Indonesia: Operating a Business

Perseroan Terbatas or PT (private limited company)

Number of partners: Minimum 2 shareholders. Must have a minimum of 1 director and 2 local Indonesian shareholders.
Capital (max/min): Minimum IDR 50 million
Shareholders and liability: Liability is limited to the amount contributed.

Penamam Modal Asing (limited company open to foreign investment - PT PMA)

Number of partners: Minimum 2 shareholders.
Capital (max/min): Investment plan of 10 billions IDR, of which 25% must be released when the company is founded.
Shareholders and liability: Liability is limited to the amount contributed.

Preum-Perusahaan Umum (public limited liability company)

Number of partners: Minimum 300 shareholders.
Capital (max/min): Minimum IDR 3 billions
Shareholders and liability: Liability is limited to the amount contributed.

Business Setup Procedures

The Competent Organisation

To create a Perseroan Terbatas (PT), the competent organisation is the Bureau for the coordination of investments (BKPM). To create a Representative Office, the competent organisation may be, according to the sector of activity, the Ministry of Commerce, the Ministry of Finance, the Ministry of Public Works, or the Bureau for the coordination of investments.

For Further Information

Consult the Doing Business Website, to know about procedures to start a Business in Indonesia.
ICL Directory

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Recovery Procedures

Principle

The request for discharge must be made to the tribunal which declared the bankruptcy, as set out in Law n°37 of 2004 on bankruptcy and suspension of payments.

Minimum Debt-to-Capital Ratio Triggering Liquidation

None

Bankruptcy Laws

It is Law n°37 of 2004 on bankruptcy and suspension of payments which is applicable.

Reorganization and Rehabilitation Laws

Law n°37 of 2004 on bankruptcy and suspension of payments sets out the formalities for discharge.

For Further Statistics

The Indonesian Labor Market

For Further Information About the Labour Market

Portal for official information about Indonesia

Opening Hours

 

• Legal Weekly Duration

The legal duration of work is 7 hours a day and 40 hours a week for 6 working days in a week, or 8 hours a day and 40 hours a week for 5 working days in a week.

• Maximum Duration

After 4 successive hours of work, the employee must be given a rest period of half an hour.

• Night Hours

If work must be done at night, or if it is dangerous for the health or safety of the workers, the work must not exceed 6 hours a day or 35 hours a week.

Working Rest Day

After a week's work, the employee must be given a day of rest.

Paid Annual Vacation

After a year's work, the worker has 12 days vacation. After six consecutive years' work, the employee has 2 months' long term vacation (to be taken during the 7th and 8th years).

Retirement Age

55

Child Labour and Minimum Age For Employment

Employing children (under 14) is prohibited.
Employing young workers (aged 14 to 18) is only authorized for daytime work. They are not allowed to work in mines or quarries, or to carry out tasks harmful to their health or safety.

Informal Labour Market

Work in the non-agricultural informal sector represents 78% of non-agricultural jobs (UNDP 2007/2008 Report)

Pay

Minimum Wage

The minimum wage fluctuates a lot depending on provinces. In January 2022, the highest minimum wage was for Jakarta, at 4,641,854 rupiah per month (USD 322.10), an increase of 5.1% from 2021. The lowest minimum wage was for Central Java, at 1,812,935 rupiah per month, an increase of 0.78% from 2021.

Average Wage

The average salary in the country is around 12,100,000 IDR per month (USD 862) (Salary Explorer, 2022).

Other Forms of Pay

• Pay For Overtime

1.5 times the normal hourly rate for one hour's overtime, then twice the rate for the following hours.

Social Security Costs

The Areas Covered

Comprehensive social security schemes covering worker social security and healthcare are administered by the Badan Penyelengara Jaminan Sosial (BPJS). The schemes are mandatory for Indonesian nationals and foreigners who have worked in Indonesia for more than six months.

Contributions

Contributions Paid By the Employer: 0.24%-1.74% for work accident protection; 0.3% for death insurance; 3.7% for old age savings; 2% for pension; 4% for healthcare. The monthly income cap for pension contribution is updated annually. Since 1 January 2020, maximum salary cap for health insurance is IDR12,000,000.
Contributions Paid By the Employee: 2% of gross monthly earnings for old age insurance; 1% of gross monthly earnings for health insurance; 1% for pension. As of 1 January 2020, maximum salary cap for health insurance is IDR 12,000,000. The monthly income cap for pension contribution is updated annually.

Competent Organization

National Manpower Security Agency – BPJS Ketenagakerjaan
National Healthcare Security Agency – BPJS Kesehatan

Recruitment

Method of Recruitment

Recruitment is taking place more and more using Internet. A hiring interview is most often planned, but relations, contacts or references are very important.

Recruitment Agencies

A list of recruitment agencies is available on the website Kelly search Asia

Recruitment Websites

JobDB, Asia-Pacific recruitment website

The Contract

Dispute Settlement

Social Partners

Employer Associations

APINDO - Employers' Association of Indonesia
KADIN - BSD - Indonesian Chamber of Commerce and Industry

Social Dialogue and Involvement of Social Partners

We can mention the ASPEK Indonesia union.

Unionisation Rate

Less than 4% of the active population (formal and informal sectors) and 14% of the active population (formal sector).

Labour Unions

National Front for the Indonesian workers' struggle (FNPBI)

Regulation Bodies

National Portal of Indonesia with information about work market and regulations