Starting a Business in Indonesia: What You Need to Know

Thinking about launching a business in Indonesia? You're not alone. With a population of over 270 million, a rising middle class, and a government that's actively welcoming foreign investment, Indonesia is fast becoming a regional hotspot for entrepreneurs and international companies alike.

From bustling Jakarta to the island paradise of Bali, opportunities stretch across a wide range of sectors — from manufacturing and tourism to e-commerce and infrastructure. But before diving in, it’s important to understand the local business landscape and prepare properly. Here’s what you need to know.

Why Indonesia?

Indonesia isn’t just rich in natural resources — it’s also rich in potential. Over the last few decades, it’s transformed from an agriculture-based economy into a diverse, fast-growing market driven by industry, services, and digital innovation.

Here are a few compelling stats:

• 17th largest economy in the world by nominal GDP
• 7th largest by purchasing power parity (PPP)
• A projected 90 million new middle-class consumers by 2030, according to McKinsey

In short: Indonesia is growing fast, and its consumers are becoming more sophisticated. For businesses, that means a huge new market is opening up — but it also means understanding local habits, laws, and responsibilities.

Where Are the Opportunities?

Indonesia’s government has identified four priority sectors for growth and foreign investment:

• Manufacturing – Especially for companies that can reduce reliance on imports and improve domestic supply chains
• Tourism – Bali may be saturated, but there are 17,000+ islands with untapped potential
• Digital and e-commerce – A growing population of internet-savvy consumers is hungry for online solutions
• Infrastructure – A massive area of development, though often still led by public or local capital

While real estate and certain infrastructure projects are still limited to domestic investors, the Positive Investment List — introduced after COVID-19 — has significantly reduced restrictions on foreign ownership in many sectors.

A New Attitude Toward Foreign Investment

For years, Indonesia had a Negative Investment List, outlining sectors closed to foreign investors. That changed after the pandemic. The government, eager to stimulate growth, replaced it with a Positive Investment List, significantly reducing restrictions.

Now, just a handful of sectors remain off-limits — including narcotics, endangered species fishing, and coral reef exploitation. Almost all other sectors are technically open to international investors, although specific regulations may still apply depending on the industry.

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Public vs Private Investment

Indonesia’s economy is a mix of public and private investment. The government maintains control over prices for essentials like oil, rice, and electricity, and operates over 160 state-owned enterprises.

This strong state presence has historically driven stability and growth — but it’s also required reforms. Efforts are ongoing to fight corruption and streamline business processes. Encouragingly, Indonesia has been climbing the World Bank’s Doing Business Index, showing improvements in everything from starting a company to securing permits.

Setting Up a Business: What You’ll Need

If you plan to generate revenue locally, you’ll most likely need to set up a PT PMA (Foreign Investment Limited Liability Company). This is the go-to structure for foreign-owned businesses in Indonesia.

Here’s what that typically involves:

Requirements:

• Minimum of 2 shareholders (at least one foreigner)
• Minimum capital of IDR 2.5 billion (~USD $200,000)
• Key documents:
  • Deed of establishment (legalized by a notary)
  • Licenses from the Investment Coordinating Board (BKPM)
  • Tax ID (NPWP)
  • Domicile letter
  • Labor and welfare reports

While you may not need to transfer the full paid-up capital immediately, you’ll still need to sign a declaration stating your readiness to do so.

You can go through BKPM yourself, or work with a reputable local agent who can guide you through the process. Just make sure they’re up to date with regulations, as policies do change regularly.

Plan Ahead — and Protect Yourself

Launching a business anywhere comes with risk, and Indonesia is no exception. From unpredictable bureaucracy to fluctuating commodity prices and local labor laws, preparation is everything.

That includes getting the right insurance. Whether you're setting up a physical location, hiring staff, or relocating yourself and your family, having comprehensive health coverage and business protection in place is essential.

At Pacific Cross, we support entrepreneurs and expats across Asia with tailored insurance plans — from health coverage to travel and critical illness insurance — so you can focus on growing your business with peace of mind.

Final Tips for Success

• Start early: Don’t wait for your first big contract — sort out permits and paperwork ahead of time.
• Get expert advice: Reach out to BKPM, other investors, or legal consultants familiar with local regulations.
• Don’t rush the admin: It might feel tedious, but this is your gateway to a huge and growing market.
• File taxes on time: Indonesian authorities monitor compliance closely.
• Ensure your health coverage is in place: It’s now mandatory, and your future self will thank you.

Indonesia is a land of opportunity — but like any new venture, success starts with smart preparation. If you're considering setting up a business here, we at Pacific Cross are here to help protect your health and your investment every step of the way.

Ready to take the next step? Get in touch with our team to learn how our coverage can support your journey.