How to Register a Company in Indonesia Legally

Indonesia, as one of the largest economies in Southeast Asia, continues to attract both local entrepreneurs and foreign investors. The country offers a promising market, strategic geographical location, and a growing digital ecosystem. However, before starting operations, it is crucial to understand how to register a company in Indonesia legally.

Having proper legal status is not just about compliance; it ensures credibility, access to financing, protection under the law, and long-term business continuity. This article will provide a detailed guide on the requirements, documents, and official process for company registration in Indonesia.

Why Registering a Company Legally Matters

Registering a company legally in Indonesia provides several advantages:

• Legal protection: A registered company can enter contracts, own assets, and seek legal remedies.
• Credibility: Clients, suppliers, and investors prefer dealing with legally recognized entities.
• Access to capital: Banks and financial institutions require legal status before providing loans or credit.
• Tax compliance: A registered company receives a Tax Identification Number (NPWP), making tax filing legitimate.
• Business opportunities: Many government tenders, large contracts, and export-import opportunities require legal company status.

In short, legal registration lays the foundation for trust and sustainable growth.

Requirements to Establish a Company in Indonesia

The requirements differ depending on the type of company:

1. Limited Liability Company (PT)

• Minimum shareholders: At least 2 shareholders (individuals or legal entities).
• Management structure: At least 1 director and 1 commissioner.
• Minimum capital:
  • For PT PMA (foreign investment company): usually IDR 10 billion in paid-up capital.
  • For local PT: more flexible under the Job Creation Law (UU Cipta Kerja).
• Company address: Must be a valid office address (not a virtual office in most cases).

2. Foreign-Owned Company (PT PMA)

• Must comply with the Positive Investment List which outlines sectors open for foreign investment.
• Required to report investment realization to BKPM (Indonesia Investment Coordinating Board).

3. Other Entities

• CV (Commanditaire Vennootschap): Partnership type, not a legal entity, simpler but less protection.
• Representative Office: For foreign companies conducting research, marketing, or liaison activities without commercial transactions.

Required Documents for Company Registration

To register a company legally, several documents must be prepared:

For Founders (Individuals)

• Valid passport (for foreigners) or national ID (for Indonesians).
• Tax Identification Number (NPWP).
• Recent passport-size photographs.

For Founders (Corporate Shareholders)

• Certificate of incorporation and articles of association.
• Legalized documents translated into Bahasa Indonesia by a sworn translator.

For the Company

• Proposed company name (must be unique and approved by the Ministry of Law and Human Rights).
• Articles of Association (drafted by a notary).
• Deed of Establishment (legalized by a notary).
• Proof of office address (lease agreement or ownership certificate).
• Bank statement as proof of capital deposit.

The Legal Registration Process

Step 1: Reserve and Approve Company Name

• Submit proposed company names to the Ministry of Law and Human Rights.
• The name must be unique, not offensive, and comply with Indonesian naming rules.

Step 2: Draft and Sign the Deed of Establishment

• Prepared by a licensed notary in Bahasa Indonesia.
• Includes company name, objectives, shareholders, capital, and management structure.

Step 3: Legalization by the Ministry of Law and Human Rights

• Submit the deed of establishment for approval.
• Once approved, the company obtains legal entity status.

Step 4: Obtain NPWP (Tax Identification Number)

• Register the company with the local Tax Office.
• This enables tax reporting and compliance.

Step 5: Register with the OSS System and Obtain NIB

• Create an account on OSS (Online Single Submission).
• Obtain NIB (Business Identification Number), which serves as:
  • Business license.
  • Import license (if applicable).
  • Customs identification number.

Step 6: Apply for Sectoral Licenses (If Applicable)

• Certain businesses require additional permits:
  • BPOM License for food, beverages, cosmetics, and pharmaceuticals.
  • Environmental Permits (UKL-UPL/AMDAL) for environmentally sensitive industries.
  • TDUP for tourism-related businesses.

Step 7: Operational Preparation

• Open a corporate bank account.
• Register employees with BPJS (Indonesian Social Security Program).
• Comply with labor and immigration laws if hiring foreign workers.

Estimated Timeline and Costs

• Local PT: ± 20–30 working days.
• PT PMA: ± 30–45 working days due to additional approvals.

Estimated costs:

• Local PT: starts from IDR 10 million (notary, government fees, consultant fees).
• PT PMA: higher due to capital requirements and translation/legalization costs.

Common Challenges in Company Registration

1. Changing regulations: Indonesia frequently updates business laws, such as through the Job Creation Law and OSS system improvements.
2. Incomplete documents: Mismatched data between passport, NPWP, or deed can delay approval.
3. Restricted business sectors: Not all industries are open to foreign ownership.
4. Complex licensing requirements: Companies in food, health, and environmental sectors face stricter licensing procedures.

Best Practices for Smooth Company Registration

• Prepare documents early and ensure consistency across all forms.
• Consult professionals or legal experts to navigate complex regulations.
• Check the Positive Investment List before foreign investors commit to a sector.
• Monitor regulatory updates, especially regarding OSS.
• Maintain proper records for future audits or renewals.

Conclusion

Registering a company in Indonesia is an essential step for establishing a legal, trusted, and sustainable business. The process involves meeting certain requirements, preparing valid documents, and following official registration procedures through Kemenkumham, Tax Office, and OSS.

While the steps may seem complex, with proper preparation and guidance, entrepreneurs can complete the process efficiently. Legal company registration not only ensures compliance but also opens doors to financing, partnerships, and long-term growth.

For both local and foreign entrepreneurs, investing in proper legal registration is the foundation of building a strong and credible business in Indonesia.