With the recent implementation of the Omnibus Law on Job Creation, which has now been officially enacted as Law Number 6 of 2023 (previously Government Regulation in Lieu of Law No. 2 of 2022, or Perppu), Indonesia has taken significant strides toward improving its business climate. This article aims to provide an overview of how to establish a company in Indonesia following the implementation of the Omnibus Law on Job Creation and Law Number 6 of 2023, highlighting the key steps and benefits.
First, it is important to develop a comprehensive business plan that outlines the company’s goals, target market, products or services, and financial projections. Next, you need to decide on the legal entity type suitable for your business, with a limited liability company (Perseroan Terbatas or “PT”) being the most common form in Indonesia. The establishment of a PT is regulated by Law Number 40 of 2007 on Limited Liability Companies, as amended by the Omnibus Law on Job Creation. This law governs the requirements for establishing a PT, the application and registration process, authorized and issued capital, shareholder composition, company management, and other requirements related to the establishment and operation of a PT.
The next step is to choose a unique company name that complies with the regulations set by the Ministry of Law and Human Rights. Identifying the shareholders and directors is another crucial step, and determining which foreign individuals and entities are permitted to hold these positions under Indonesian law must be done by referring to the Positive Investment List (Presidential Regulation No. 10 of 2021, as amended by No. 49 of 2021).
Determining the business classification based on the Indonesian Standard Industrial Classification (KBLI) 2020 and obtaining a Business Identification Number (NIB) through the Online Single Submission Risk-Based Approach (OSS-RBA) system is now mandatory. This effectively replaces the obsolete requirement of obtaining a company domicile letter from the local administrative office. Leasing office space and obtaining the necessary supporting documentation may still be required, depending on the nature of the business.
Depending on the risk level of the business activities, as regulated under Government Regulation No. 5 of 2021 on the Implementation of Risk-Based Business Licensing and Ministry of Investment and Downstreaming/BKPM Regulation No. 5 of 2025 on Guidelines and Procedures for the Implementation of Risk-Based Business Licensing and Investment Facilities through an Electronically Integrated Business Licensing System (OSS), additional licenses or permits from relevant government authorities—such as local governments, the Ministry of Trade, or sector-specific regulators—may be required.
Registering the company and its employees with the Ministry of Manpower and the Social Security Agency for employee benefits and social security coverage is also essential. Finally, compliance with other operational requirements—such as opening a bank account, obtaining insurance coverage, and setting up an accounting system—completes the process of establishing a company in Indonesia.
It is important to note that the process of establishing a company in Indonesia may vary depending on several factors, including the nature of the business, industry-specific regulations, and location. In Indonesia, the laws governing company formation and operations include the following:
- Omnibus Law on Job Creation (Law No. 6 of 2023)
Following the Constitutional Court Decision Number 91/PUU-XVIII/2020, which declared certain provisions of Law No. 11 of 2020 on Job Creation conditionally unconstitutional, the Indonesian Government issued a Government Regulation in Lieu of Law, which was later enacted as Law Number 6 of 2023. This law constitutes a comprehensive labor and business regulatory reform aimed at streamlining regulations, improving the investment climate, and promoting economic growth by simplifying legal provisions and reducing bureaucratic burdens. Key aspects include:- Simplification of the PT establishment process, focusing on reducing excessive administrative requirements and bureaucracy. This includes simplifying document requirements, minimizing redundant forms, and streamlining approval procedures to expedite company formation.
- Flexible authorized capital for local companies (PMDN): Under Government Regulation No. 8 of 2021, local PTs are granted flexibility in determining their authorized capital based on business needs, industry requirements, and projected financial capacity.
- Facilitation of foreign investment: The regulation eases restrictions on foreign share ownership in PTs pursuant to the Positive Investment List, allowing greater foreign ownership in sectors that are fully open to foreign investment.
- Integrated licensing through OSS-RBA: The introduction of a risk-based, integrated licensing system allows businesses to obtain required licenses and permits through a single online platform, reducing the need to engage with multiple government agencies.
- Indonesian Company Law (Undang-Undang Nomor 40 Tahun 2007 tentang Perseroan Terbatas, as amended by Law No. 6 of 2023)
This law serves as the primary legal framework governing the establishment, organization, management, and dissolution of PTs, ensuring legal certainty and protection for shareholders and stakeholders. - Investment Law (Undang-Undang Nomor 25 Tahun 2007 tentang Penanaman Modal, as amended by Law No. 6 of 2023)
The Investment Law regulates both domestic and foreign investment in Indonesia, providing guidelines for establishing and conducting business activities and aiming to foster an attractive and secure investment environment.
To establish a foreign-owned company (Perseroan Terbatas Penanaman Modal Asing or PT PMA) in Indonesia, capital requirements vary depending on the business sector and are regulated by the Investment Coordinating Board (BKPM). In general, the minimum investment requirement is IDR 10 billion per KBLI classification, excluding land and buildings, with a minimum issued and paid-up capital of IDR 2.5 billion, pursuant to Ministry of Investment and Downstreaming/BKPM Regulation No. 5 of 2025.
These figures serve as general guidelines and may vary depending on the business sector, location, and other regulatory considerations. Certain sectors may impose additional requirements or higher capital thresholds.
In conclusion, with the implementation of the Omnibus Law on Job Creation enacted through Law No. 6 of 2023, establishing a company in Indonesia has become more streamlined and investor-friendly. Foreign investors now enjoy greater flexibility in choosing business entities and ownership structures across various sectors, although they remain subject to stricter minimum investment thresholds designed to protect local Micro, Small, and Medium Enterprises (MSMEs). Nevertheless, it is essential to conduct thorough research, seek professional assistance, and ensure full compliance with applicable legal and regulatory frameworks to achieve a successful business venture in Indonesia. The vast potential of the Indonesian market awaits those ready to seize these opportunities and contribute to Indonesia’s economic growth.
Written by: Muhamad Destianto, Nadira Karisma Ramadanti, Shelina Theodora, and Raisa Safina
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
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