Starting Business in Indonesia

KBLI Selection

As a first step, investors must identify the relevant Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI) codes for their proposed business activities. Each business activity is tied to a specific KBLI code, as set out in the Central Bureau of Statistics (Badan Pusat Statistik or BPS) Regulation No. 7 of 2025. KBLI selection is critical because it determines:

  • Whether a business activity is open to foreign investment
  • The applicable foreign ownership limits and licensing requirements
  • Eligibility for investment incentives and facilities.

Early and accurate KBLI mapping is therefore essential to avoid structural issues, licensing delays, or the need for later restructuring.


Priority Investment List

Once the relevant KBLI codes have been identified, investors should check the Priority Investment List to confirm whether its proposed business activity is open to foreign investment and whether any conditions apply. The Priority Investment List is set out in Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021 (Priority Investment List). As a general principle, business activities listed in the Priority Investment List are open to foreign investment unless the list or sectoral rules impose limitations or additional requirements. Based on the Priority Investment List, business activities are generally categorized as follows:

  • Prioritised business sectors — As listed in Appendix I of Presidential Regulation No. 10 of 2021.

Accordingly, as certain industries are also regulated by sector-specific laws and regulations, investors should confirm both (i) the applicable treatment under the Priority Investment List and (ii) any additional sectoral requirements that may apply to the proposed business activity. These are sectors that the government actively encourages and may be eligible for fiscal incentives (e.g., tax facilities and import duty exemptions) and non-fiscal incentives (e.g., simplified licensing and supporting infrastructure). Prioritised sectors generally include activities that are strategically important, capital- or labour‑intensive, technology-driven, pioneering, export‑oriented, or linked to research and development.

  • Business sectors allocated for or requiring partnership with cooperatives or micro, small, and medium enterprises (MSMEs) — As listed in Appendix II of Presidential Regulation No. 10 of 2021.

Certain activities are reserved for cooperatives or MSMEs or may only be conducted by larger businesses through a partnership arrangement with those entities.

  • Business sectors with specific requirements — As listed in Appendix III of Presidential Regulation No. 10 of 2021.

These sectors remain open to investment but are subject to particular conditions, such as foreign ownership caps, special licensing, or other operational requirements. These conditions must be reviewed carefully at the structuring stage, particularly for regulated industries such as banking and finance.

  • Closed business sectors and sectors reserved for the government — As listed in Appendix III of Presidential Regulation No. 10 of 2021.

A limited number of activities are closed to foreign investment, and certain strategic sectors may be reserved for the government (typically linked to public services or national defence/security considerations).

Accordingly, as certain industries are also regulated by sector-specific laws and regulations, investors should confirm both (i) the applicable treatment under the Priority Investment List and (ii) any additional sectoral requirements that may apply to the proposed business activity.


Investment Entry Options
Foreign investors may enter the Indonesian market through three ways:

  • Establishing a new PT PMA – Establishing a PT PMA (Perseroan Terbatas Penanaman Modal Asing or foreign investment company) allows the investor to conduct revenue-generating business activities in Indonesia. A PT PMA is incorporated as a limited liability company (Perseroan Terbatas or PT) under Indonesian law, through a deed of establishment executed before a public notary. As a general requirement, a PT PMA must have at least two shareholders and a minimum issued and paid-up capital of IDR 2.5 billion.
  • Acquisition of existing company – Acquiring shares in an existing foreign investment company allows investors to enter the Indonesian market through a business that is already established. This route may also be subject to change‑of‑control requirements in certain regulated sectors, where prior approvals or notifications are mandatory.
  • Opening a representative office – Unlike a PT PMA, activities of a representative office will generally be limited to non-commercial activities such as liaison, supervision, market research, or coordination with headquarters, depending on the sector.


Each option carries different regulatory, tax, and operational implications and should be selected based on the intended scope of activities. While foreign investors may enter the Indonesian market through several routes, in practice, the establishment of a new PT PMA is often the preferred approach. Setting up a new PT PMA provides a clean structure from the outset, with clearly defined KBLI, licensing scope, capitalization, and governance arrangements aligned to the investor’s intended operations.