Indonesia Business Expansion Checklist for Foreign Investors in 2027

Expanding into Indonesia requires more than registering a company and obtaining a business license. Foreign investors must understand which business activities are open to investment, how licensing requirements apply, what financial and employment obligations come with operating locally, and how to prepare the business before its first commercial transaction.

For companies planning to enter Indonesia in 2027, the preparation process should connect investment decisions with practical operational requirements. A business may have completed its incorporation but still be unable to operate fully if its licenses, workforce arrangements, tax administration, or supporting infrastructure are not ready.

This checklist follows the actual expansion journey, from defining the market-entry model to preparing the company for its first 90 days of operations.

1. Indonesia Business Expansion Checklist: Define Your Market-Entry Strategy

Before establishing a legal entity, foreign investors should determine what they intend to achieve in Indonesia. The right market-entry structure depends on the company’s business activities, investment objectives, expected operating scale, and level of control required.

A company entering Indonesia to test market demand may have different requirements from one planning to establish a permanent office, hire a local workforce, or operate a production facility.

Start by answering these questions:

• What products or services will the company offer in Indonesia?
• Will the business sell directly to Indonesian customers or work through local distributors?
• Does the company need a physical office, warehouse, production facility, or local team?
• Will the business employ Indonesian employees, foreign employees, or both?
• What is the expected investment and operating budget for the first year?
• Does the company intend to establish a long-term presence or begin with a limited market-entry arrangement?

Choose the operating structure carefully.

Foreign investors commonly evaluate several approaches:

• PT PMA: A foreign investment company that can conduct approved business activities in Indonesia, subject to applicable investment and licensing requirements.
• Representative Office: A structure that may be suitable for permitted representative, supervisory, or promotional activities, depending on the applicable office classification. It should not be treated as a general substitute for a commercial operating entity.
• Local partnership or distribution arrangement: A commercial arrangement that may support market entry, provided the business activities and contractual structure comply with Indonesian regulations.
• Employer of Record (EOR): A workforce solution that may help eligible foreign businesses engage local employees without immediately establishing their own Indonesian employing entity. It does not replace business licensing where the company itself conducts regulated commercial activities.

The market-entry decision should be made before committing to office leases, recruitment, or major operational expenses.

2. Confirm Whether Your Business Can Operate in Indonesia

Once the expansion strategy is defined, the next step is to examine whether the intended business activities can be conducted by a foreign investment company.

Review the relevant KBLI classifications

Indonesia uses the Indonesian Standard Industrial Classification, known as KBLI, to classify business activities.

Foreign investors should identify the appropriate KBLI codes for every activity the company intends to conduct. This is important because different activities may have different investment conditions, ownership restrictions, licensing requirements, and operational obligations.

Do not select a KBLI code only because its description appears similar to the company’s business model. Review the actual scope of activities and confirm that the selected classification reflects what the company will do in practice.

Evaluate foreign investment requirements

Before proceeding with incorporation, review the investment conditions applicable to the selected business activities.

The assessment should cover:

• Whether the business activity is open to foreign investment.
• Whether foreign ownership is restricted or subject to specific conditions.
• Applicable minimum investment requirements.
• Capital structure and paid-up capital requirements.
• Additional requirements for regulated sectors.
• Whether the company needs sector-specific approvals.

Investment requirements should be assessed against the current regulations and the company’s actual business activities. Avoid relying on general investment figures without checking the applicable KBLI and regulatory conditions.

Prepare the incorporation documents

The company should prepare the necessary corporate information and supporting documents, including:

• Shareholder and director information.
• Proposed company name.
• Business activities and KBLI classifications.
• Shareholding structure.
• Investment and capital information.
• Registered business address.
• Corporate documents from foreign shareholders, where applicable.

The incorporation process should be coordinated with the licensing plan so that the company’s registered activities and intended operations remain consistent.

For support with the legal establishment process, foreign investors can review BigFish Global Consulting’s Legal Services.

3. Move from Company Incorporation to Operational Approval

Company establishment is an important milestone, but it does not automatically mean every business activity is ready to operate.

Indonesia applies a risk-based business licensing framework. Under Government Regulation No. 28 of 2025, business licensing requirements are linked to the risk classification of the relevant business activity.

Investors should also review the implementation procedures under Minister of Investment and Downstream Industry/BKPM Regulation No. 5 of 2025.

Understand the risk-based licensing process

Depending on the activity and its risk classification, the company may need different licensing documents and supporting approvals.

The general framework distinguishes between:

• Low-risk activities: Generally require a Business Identification Number (NIB).
• Medium-low-risk activities: Generally require an NIB and a Standard Certificate.
• Medium-high-risk activities: Generally require an NIB and a Standard Certificate that must meet the applicable verification requirements.
• High-risk activities: Generally require an NIB and a business license, together with applicable supporting requirements.

The actual requirements must be checked for each KBLI and the relevant sector. Some businesses may also need environmental approvals, building-related approvals, operational certificates, or other sector-specific documents.

Business licensing checklist

Before starting commercial operations, confirm that:

• The company’s NIB has been issued through the Online Single Submission (OSS) system.
• The registered KBLI codes match the intended business activities.
• Required Standard Certificates or business licenses have been obtained.
• Applicable sector-specific approvals have been completed.
• Business location and environmental requirements have been addressed.
• Supporting operational documents are available.
• The company understands its ongoing reporting and compliance obligations.

A useful practice is to maintain a licensing register that records each license, its responsible department, its status, and any renewal or reporting requirements.

4. Build Your First-Year Financial Plan

Foreign investors should prepare a financial operating plan before the company begins conducting business. Incorporation costs are only one part of the total investment.

The first-year budget should account for recurring expenses, tax obligations, employee costs, professional services, and operational requirements.

Identify the main financial obligations

Depending on the company’s activities and tax position, its financial plan may need to cover:

• Corporate income tax.
• Monthly withholding tax obligations.
• Value Added Tax (VAT), where applicable.
• Employee income tax administration.
• Accounting and bookkeeping.
• Annual tax reporting.
• Tax-related documentation and supporting records.
• Professional accounting and tax support.

Companies should also prepare an internal process for collecting invoices, recording transactions, reviewing expenses, and reconciling financial information.

Prepare for Coretax and tax administration

Indonesia’s tax administration uses the Coretax system. Companies should ensure that their tax administration, taxpayer information, authorized access, and reporting processes are properly prepared.

The finance team should establish clear responsibilities for:

1. Collecting and reviewing transaction documents.
2. Recording revenue and business expenses.
3. Calculating applicable tax obligations.
4. Preparing tax payments and returns.
5. Maintaining supporting documentation.
6. Monitoring filing deadlines.

For a more detailed explanation of corporate tax preparation, read Indonesia Corporate Tax Compliance: What Foreign Companies Should Prepare for 2027.

Companies that do not have an established local finance team may also consider professional Finance and Tax Services to support accounting, tax administration, and reporting.

5. Prepare Your First Indonesian Workforce

Recruitment should be planned alongside the company’s operational launch. Hiring employees before defining the workforce structure can create unnecessary costs and employment compliance risks.

Foreign investors should first determine which positions are essential during the initial operating period.

Define the initial team structure

A new business may need employees in areas such as:

• Business development and sales.
• Administration and operations.
• Finance and accounting.
• Human resources.
• Customer support.
• Technical or industry-specific functions.

The company should also determine which responsibilities can be handled by its regional headquarters and which require employees based in Indonesia.

Prepare employment arrangements

Before hiring, establish the employment documentation and policies required for the workforce.

Review the following:

• Employment agreement type, including PKWT or PKWTT where applicable.
• Job descriptions and reporting lines.
• Salary structure and payment arrangements.
• Working hours and overtime policies.
• Leave entitlements.
• Company regulations or collective agreements, where required.
• Employee personal data and payroll documentation.
• Termination and employment administration procedures.

Employment arrangements should comply with Indonesian labor regulations. Foreign companies should not simply transfer employment contracts or HR policies from their home country without reviewing local requirements.

For additional guidance, see Indonesia Employment Law: What Foreign Companies Must Change in Their HR Policies.

If a company needs to hire local employees before establishing its own Indonesian employing entity, it may also evaluate whether an Employer of Record arrangement is suitable for its circumstances.

6. Budget for Payroll, THR, and Employee Benefits

Payroll planning should cover more than monthly salaries. Employers must account for statutory benefits, social security contributions, and religious holiday allowances.

This is particularly important when preparing a 2027 workforce budget because employees may observe different religious holidays throughout the year.

Include THR in the annual payroll budget

Under Minister of Manpower Regulation No. 6 of 2016, employers are required to provide Religious Holiday Allowance, commonly known as Tunjangan Hari Raya (THR), to eligible employees.

The regulation covers employees working under both fixed-term and indefinite-term employment agreements, subject to the applicable eligibility conditions.

The general calculation is:

• Employees with at least 12 months of continuous service are entitled to one month’s wages.
• Employees with at least one month but less than 12 months of continuous service receive a proportional amount, calculated based on their length of service.

The proportional calculation is:

THR = (Length of service in months ÷ 12) × One month’s wages

THR must be paid no later than seven days before the employee’s respective religious holiday. Employers should also observe the applicable payment rules and ensure the allowance is paid in full.

The relevant holiday is based on the employee’s religion. Therefore, companies should not prepare their THR budget only around Eid al-Fitr. Other religious holidays may also affect the company’s payroll schedule.

For 2027 planning, HR and finance teams should:

• Maintain accurate employee religious holiday information for legitimate HR administration.
• Identify the applicable religious holiday for each employee.
• Estimate THR based on employee length of service and applicable wage components.
• Prepare sufficient cash flow before the payment deadline.
• Coordinate payroll processing with the relevant holiday calendar.
• Monitor official government announcements and any updated implementation guidance.

The legal reference is Minister of Manpower Regulation No. 6 of 2016 on Religious Holiday Allowance.

Account for other employee benefits

The annual workforce budget should also consider:

• BPJS Kesehatan contributions.
• BPJS Ketenagakerjaan contributions.
• Overtime payments, where applicable.
• Paid leave and other statutory entitlements.
• Recruitment and onboarding costs.
• Payroll administration and HR support.

Companies should calculate these costs before finalizing the annual hiring plan.

For assistance with monthly payroll administration, review BigFish Payroll Services.

7. Register Employees and Organize Social Security Administration

Employers must prepare the required social security administration when hiring employees in Indonesia.

The relevant programs include BPJS Kesehatan and BPJS Ketenagakerjaan, subject to the applicable participation requirements.

Prepare BPJS registration

The employer should establish a process to:

• Register the company as an employer.
• Register eligible employees.
• Submit accurate employee information.
• Calculate and pay applicable contributions.
• Update employee information when changes occur.
• Maintain contribution and registration records.

BPJS Ketenagakerjaan explains that employers are required to register themselves and their workers in accordance with the applicable social security programs. More information is available through the official BPJS Ketenagakerjaan website.

Connect HR administration with payroll

Employee registration, payroll calculations, and monthly reporting should use consistent employee information.

A mismatch between HR records and payroll data can lead to incorrect contributions, payment discrepancies, and administrative problems.

Companies without a dedicated local HR department may consider HR Hosting Services to support recurring HR administration.

8. Plan Immigration and Work Authorization for Foreign Employees

Some foreign investors intend to relocate directors, managers, technical specialists, or other employees to Indonesia.

Before arranging travel or assigning work, the company should determine the correct immigration and manpower requirements for each individual.

Review foreign worker requirements

The use of foreign workers is regulated in Indonesia. Depending on the position and circumstances, employers may need to prepare:

• The relevant foreign worker utilization plan (RPTKA), where required.
• Employer and foreign worker documentation.
• Applicable compensation fund payment (DKPTKA), where required.
• The appropriate visa and stay permit.
• Position and employment information.
• Reporting and other applicable administrative obligations.

The company should also check whether the proposed position is eligible for foreign workers and whether any specific requirements apply.

The main regulatory references include Government Regulation No. 34 of 2021 on the Use of Foreign Workers and its implementing regulations.

A business should not assume that holding a business visa or being a company director automatically authorizes an individual to perform employment activities in Indonesia.

For support with the relevant immigration process, foreign companies can review BigFish Visa Services.

9. Prepare the Infrastructure for Your First Business Transaction

Once the company has addressed its legal, licensing, financial, and workforce requirements, it should prepare the operational infrastructure needed to serve customers and manage daily activities.

This stage is often overlooked because investors focus heavily on incorporation and licensing.

However, a company that has completed its registration may still face delays if its internal operating processes are not ready.

Review operational readiness

Before the first commercial transaction, check whether the company has:

• A suitable business address and office arrangement, where required.
• A corporate bank account and payment process.
• Accounting and bookkeeping procedures.
• Customer contracts and standard commercial documents.
• Vendor and supplier agreements.
• Internal approval procedures.
• Document storage and recordkeeping systems.
• Customer service and communication channels.
• Data protection and access management procedures.
• A clear process for handling invoices and payments.

The exact requirements depend on the business model. A consulting company, trading business, manufacturer, and technology company will not necessarily need the same operational infrastructure.

The objective is to ensure that the company can conduct its intended activities without avoidable administrative delays.

10. Follow a Practical 90-Day Expansion Roadmap

A structured implementation plan helps foreign investors turn preparation into measurable progress.

The following roadmap is an illustrative planning framework. Actual timelines depend on the business sector, licensing complexity, document readiness, and government processing requirements.

Days 1–30: Establish the foundation

Focus on decisions and documentation.

• Confirm the market-entry strategy.
• Review KBLI classifications and foreign investment conditions.
• Prepare shareholder and company documents.
• Plan the company structure and capital requirements.
• Begin incorporation and licensing preparation.
• Establish an initial operating budget.
• Identify the first workforce requirements.

Expected outcome: The company has a defined market-entry model and a clear legal, financial, and operational preparation plan.

Days 31–60: Complete core administrative preparations

Focus on licensing, finance, and workforce readiness.

• Progress company incorporation and required licensing.
• Review OSS requirements and supporting approvals.
• Prepare tax administration and accounting processes.
• Finalize employment documentation and HR policies.
• Prepare payroll and THR budgeting.
• Organize BPJS registration requirements.
• Assess foreign worker and immigration requirements.

Expected outcome: The company has progressed through its core administrative setup and understands the remaining requirements before operating.

Days 61–90: Prepare for operational launch

Focus on execution and internal coordination.

• Confirm the status of required business licenses.
• Complete outstanding operational approvals.
• Finalize employee onboarding.
• Test payroll and financial workflows.
• Prepare customer and vendor documentation.
• Confirm banking and payment arrangements.
• Establish internal reporting and compliance monitoring.
• Review launch readiness with management.

Expected outcome: The company has a coordinated operating structure and is ready to begin the business activities permitted by its licenses and approvals.

11. Expansion Risks Foreign Investors Often Overlook

Even well-prepared companies can encounter problems when legal requirements and operational decisions are handled separately.

The following risks deserve attention during the expansion process.

Choosing an unsuitable KBLI classification

A mismatch between registered business activities and actual operations can create licensing and compliance problems. Review the company’s intended activities before selecting its KBLI codes.

Assuming incorporation means full operational approval

Company establishment and business licensing are separate parts of the process. Check whether additional Standard Certificates, business licenses, or sector-specific approvals are required.

Underestimating employment costs

Monthly salaries are not the only workforce expense. Employers should budget for THR, BPJS contributions, overtime, and other applicable employment entitlements.

Using foreign employment policies without local review

Employment contracts, leave policies, working hours, and termination procedures should be reviewed against Indonesian labor requirements.

Delaying tax administration

Companies should prepare their accounting and tax processes before transactions begin. Poor documentation can make later tax reporting more difficult.

Treating immigration arrangements as a last-minute task

Foreign employee assignments should be reviewed before relocation or work activities begin. Visa and work authorization requirements depend on the individual’s actual activities and circumstances.

Failing to assign compliance responsibilities

A company should identify who is responsible for licenses, tax reporting, payroll, HR administration, and document management. Without clear ownership, important obligations may be missed.

12. How BigFish Global Consulting Supports Business Expansion in Indonesia

Entering Indonesia involves multiple administrative and operational workstreams. Foreign investors may need support with company establishment, business licensing, workforce management, payroll, tax administration, and immigration.

BigFish Global Consulting supports businesses that need assistance navigating these requirements and organizing their local operations.

Depending on the company’s needs, support may include:

• Legal Services: Support with company establishment and legal administration.
• Employer of Record (EOR): Workforce engagement support for eligible businesses that need to hire local employees.
• HR Hosting: Ongoing HR administration and employment support.
• Payroll Services: Payroll processing and related administration.
• Finance and Tax Services: Accounting, financial administration, and tax support.
• Visa Services: Immigration and visa-related assistance for eligible foreign employees and business personnel.

The appropriate service depends on the company’s operating structure, business activities, and regulatory requirements. These services should be evaluated as part of a broader market-entry plan rather than treated as substitutes for licenses or approvals required by law.

Conclusion: Prepare Your Indonesia Expansion Before the First Transaction

A successful expansion into Indonesia requires coordinated preparation across investment, legal, licensing, finance, HR, payroll, immigration, and operations.

For foreign investors planning to enter the market in 2027, the most effective approach is to identify the applicable requirements early and connect them to a realistic implementation schedule.

Use this Indonesia Business Expansion Checklist as a starting point, but remember that the exact requirements depend on the company’s KBLI classifications, ownership structure, sector, workforce, and intended business activities.

With the right preparation, foreign companies can reduce administrative delays, manage operating costs more effectively, and build a stronger foundation for long-term business operations in Indonesia.