Eleven business structures to register in Indonesia.

Foreign and domestic investors establishing a presence in Indonesia have multiple business structure options, each with distinct legal frameworks, ownership requirements and operational capabilities. The structure of a company determines regulatory compliance and influences long-term growth potential, liability exposure and investment flexibility.

This guide examines the primary business structures available in Indonesia, and includes their characteristics, requirements and suitability for different business objectives.

Business structures for foreign investors

Indonesia’s regulatory framework provides foreign investors with two primary structures for establishing a presence in the country:

• Foreign-owned limited liability company (PT PMA), which is a legal entity established under Indonesian law
• Representative office (RO), which is not a separate legal entity but a non-commercial extension of the foreign parent company

Foreign-owned limited liability company (PT PMA)

PT PMA is a type of subsidiary that represents the standard structure for foreign investors seeking to generate revenue and establish long-term operations in Indonesia. This entity functions as a legal person separate from its shareholders, providing liability protection and operational autonomy, and is governed by Law No. 40 of 2007 (as amended by the Job Creation Law) and its implementing regulations.

Foreign ownership in a PT PMA ranges from partial to 100%, depending on the business sector’s classification under the Positive Investment List. Sectors not subject to restrictions permit full foreign ownership, while others specify maximum foreign ownership percentages or mandate partnerships with Indonesian entities.

Capital requirements

Under BKPM Regulation No. 5 of 2025, PT PMA entities must comply with the following capital and investment requirements:

• Minimum total investment of more than IDR 10,000,000,000 (ten billion rupiah) per business activity (per KBLI and per project location), excluding land and buildings
• Minimum issued and paid-up capital of IDR 2,500,000,000 (two billion five hundred million rupiah) per company

The issued and paid-up capital must be deposited into the company’s bank account and must not be transferred for a minimum period of 12 months, except for use in asset acquisition, construction activities and legitimate business operations. Certain regulated sectors, including financial services and construction, may impose higher sector-specific capital requirements.

Structural requirements

A PT PMA operates with defined governance organs:

• Minimum two shareholders (foreign individuals, legal entities or combination with local shareholders)
• At least one resident director (additional directors may be foreign nationals)
• Minimum one commissioner (foreign or Indonesian national)
• Registered business address in Indonesia
• The company is classified as a Large-Scale Business (Skala Usaha Besar) under Indonesian investment regulations and registered accordingly in the OSS system.

Licensing framework

Under Government Regulation No. 28 of 2025 and BKPM Regulation No. 5 of 2025, business activities in Indonesia are classified under the Risk-Based Licensing (OSS-RBA) framework into the following risk levels:

• Low risk: A Business Identification Number (NIB) is sufficient to operate the business.
• Medium-low risk: An NIB and a Standard Certificate (self-declared) are required.
• Medium-high risk: An NIB and a Standard Certificate verified by the relevant authority are required.
• High risk: An NIB and formal business licensing/approval from the relevant authority are required prior to commencing operations.

Representative office (KPPA)

Foreign companies seeking market presence without direct commercial engagement establish representative offices. These entities function as liaison offices, facilitating parent company activities and maintaining a non-revenue generating status in Indonesia.

Representative offices conduct market research, promotional activities and coordination functions on behalf of foreign parent companies. All commercial transactions, revenue generation and contractual agreements remain in the exclusive domain of the parent entity.

Unlike PT PMA structures, representative offices operate without minimum capital requirements, though they incur establishment and operational costs. These offices employ both Indonesian and foreign personnel, subject to applicable employment regulations.

Types of representative offices in Indonesia

Foreign representative office (KPPA)

Undertakes supervisory and coordination functions for parent company interests in Indonesia and abroad. These offices conduct no profit-generating activities, contract negotiations or participation in Indonesian corporate structures.

Foreign construction representative office (BUJKA)

Provides construction services through collaboration with local construction companies. These entities handle high-risk, high-technology or high-cost construction projects via joint operations and require specific construction representative for office permissions.

Foreign trade representative office (KP3A)

Focuses on product introduction, marketing support and market development activities for foreign principals. Its permitted activities include market research, product usage instruction, sales monitoring and supply sourcing from Indonesia. A KP3A may facilitate contract discussions and documentation on behalf of the foreign principal, however, it is strictly prohibited from conducting sales transactions, engaging in commercial trading activities, issuing invoices, receiving payments or acting as a contracting party in Indonesia. All commercial contracts must be entered into directly by the foreign principal outside Indonesia.

Foreign Trade Representative Office in the Electronic Trading System Sector (KP3A Bidang PMSE)

May be established only by a foreign electronic trading system operator (Penyelenggara Perdagangan Melalui Sistem Elektronik, PPMSE or PSP) that wishes to appoint a representative in Indonesia. In terms of day-to-day activities, KP3A PMSE functions in a similar way to a conventional KP3A, such as conducting market research and supporting promotional activities in Indonesia.

Foreign electricity support services representative office

Established by a foreign company that provides electricity support services and wishes to undertake projects in Indonesia. This office may only perform high-value, large-scale electricity support activities, and its operations must involve technology transfer, the employment of a greater number of Indonesian workers than foreign workers, and the appointment of an Indonesian citizen as the Head of the Representative Office. The permitted scope of services includes consultancy in electrical power installations, construction and installation of electrical power systems and maintenance of electrical power installations, subject to the applicable sectoral licensing requirements.

Business structures for domestic investors

Indonesian citizens and resident entities access a broader range of business structures, from individual proprietorships to various partnership models. These structures generally feature simpler establishment procedures and lower capital thresholds than foreign investment vehicles.

Limited liability company (PT)

The limited liability company (Perseroan Terbatas, PT) is Indonesia’s most commonly used business structure for domestic investors. As a separate legal entity with capital divided into shares and share types, a PT provides shareholders with limited liability, restricted to the value of unpaid shares. Share transfers and ownership modifications may be carried out without requiring the dissolution of the company.

Local PTs restrict ownership to Indonesian citizens or Indonesian legal entities. For micro and small-scale businesses, Indonesian law also recognises the establishment of a Single Shareholder Company (PT Perorangan) by an individual Indonesian citizen. Companies that are intended to receive foreign investment in the future are generally advised to establish PT PMA from the outset to avoid subsequent restructuring complexity.

Establishment requirements

• Minimum two shareholders (except for PT Perorangan, which may be established by a single Indonesian citizen for micro and small-scale businesses).
• At least one director and one commissioner
• Registered business address
• Company name comprising minimum three Indonesian words
• Articles of Association approved by Ministry of Law
• Tax registration (NPWP)

Single shareholder company (PT Perorangan)

Recent regulatory under the Job Creation Law introduced the single-shareholder limited liability company structure, specifically designed for micro and small enterprises. This PT Perorangan variant enables individual Indonesian citizens to establish limited liability companies without requiring multiple founders.

PT Perorangan structures feature reduced capital requirements compared to standard PTs, making them particularly suitable for MSMEs transitioning from informal to formal business structures. The Job Creation Law provisions facilitate this entity type, though they maintain the fundamental PT characteristics of limited liability and separate legal personality. For a PT Perorangan, the amount of authorised, issued and paid-up capital is determined by the founder, and there is no statutory minimum capital requirement.

Characteristics

• Single Indonesian citizen shareholder
• Reduced capital requirements for micro and small enterprises
• Limited liability protection
• Simplified establishment procedures
• Subject to standard PT governance requirements

Individual enterprise (Usaha Dagang)

The Individual Enterprise represents Indonesia’s simplest business structure. This sole proprietorship model does not require a notarial deed of establishment and has no statutory minimum capital requirement, although a Business Identification Number (NIB), tax registration and, in certain cases, a local business certificate may still be required for regulatory compliance.

Operating without legal separation between owner and business entity, the UD exposes proprietors to unlimited personal liability for business obligations. This structure suits service providers, small traders and consultants seeking minimal regulatory complexity.

Advantages

Individual enterprises offer straightforward establishment and dissolution, complete operational control and minimal compliance requirements. The structure enables rapid decision-making and direct profit retention. Ongoing reporting and corporate governance requirements are minimal compared to incorporated entities.

Limitations

Unlimited personal liability extends to all business debts and obligations, potentially placing personal assets at risk. The structure limits business expansion potential and complicates access to formal financing. Foreign nationals cannot establish UDs, restricting this option to Indonesian citizens.

Get our in-depth guide covering everything you need to know about starting and managing your business in Indonesia.

• 

  Discover foreign registration options & restrictions
• 

  Learn about available government incentives & promotions
• 

  Understand all compliance requirements

Download now

Limited partnership (CV)

The limited partnership (Commanditaire Vennootschap,(CV), or Persekutuan Komanditer) operates as a partnership with differentiated partner roles and responsibilities governed primarily under the Indonesian Commercial Code (KUHD). This structure accommodates investors seeking capital participation without operational involvement alongside active business managers.

Partner categories

• Active partners (sekutu komplementer) manage CV operations and bear unlimited personal liability for partnership obligations. These partners conduct business activities, represent the CV in third-party relations and exercise full management authority.
• Passive partners (sekutu komanditer) contribute capital without participating in management or daily operations. Their liability limits to contributed capital amounts, providing investment opportunities with bounded risk exposure.

Partnership variants

Pure CV (CV murni) represents the simplest form, comprising one active partner and one or more passive partners. This structure clearly delineates management and investment roles.

Mixed CV (CV campuran) evolves from Firma partnerships requiring additional capital. Original Firma partners become active partners while new investors join as passive partners, preserving existing operational structures and expanding capitalisation.

Share-based CV (CV bersaham) issues internal shares to formalise ownership proportions among partners. These shares serve internal documentation purposes rather than public trading instruments, providing capital mobility mechanisms within the CV structure.

Establishment and dissolution

CVs require notarised establishment deeds and must be registered electronically through the Sistem Administrasi Badan Usaha (SABU), managed by the Directorate General of General Legal Administration of the Ministry of Law. Upon submission, the Direktur Jenderal issues an SKT (Surat Keterangan Terdaftar) which replaces the former registration with local courts and publication in the State Gazette. A notarised deed must be submitted within 60 calendar days from the date of the deed’s signature. The KUHD governs CV operations, though no minimum capital requirements apply.

Dissolution is registered when the CV ends due to various mechanisms, including: expiration of the agreed-upon partnership term, destruction of assets used for the CV’s purpose, achievement of the CV’s purpose, or mutual consent of the partners. Dissolution is registered electronically via SABU by submitting the dissolution deed/court decision within the required timeframe. Partnership agreements may specify continuation provisions upon partner death or bankruptcy, enabling business continuity through succession or remaining partner continuation.

General partnership (Firma)

The firma, or Persekutuan Firma, constitutes a civil partnership of two or more Indonesian citizens conducting business under a collective name. This structure operates on mutual trust foundations, with partners sharing equal rights and unlimited joint liability for partnership obligations.

Firma partnerships suit professional service providers, small trading operations and collaborative ventures among individuals with complementary skills. The structure enables resource pooling and shared operational responsibilities.

Characteristics

All firma partners bear unlimited personal liability, exposing their personal assets to partnership creditors. Partners share equally in management rights and profit distribution unless partnership agreements specify alternative arrangements. The partnership operates without minimum capital requirements, though adequate capitalisation remains commercially prudent.

Registration requirements

Firmas require notarised establishment deeds. The registration is submitted electronically by the Notary through the SABU to the Directorate General of General Legal Administration of the Ministry of Law. This electronic registration replaces the previous requirements for registration with regional courts and publication in the State Gazette. The application for registration must be submitted within a maximum period of 60 calendar days from the date of the notarial deed.

Operational considerations

Firma partnerships demand high trust levels among partners, given unlimited liability exposure and equal management authority. The structure suits small to medium-scale operations where partner collaboration adds significant value and risk-sharing aligns with business objectives.

Civil partnership (Persekutuan Perdata)

Civil partnerships represent the most flexible partnership form, established through agreements between two or more parties to pool resources for shared profit objectives. These partnerships may pursue temporary projects or ongoing business activities.

Civil partnerships require notarised establishment of deeds and must be formally registered. The registration must be submitted electronically by the Notary through SABU to the Directorate General of General Legal Administration of the Ministry of Law. Upon submission, the Directorate General issues a Surat Keterangan Terdaftar (SKT). The application for registration must be submitted within a maximum period of 60 calendar days from the date of the notarial deed.

Civil partnerships typically suit project-based collaborations, joint ventures for specific undertakings or informal business arrangements among trusted parties. The structure’s flexibility accommodates varied partnership objectives and maintains minimal regulatory compliance.

Specialised structures

Beyond standard commercial entities, Indonesia recognises several specialised structures serving specific purposes or sectors.

Branch office (Kantor Cabang)

Established subsidiary companies operating as PT or PT PMA may create branch offices to extend operations into additional locations. Branch offices function as extensions of the parent company rather than separate legal entities, operating under the parent company’s legal personality and capital structure.

Branch office establishment requires parent company approval, registration through the OSS system and compliance with local government requirements for the branch location. These offices typically serve regional market expansion, operational decentralisation or sector-specific regulatory compliance.

Cooperative (Koperasi)

Cooperatives embody Indonesia’s constitutional economic principles, operating as member-owned entities based on kinship and mutual assistance principles. These structures serve community economic development, particularly among small producers, consumers and service users.

Cooperative establishment requires a minimum of nine members for primary cooperatives, with democratic governance structures emphasising member participation. The Cooperative Law governs formation, operation and dissolution, with sector-specific regulations applying to certain cooperative types.

Foundation (Yayasan)

Foundations operate as non-profit legal entities pursuing social, religious, or humanitarian objectives. These structures hold dedicated assets serving foundation purposes, with the Board of Management (Pengurus) holding accountability to the Board of Patrons (Pembina) and subject to oversight by the Board of Supervisors (Pengawas).

Foundation establishment requires notarised deeds and must obtain ratification from the Ministry of Law to gain legal entity status. Foundations are strictly prohibited from distributing profits or assets to the board of patrons, management or supervisors, ensuring all resources remain channeled toward stated objectives.

Foundation establishment requires notarised deeds, Ministry of Law and Human Rights approval compliance with Foundation Law provisions. Foundations cannot distribute profits to founders, managers or supervisory boards, channelling all resources toward stated objectives.

Choosing the appropriate structure

Structure selection depends on multiple factors, such as foreign ownership requirements, liability exposure preferences, capital availability, operational complexity, industry sector regulations and long-term business objectives.

Foreign investors seeking revenue generation and market establishment typically select PT PMA structures, accepting higher capital requirements for full legal entity status and liability protection. Representative Offices suit market exploration phases, providing visibility without commitment to substantial capitalisation or permanent operations.

Domestic entrepreneurs evaluate trade-offs between establishment simplicity, liability protection and growth potential. Individual enterprises and partnerships offer accessible entry points with minimal capital and compliance requirements, though unlimited liability exposure and growth limitations may prompt eventual transition to PT structures. For micro and small business operators, the Single Shareholder Company provides an additional option that offers limited liability with significantly simplified establishment and governance requirements.

Sector considerations significantly influence structure selection. Industries subject to foreign ownership restrictions necessitate PT PMA structures with Indonesian partnerships or alternative entry strategies. Regulated sectors impose additional licensing requirements regardless of chosen structure.

Growth trajectory planning informs initial structure selection. Businesses anticipating rapid expansion, foreign investment attraction or eventual public listing benefit from establishing PT structures despite higher initial requirements. Conversely, ventures testing market concepts or pursuing limited-scale operations may appropriately start with simpler structures, transitioning as circumstances warrant.

Conclusion

Indonesia’s diverse range of business structures accommodates different investor objectives, ranging from initial market exploration through representative offices to full operational establishment through incorporated entities. Each structure carries varying levels of regulatory requirements, liability exposure, capital commitment and operational flexibility.

The Positive Investment List, sectoral regulations and capital requirements significantly influence the available options, particularly for foreign investors. While certain sectors have been liberalised in recent years, others remain restricted or subject to foreign ownership limitations, joint venture requirements or specific licensing conditions. The regulatory environment therefore requires careful and updated analysis prior to structure selection.

Investors therefore benefit from professional guidance when selecting an appropriate business structure, ensuring compliance with current regulations, efficient operational planning and readiness for future business development or restructuring when required.

How Acclime can help with establishing business entities in Indonesia

Acclime provides guidance for establishing business entities in Indonesia, from structure selection through complete operational setup. Our team assists both foreign and domestic investors with registering a company in Indonesia, from structure selection through complete operational setup. We help clients work through the Positive Investment List, understand sectoral restrictions and implement structures supporting both immediate requirements and long-term growth objectives. Contact us to discuss how we can support your business establishment in Indonesia.