Starting a business in Indonesia offers significant opportunities, especially for investors looking to enter Southeast Asia’s largest economy. However, company formation is not only about registering a company name. It involves choosing the right legal entity, checking foreign ownership rules, selecting the correct KBLI business classification, preparing notarial documents, obtaining tax registration, and securing business licenses through the Online Single Submission system.
Under Indonesia’s current risk-based business licensing framework, business activities are classified by risk level, and each level determines the permits, standards, and obligations that must be fulfilled before and during business operations. The official OSS system also states that the risk-based licensing system classifies businesses into four risk levels that determine the required licenses and obligations.
At Accura Indonesia, we help local and foreign investors establish, amend, manage, and close business entities in Indonesia with a practical, compliant, and end-to-end legal approach.
Why Legal Support Matters When Starting a Business in Indonesia
Indonesia’s company formation process requires investors to align their corporate structure with several legal frameworks, including company law, investment rules, sectoral business restrictions, tax registration, business licensing, and ongoing compliance.
The Limited Liability Company Law, Law No. 40 of 2007, regulates key corporate matters such as company establishment, articles of association, capital and shares, shareholders’ meetings, directors and commissioners, mergers, acquisitions, and dissolution. Meanwhile, Indonesia’s investment rules are closely connected to the business fields open to investment and the applicable licensing requirements.
For foreign investors, legal support is especially important because not every business activity is automatically open to full foreign ownership. Under Presidential Regulation No. 49 of 2021, which amended Presidential Regulation No. 10 of 2021, commercial business fields are generally open for investment except for sectors that are closed to investment or reserved for the central government.
This means that before incorporating a company, investors should confirm whether the intended KBLI business activity is open to foreign investment, subject to specific requirements, or requires a local partner or alternative structure.
Latest Regulatory Framework for Company Formation and Business Licensing
Indonesia has updated its business licensing system through several important regulations.
1. Government Regulation No. 28 of 2025
Government Regulation No. 28 of 2025 on Risk-Based Business Licensing is now one of the key regulations for business licensing in Indonesia. It regulates basic requirements, business licenses, supporting business licenses, OSS services, supervision, policy evaluation, problem-solving mechanisms, and sanctions. It also states that business actors must obtain business licensing to start and operate their business activities.
This regulation became effective on June 5, 2025, and revoked Government Regulation No. 5 of 2021.
2. Minister of Investment and Downstreaming / Head of BKPM Regulation No. 5 of 2025
Minister of Investment and Downstreaming / Head of BKPM Regulation No. 5 of 2025 provides technical guidelines for risk-based business licensing and investment facilities through the OSS system. This regulation is currently marked as effective and applicable by BKPM’s legal database.
It also revoked several previous BKPM regulations, including BKPM Regulations No. 3, No. 4, and No. 5 of 2021.
3. Presidential Regulation No. 10 of 2021 as amended by Presidential Regulation No. 49 of 2021
This regulation is important for determining whether a business field is open to investment, subject to specific requirements, or closed. Presidential Regulation No. 49 of 2021 confirms that all commercial business fields are open to investment unless they are specifically closed or reserved for the central government.
For investors, this makes KBLI review one of the most important steps before forming a company.
Types of Business Entities and Legal Services in Indonesia
1. PT PMA — Foreign-Owned Limited Liability Company
A PT PMA is the most common structure for foreign investors who want to conduct commercial activities in Indonesia. It allows foreign shareholders to own shares in an Indonesian limited liability company, subject to the applicable foreign ownership rules for each business activity.
A PT PMA is suitable for foreign investors who want to:
- operate commercially in Indonesia;
- hire employees directly;
- sign contracts with customers, vendors, and partners;
- import, export, manufacture, distribute, or provide services;
- apply for business licenses through OSS;
- build a long-term legal presence in Indonesia.
Before setting up a PT PMA, investors should review the intended KBLI, foreign ownership limitations, capital requirements, business location, licensing obligations, and any sector-specific permits.
2. Local PT — Indonesian-Owned Limited Liability Company
A Local PT is a limited liability company owned by Indonesian individuals or Indonesian legal entities. It is commonly used by local entrepreneurs, domestic investors, or joint ventures where the ownership structure is fully Indonesian.
A Local PT is suitable for:
- Indonesian founders starting a business;
- local subsidiaries or operating companies;
- business activities reserved for domestic investors;
- Indonesian partners managing local operations.
For foreign investors, a Local PT should not be used as a nominee structure to hide foreign ownership. Indonesian investment law prohibits agreements or statements declaring that shares in a limited liability company are owned for and on behalf of another party. If such an agreement is made, it is considered null and void under Article 33 of Law No. 25 of 2007.
Instead, foreign investors should seek a legally compliant structure, such as a PT PMA, a properly structured joint venture, a representative office, contractual partnership, or another legally permitted market-entry option.
3. Representative Office — KPPA / KP3A
A Representative Office allows a foreign company to establish a non-commercial presence in Indonesia. This structure is generally used for market research, liaison activities, brand representation, supervision, or exploring business opportunities before incorporating a full operating company.
A Representative Office is suitable for foreign companies that want to:
- research the Indonesian market;
- build relationships with potential clients or partners;
- represent the parent company;
- coordinate business development activities;
- explore future investment opportunities.
However, a Representative Office is not designed for direct commercial sales or revenue-generating activities. Companies that are ready to operate commercially should consider establishing a PT PMA instead.
4. Amendments to Company Structure and Ownership
After incorporation, a company may need to update its corporate structure due to business expansion, investor entry, shareholder changes, director or commissioner changes, address changes, capital adjustments, or KBLI updates.
Common company amendments include:
- change of shareholders;
- transfer of shares;
- appointment or replacement of directors and commissioners;
- change of company address;
- change or addition of KBLI business activities;
- increase or decrease of capital;
- update of articles of association;
- OSS and tax data updates.
These changes often require notarial deeds, approval or notification to the Ministry of Law, and updates in the OSS system.
5. Closing of Company — Dissolution and Liquidation
When a company no longer operates or investors decide to exit Indonesia, the entity should be formally dissolved. Proper dissolution helps reduce future legal, tax, employment, and administrative risks.
Company dissolution may involve:
- shareholder resolution;
- appointment of a liquidator;
- settlement of debts and obligations;
- tax clearance and reporting;
- employee settlement if applicable;
- announcement process;
- final deregistration from relevant systems.
A clean legal exit is important because an inactive company may still carry reporting obligations and potential liabilities.
Step-by-Step Company Formation Process in Indonesia
Step 1: Determine the business activity and KBLI
The first step is identifying the correct KBLI code. The selected KBLI will affect foreign ownership eligibility, business licensing requirements, risk classification, and whether supporting permits are needed.
Step 2: Choose the right legal entity
Investors should choose whether the business should be established as a PT PMA, Local PT, Representative Office, or another structure. This decision depends on ownership, business purpose, commercial activity, risk level, and long-term expansion plans.
Step 3: Review foreign ownership and investment requirements
Foreign investors must review whether their intended business activity is fully open, conditionally open, or restricted. This review should be completed before preparing the deed of establishment.
Step 4: Prepare shareholders, directors, commissioners, and company address
A company must have a clear ownership and management structure. Investors should also ensure that the business address is valid for incorporation, tax registration, and OSS licensing.
Step 5: Prepare and sign notarial documents
The company’s deed of establishment and articles of association must be prepared before a notary. These documents define the company’s name, purpose, capital, shares, shareholders, directors, commissioners, and governance structure.
Step 6: Obtain legal entity approval
After signing the deed, the company must obtain approval from the Ministry of Law to become a valid Indonesian legal entity.
Step 7: Obtain tax registration
The company must obtain tax registration and ensure that its tax profile is aligned with its business activities.
Step 8: Register through OSS and obtain NIB
The company must register through the OSS system to obtain its Business Identification Number or NIB. OSS identifies NIB as the official identity for starting or running a business in Indonesia.
Step 9: Fulfill business licensing and supporting permits
Depending on the risk level and business sector, the company may need business licenses, standard certificates, environmental approvals, location-related approvals, operational permits, or PB UMKU.
Step 10: Maintain ongoing compliance
After incorporation, companies should maintain corporate, tax, licensing, employment, and investment reporting compliance. This may include LKPM reporting, annual general meeting documentation, OSS data updates, manpower reporting, and tax filings.
Common Legal Risks in Company Formation
1. Choosing the wrong KBLI
A wrong KBLI can affect licensing, tax classification, foreign ownership eligibility, and operational legality. Companies should review their KBLI carefully before incorporation and before expanding into new business lines.
2. Using nominee arrangements
Nominee structures can expose investors to serious legal risks. Indonesian investment law prohibits agreements stating that shares are held for and on behalf of another party, and such agreements may be considered null and void.
3. Operating before licenses are complete
Under Indonesia’s risk-based licensing system, companies must understand whether their activities require only NIB, standard certification, business licenses, or additional supporting permits. Government Regulation No. 28 of 2025 confirms that business licensing is required for business actors to start and operate business activities.
4. Treating a Representative Office like a commercial company
A Representative Office is not intended for direct commercial operations. If the business plans to sell products or services, receive revenue, hire operational staff, or sign commercial contracts in Indonesia, a PT PMA may be more appropriate.
5. Forgetting OSS updates after company amendments
Changes to shareholders, directors, commissioners, business address, KBLI, or capital should be reflected not only in notarial and ministry records but also in OSS and other relevant systems.
Why Choose Accura Indonesia for Legal Support & Company Formation?
Accura Indonesia provides practical, end-to-end corporate legal support for local and foreign investors entering or operating in Indonesia. Our team assists clients from initial structure planning to incorporation, licensing, corporate amendments, and ongoing compliance.
We help clients with:
- PT PMA setup;
- Local PT formation;
- Representative Office registration;
- business licensing through OSS;
- company structure and ownership amendments;
- corporate secretarial support;
- investment reporting and compliance;
- company dissolution and liquidation;
- legal advisory for expansion in Batam, Jakarta, and across Indonesia.
With local expertise and experience handling corporate legal matters, Accura helps investors reduce regulatory risks and build a stronger legal foundation for their business in Indonesia.
Start Your Business in Indonesia with the Right Legal Structure
Choosing the right company structure from the beginning can save time, cost, and legal risk. Whether you are planning to establish a PT PMA, form a Local PT, open a Representative Office, amend your company structure, or close an entity, Accura Indonesia can help you navigate the process with confidence.
Get a free consultation with Accura Indonesia today and make sure your business setup is legally sound, properly licensed, and ready to operate in Indonesia.