Types Of Business Entities In Indonesia

Rohan Mathew

Updated on:

Entrepreneurs and Investors can receive a lot of opportunities in Indonesia. It is a country with an abundance of natural resources and human resources. Also, a broad range of financial activities is created for foreign investors due to a decrease in bureaucracy and liberalism in Indonesia. There are especially three kinds of companies for incorporation in Indonesia:

  • Local Company:

The Indonesian legal term for Local Company is Pt PMDN. It can generate revenue. All kinds of financial activities related to permitted fields can be carried out. Any foreigner can start a business as a local citizen in Indonesia or s/he should appoint a local nominee for the arrangement of business activities. They can have 100% local ownership.

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For small-sized businesses, the minimum investment required is ±USD 3.500-35.000, for medium-sized businesses, ±USD35.000-700.000 is required, and >±USD 700.000 is needed for running large businesses.

It requires approximately ±8 weeks to set up a local company in Indonesia. It is the best fit for a business that does not intend to include foreign investors.

  • Foreign Investment Company:

The Indonesian legal term for Foreign Investment Companies is PT PMA. It can also generate revenue and any financial activities can be carried out that are concerned with the related fields. Foreigners can have full ownership but that depends upon the business structure and activities. The rules are present in the Indonesian Negative Investment List.

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The minimum investment to set up the company is ±USD 700.000 and the approximate time for incorporation is ±10 weeks. It is the best fit for foreign entrepreneurs who intend to incorporate a business in Indonesia.

  • Representative Office:

The Indonesian legal term for the Representative Office is KPPA. it can’t generate revenue. Corporate communications and market research are permitted activities.

There are no restrictions for ownership and minimum investment capital. The approximate time to set up the office is ± 8 weeks. This is the best fit for the companies and foreign investors who are assessing the market and not planning to look for revenue.


The above mentioned are the types of business you can conduct in Indonesia. To get further details for opening a company in Indonesia, feel free to contact 3E Accounting Indonesia.