha – NIB) via the Online Single Submission (OSS) system. The NIB acts as your company’s national ID and business license.

Step 5: Register for Tax (NPWP)

Every company must register for a Tax Identification Number (Nomor Pokok Wajib Pajak – NPWP). This enables your business to pay corporate taxes and issue invoices.

Step 6: Obtain Required Business Licenses

Depending on your sector, you may need additional licenses or permits, such as:

• Import/export permits
• Environmental impact assessments
• Food and beverage certifications
• Tourism business licenses

Step 7: Open a Corporate Bank Account

Once you have your company documents, you can open a corporate bank account in Indonesia. Most banks will require your NIB, NPWP, and Deed of Establishment.

Step 8: Register Employees and Social Security

If you plan to hire staff, you must register them with:

• BPJS Ketenagakerjaan (Employment Social Security)
• BPJS Kesehatan (Health Insurance Program)

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Cost of Starting a Business in Indonesia

Starting a business in Indonesia is relatively affordable compared to Western countries, though costs vary by company type and location.

Expense Type	Estimated Cost (IDR)	Equivalent in USD
Company registration (PT PMA)	15,000,000 – 25,000,000	$950 – $1,600
Legal fees & documentation	10,000,000 – 20,000,000	$650 – $1,300
Office rental (monthly)	5,000,000 – 15,000,000	$325 – $950
Bank account & admin fees	1,000,000 – 2,000,000	$65 – $130
Miscellaneous (licenses, stamps, translations)	2,000,000 – 5,000,000	$130 – $325

Total estimated cost to start a foreign-owned company (PT PMA) ranges from IDR 30 million to 60 million (USD 2,000–4,000).

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Taxation for Businesses in Indonesia

Businesses in Indonesia are subject to the following main taxes:

• Corporate Income Tax: 22% (standard rate)
• Value Added Tax (VAT): 11%
• Withholding Tax: 10–15% (varies by transaction type)
• Import Duties: Applicable on imported goods

Micro, small, and medium enterprises (MSMEs) with annual revenue below IDR 4.8 billion enjoy a reduced final tax rate of 0.5%.

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Banking and Financial Setup

Indonesia has a strong banking sector, with both local and international banks. Major banks include Bank Central Asia (BCA), Bank Mandiri, BNI, and HSBC Indonesia.

To open a corporate bank account, you’ll typically need:

• Company registration certificate
• Tax number (NPWP)
• NIB
• Business license
• Identity documents of directors

Most banks also offer online banking, payroll services, and foreign currency accounts, making it easier for international business owners to operate efficiently.

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Hiring Employees in Indonesia

Labor costs in Indonesia are lower than in Western countries, but vary by province.

Average Monthly Salaries (2025 Estimate):

• Office staff: IDR 5–7 million (USD 325–450)
• Skilled technician: IDR 8–12 million (USD 500–750)
• Manager: IDR 15–25 million (USD 950–1,600)

Key Labor Regulations:

• Standard workweek: 40 hours
• Paid annual leave: 12 days
• Public holidays: Around 15–16 per year
• Mandatory contributions to BPJS (social and health insurance)

Foreign workers (expatriates) require a work permit (IMTA) and Limited Stay Visa (KITAS), both of which can be arranged by your company.

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Opportunities and Popular Business Sectors

Foreign and local investors are particularly active in the following sectors:

• Technology and e-commerce – Online retail, logistics, fintech.
• Tourism and hospitality – Hotels, restaurants, travel services.
• Manufacturing – Electronics, textiles, automotive.
• Agriculture and food processing – Sustainable farming, exports.
• Renewable energy – Solar, bioenergy, and waste management.

The digital economy is one of the fastest-growing sectors, projected to exceed USD 150 billion by 2025, driven by the nation’s young and tech-savvy population.

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Challenges of Doing Business in Indonesia

While Indonesia offers great opportunities, there are still some challenges:

1. Bureaucracy and paperwork – Although improved, procedures can still be complex for foreigners.
2. Language barrier – Most government documents are in Bahasa Indonesia.
3. Infrastructure gaps – Some areas outside Java have limited logistics networks.
4. Regulatory changes – Business laws and foreign ownership limits can change.

To navigate these challenges, it’s often helpful to work with a local consultant or legal advisor familiar with Indonesian regulations.

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Tips for Success in Indonesia

1. Understand local culture and etiquette. Building strong relationships is crucial in Indonesian business.
2. Hire local staff. They can help bridge language and cultural gaps.
3. Comply with regulations. Always stay updated on business laws and tax requirements.
4. Start small, then scale. Many successful foreign businesses begin as local partnerships before expanding.
5. Leverage digital marketing. Indonesians are active on social media, making it an effective way to promote your business.

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Conclusion: Indonesia’s Business Potential in 2025

Starting a business in Indonesia is both profitable and promising for entrepreneurs willing to navigate its dynamic landscape. With a large domestic market, improving infrastructure, and strong government support for foreign investors, the country is positioned as a major business hub in Southeast Asia.

Whether you’re in tech, manufacturing, or hospitality, Indonesia offers the resources, workforce, and opportunities to help your venture grow. With proper planning and compliance, your business can thrive in this vibrant, fast-evolving economy.

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If you are interested in starting a business in Myanmar then check out the following article: Myanmar Startup Guide: Key Steps to Build a Business.

For more in-depth information on starting a business in Indonesia, check out my ebook: Launching Success A Guide to Starting Your Business in Indonesia. You can find it below on Amazon.

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