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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
For investors and entrepreneurs planning to start a trading company in Indonesia, understanding the legal requirements is important for compliance with local laws and smooth business operations.
This guide covers the essentials of how to start a trading company in Indonesia, covering key requirements, mandatory licenses, and process.
Can Foreigners Start a Trading Company in Indonesia?
Yes, foreigners can start and own 100% of a trading company in Indonesia. However, the business must operate within sectors open to foreign ownership as per the Positive Investment List.
In recent years, Indonesian authorities have lifted foreign ownership restrictions from various sectors. For instance, the wholesale trade/ distribution was limited to 67% foreign ownership but is now open to 100% foreign ownership.
You can book a free consultation with our local experts to discuss your plans. They will advise you on the most appropriate business classification (KBLI)
Key Requirements for a Trading Company in Indonesia
Before you start your trading business, it’s important to understand the fundamental requirements for establishing a trading company in Indonesia:
- Legal Entity: Foreign investors can set up a PT PMA (Perseroan Terbatas Penanaman Modal Asing), which is a foreign-owned limited liability company. Keep in mind that whether the company has 1% or 100% foreign ownership, it is legally referred to as a PT PMA. For local owners, it is advisable to register a PT company.
- Minimum Capital: The minimum paid-up capital requirement for a foreign-owned trading company is at least IDR 2.5 billion (approximately USD 150,000) per business activity classification code (KBLI). For a local company, the minimum capital requirement starts from 51 Million IDR (approximately USD 3500) depending on the size of operations.
- Shareholders: A PT or PT PMA requires a minimum of two shareholders. These can be individuals, companies, or both.
- Directors and Commissioners: The company must appoint at least one director and one commissioner. While these roles can be filled by foreigners, one of them must be a resident of Indonesia to facilitate local operations.
- Business Address: You must provide a valid business address. If your office is in Jakarta, then it is mandatory to have this address in a commercial area. Outside Jakarta, it can be any area but the building must not be a residential house.
Licenses and Permits for Trading Companies in Indonesia
Licenses and permits for trading companies in Indonesia can be categorized into three main types:
1. Trading Business License (SIUP)
SIUP (Surat Izin Usaha Perdagangan), also known as Trading Business License in Indonesia, is a mandatory license for companies that plan on engaging in trading activities. It serves as official proof that a company has been granted permission by the government to conduct trading operations. The SIUP is issued by the local government trade office.
There are 4 different types of SIUP licenses depending on the business size:
| SIUP Type | Company Net Worth (IDR) |
|---|---|
| Micro SIUP | Less than 50 million |
| Small SIUP | 50 million – 500 million |
| Medium SIUP | 500 million – 10 billion |
| Large SIUP | Over 10 billion |
Note that the net worth amounts do not include the value of land and buildings owned by the company.
2. Activity-Specific Licenses for Trading Companies
Depending on your trading activities, you might need additional licenses such as:
- API-U (General Import License): For companies importing finished products for trading purposes. This is typically integrated into your NIB if you’ve registered the correct KBLI codes.
- API-P (Producer Import License): For manufacturing companies importing raw materials or supporting goods for production.
- Export License: Required for companies engaged in export activities, usually obtained through the Indonesia National Single Window site.
3. Product-Specific Licenses for Trading Companies
These vary based on the types of products you’re trading:
- BPOM Certification: Similar to FDA registration in various countries, businesses in Indonesia require BPOM registration for food, beverages, cosmetics, and pharmaceutical products.
- SNI (Indonesian National Standard) Certification: Needed for certain products like textiles and footwear to ensure they meet Indonesian National Standards.
- Halal Certification: As per new guidelines, obtaining a halal certificate is mandatory in Indonesia for a wide range of products including food and beverages, drugs, and cosmetics. There are exceptions for products that are explicitly forbidden in Islam (haram) such as pork, alcohol, etc.
- Import Approval (Persetujuan Impor): Necessary for certain restricted goods, ensuring they meet health, safety, and environmental standards.
How to Start a Trading Company in Indonesia
Here’s the step-by-step process to start a trading company in Indonesia
Step 1: Trading Company Registration with the Ministry of Law and Human Rights
To start your trading operation in Indonesia, the first step is to register your trading company with the Ministry of Law and Human Rights.
The registration process requires the following:
- reserving a company name
- preparing the Articles of Association with a notary
- Obtaining Ministry approval
For foreign-owned companies (PT PMA), a minimum paid-up capital of at least IDR 2.5 billion is required.
Step 2: Register for Taxes
After company registration, you need to obtain a Tax Identification Number (NPWP) from the local tax office. If your annual turnover exceeds IDR 4.8 billion, you must also register for Value Added Tax (VAT).
Step 3: Obtain the Business Identification Number (NBI)
Next, apply for a Business Identification Number (NIB) through the Online Single Submission (OSS) system.
The NIB acts as your primary business license, replaces the Company Registration Certificate (TDP) and automatically registers your business for social security programs (BPJS).
It’s a prerequisite for most subsequent business activities, including securing additional sector-specific licenses, applying for work visas, and participating in tenders.
Step 4: Secure Operational Licenses for Your Trading Company
Once you have the mandatory permits, you will need to secure operational licenses depending on your planned activities and industry.
For instance, if you want to import food products, you will need to have the general import license (API-U), BPOM distribution certificate, and Import notification letter (SKI). Similarly, if your business is focused on wholesale/retail of baby clothes and footwear, you will additionally need to obtain the SNI certification.
The timeline for obtaining these licenses varies depending on the specific requirements, ranging from a few weeks to several months for more complex approvals.
Start Your Trading Business in Indonesia with Emerhub
Starting a trading business in Indonesia requires a thorough understanding of local regulations and several other aspects.
Emerhub’s local experts make this easier for you by handling the entire process on your behalf. We offer:
- Company registration and setup
- securing mandatory and activity/product specific licenses and permits
- Monthly operational assistance, including compliance reporting, bookkeeping, and payroll services
- Local nominee director or commissioner for initial registration, if required
Fill out the form below and we will put you in touch with one of our local experts.
