ENCYCLOPEDIA
Setting up an Indonesian foreign-owned company (PT PMA) is not difficult to understand at the basic level: at least 2 shareholders, either individuals or legal entities; at least 1 director and 1 commissioner, who cannot be the same person; at least one director must hold an Indonesian tax ID (NPWP); a local registered address is required; the deed of establishment must be notarized and submitted to the Ministry of Law for approval. The entity is established once the legal approval letter is obtained. Foreigners may serve as directors, but if they actually work in Indonesia, they must separately resolve residence and work permit issues.
But company formation is only the starting point. From the NIB application to actual business operations, companies will encounter a series of key concepts — IDR 10 billion, IDR 2.5 billion, KBLI, NIB, OSS, AHU, SBU, BPOM, and import licenses. Without understanding these, registration may be complete while the business still cannot start.
A PT PMA involves two commonly confused figures.
IDR 10 billion is the minimum investment. Under BKPM Regulation No. 5 of 2025, a PT PMA must have total investment exceeding IDR 10 billion per project location and per five-digit KBLI business category, excluding land and building value. This means if a company has operating premises in both Jakarta and Karawang, each location must separately meet the IDR 10 billion investment requirement. Investment consists of fixed capital (equipment, machinery, etc.) and working capital. It is the project investment data reported in the NIB application and subsequent LKPM reports.
IDR 2.5 billion is the minimum paid-up capital. From October 2025, the minimum subscribed and paid-up capital for a PT PMA is explicitly IDR 2.5 billion (previously it was as high as IDR 10 billion). This capital must actually be in place and is subject to a 12-month lock-up period — after being deposited into the company account, it cannot be transferred out within 12 months unless used for legitimate business purposes such as asset purchases, construction, or company operations. If paid-up capital is insufficient, applications for NIB and other documents may be blocked.
The two answer different questions: IDR 10 billion corresponds to the project-level scale threshold, while IDR 2.5 billion corresponds to the company-level capital threshold.
KBLI is Indonesia’s official business activity classification system, issued by the Central Statistics Agency, using five-digit codes to identify specific business activities. Every company must select KBLI codes at registration and state them in its articles of association. These codes are not chosen at random — they directly determine foreign investment access, shareholding limits, OSS risk level, and the required license types.
KBLI 2025 is now officially in effect. Although the OSS system has automatically completed the conversion between old and new codes, the system only performs technical mapping; it does not judge whether the new codes match the actual business. When one old code corresponds to multiple new codes, the system only completes the code replacement and does not determine which new code matches your actual business. The responsibility for selection lies with the company. Companies must verify against actual products, services, contracts, and revenue sources one by one, especially in cases involving splitting, merging, or reclassification. They cannot rely solely on the conversion results shown in OSS to judge compliance.
The proper sequence is: actual business → determine KBLI → confirm foreign investment access → determine shareholding structure → establish PT PMA. It is not advisable to register the company first and then research what it can do.
Indonesian company registration is not completed in a single system, but through a relay between two core systems: the AHU system manages “whether the company is legally established,” while the OSS system manages “what the company can operate.”
The AHU system is managed by the Ministry of Law and Human Rights and is responsible for the establishment and change registration of the legal entity. Company name verification, deed filing, and obtaining the legal approval letter are all completed in the AHU system. AHU also pushes company establishment data to the Directorate General of Taxes, generates the company tax number, and synchronizes the data to the OSS system. In short, AHU solves the “legal identity” issue — after obtaining the legal approval letter, the company exists as a legal entity, but it cannot yet operate commercially.
The OSS system is managed by the Investment Coordinating Board (BKPM) and is responsible for issuing business licenses. After the company obtains legal identity, it enters the OSS system to apply for a Business Identification Number (NIB). The system automatically determines the risk level based on the selected KBLI and determines the licensing path. OSS is not a simple registration system, but a risk-based licensing engine: low-risk activities are automatically issued an NIB; low-to-medium risk activities are automatically issued an NIB plus a self-declared standard certificate; medium-high and high-risk activities require manual verification by the competent authority before a standard certificate or business license can be issued.
The relationship between the two systems can be understood this way: AHU is “birth registration,” and OSS is the “business license.” Company data in the AHU system is kept synchronized with the OSS system. If the legal entity information registered in AHU is inconsistent with the business information in OSS, the system will automatically prompt an update. The KBLI 2025 transition is also coordinated by the two systems. Only when the business scope actually changes does the company need to proactively amend its articles of association.
A common practical mistake is: after obtaining the legal approval letter from AHU, assuming the company can already conduct business, while ignoring the NIB and subsequent license applications in OSS. In fact, without an NIB and the license documents corresponding to the relevant risk level, the company still cannot legally operate.
NIB (Business Identification Number) is the basic identity document obtained by all companies after OSS registration, recording approved KBLI activities. But as noted above, the legal effect of the NIB depends entirely on the risk level of the corresponding KBLI — low-risk activities can operate with the NIB alone; low-to-medium risk activities also require a standard certificate; medium-high and high-risk activities must complete verification or obtain a business license.
The key insight here is: getting an NIB does not mean you can operate. Each KBLI category requiring a standard certificate must be applied for separately. Operating without a license exposes the company to administrative penalties. This is the most common root cause of “registration completed but business cannot start.”
1. SBU (Construction Qualification Certificate) is a mandatory threshold for construction service companies. Having a construction KBLI does not mean the company has obtained an SBU. Even with an SBU, the company must ensure that its registered business activities match the qualification scope.
The path for construction companies is: determine the construction business → corresponding KBLI → industry classification → allocate SKK personnel → apply for SBU. It is a complete chain. Foreign construction companies also face shareholding restrictions, and these restrictions appear at the SBU application stage rather than the company establishment stage — the company can be registered, but without an SBU it cannot legally undertake projects. The equity structure must be planned in advance at the time of establishment.
2. BPOM is the market access regulator for products such as food, cosmetics, and pharmaceuticals. A company having the corresponding KBLI only means it is registered as permitted to engage in such business activities. For products to circulate legally, a BPOM license must be obtained separately. A company license is not a product license; each SKU must be registered separately.
3. Import License (API) is not required for every company. Only companies actually engaged in import activities need it. If the company does not import, it does not need an API. If it does import, it must choose the type: API-U (general importer, suitable for trading companies importing finished goods for resale) and API-P (manufacturer importer, suitable for production companies importing raw materials and machinery for their own production). A company can hold only one of these, and it must be tied to a local registered entity.
Name verification: Prepare 3–5 alternatives in the format PT + business name. Name verification takes about 1–3 working days.
KBLI matching: Determines foreign investment access, share ratio, risk level, and licensing path.
Sign documents: Draft articles of association, affidavit, power of attorney, address confirmation, share confirmation, etc. The deed of establishment must be submitted to the Ministry of Law within 60 days after signing.
Ministry of Law registration: The notary submits through the SABH system and obtains the SK. The company obtains legal personality.
OSS apply for NIB: The NIB is a business identity code, but its effect depends on the KBLI risk level. It does not equal formal operation.
Industry licenses (if applicable): BPOM, OJK, SBU, IUJP, SNI, AMDAL, etc., handled according to industry.
Tax setup: Complete NPWP, tax representative, and VAT registration through Coretax.
Bank account opening: Inject IDR 2.5 billion in paid-up capital. It cannot be withdrawn freely within 12 months. Directors often need a KITAS residence permit, so plan ahead.
In one sentence: AHU manages legal identity, OSS manages business identity, KBLI defines business coordinates, and industry licenses determine whether you can formally operate. Define the business first, then work backward to KBLI, foreign investment access, capital, and the licensing path. This is more reliable than registering first and remedying later.
