General Information Banking
Business Etiquette Tips Embassy Locations and Registration
Employment-Legal Requirements Entry and Exit Requirements
Intellectual Property Legal and Registration of a Business Entity
Safety and Crime Taxes

General Information

Indonesia Indonesia is the world's largest archipelagic state consisting of more than 17,500 islands spread over 3,400 miles along the equator. As home to more than 300 ethnic groups, it also ranks as the world's fourth-largest country. 

A 1,500 year-old country with a rich history, Indonesia embraces numerous unique cultures, and it continues to be a popular tourist destination. As home to the world's largest Muslim population, Islamic interests play a large role in the country's foreign policy decisions. 

Indonesia held its first democratic elections in 2004 and elected its first president and vice president into office by popular vote.  Indonesia and the United States both share the common goal of maintaining peace, security, and stability in the region and engaging in dialogue regarding threats to regional security. 

Indonesia's geographic location between Australia and Asia as well as its topography (which includes 400 volcanoes, 100 of which are active) make the country prone to natural disasters and heavy seismic upheaval. In recent years, natural disasters have devastated many areas of the country and left thousands homeless, making the alleviation of poverty a top concern for the new government. 

In spite of numerous setbacks, the country has made significant strides in economic development, and it has introduced reforms geared toward increasing foreign investment and streamlining the process to make it more attractive. If its current growth continues, Indonesia is slated to become the world's 14th largest economy by 2025.

There may be political unrest and/or targeted crime against visitors to the country.  Travelers should check with the U.S. State Department Web site for current travel safety information.

Major Cities Capital: Jakarta (estimated population 8.8 million).
Major cities: Surabaya, Medan, and Bandung.
Official Currency Indonesia's official currency is the Indonesian rupiah (IDR).
Time Zone UTC+7 (12 hours ahead of Washington, D.C. during Standard Time). Note: Indonesia is divided into three time zones.
Language Bahasa Indonesia (official, modified form of Malay).  English, Dutch, and local dialects (the most widely spoken of which is Javanese). English is the most widely spoken foreign language.

Legal System and Government

Type of Legal System

The Indonesian legal system is based on Roman-Dutch law, but it is substantially modified by indigenous concepts, new criminal procedures, and election codes. It has not accepted compulsory International Court of Justice (ICJ) jurisdiction.

Form of Government

Independent republic with a constitutional democracy and an executive president.



The Indonesian central bank, Bank Indonesia, announced plans in January 2005 to strengthen the banking sector by encouraging consolidation and improving prudential banking and supervision.

Available Banking Services

Online banking
Banking in English
Overdraft protection

Bank Holidays

New Year's Day 
El am Hejir New Year 
Chinese New Year 
Nyepi Day (Balinese New Year)
Prophet's Anniversary (Eid-Milad Nnabi)
Good Friday 
Hindu, Lao, Navratra, Songkran, Tamil,
Telugu, and Ugadi New Year 
Ascension Day 
Vesak-Buddha Purnima-Visakha Bucha 
Ascension of Mohammed
Independence Day 
Banks Closed 
End of Ramadan
Eid-ul-Adha (Feast of the Sacrifice)
Christmas Day
El am Hejir New Year

U.S. and Other Major Banks in Country

Citi is one of the largest foreign banks in Indonesia with the largest credit card (1.6 million) customer base. There are numerous branches with ATMs in the six major cities: Jakarta, Surabaya, Bandung, Medan, Semarang, and Denpasar.

(Note:  Addresses and contact information subject to change.)

Bank of Indonesia (Central Bank)
Jl. M.H. Thamrin 2
Jakarta 10350
Phone: (62-21) 381-7317
Fax:  (62-21) 350-1867

Citibank Landmark
Landmark Building
Jl. Jendral Sudirman 1
Jakarta 12910

Standard Chartered Bank - Wisma
Jl. Jend. Sudirman Kav. 33 A
Jakarta 10220
Phone: 62 2157999000
Fax:  62 215721234


Business Etiquette Tips

Business Attire

Indonesia is a conservative environment, and lightweight business suits and conservative attire is recommended for both men and women. 

Business Negotiations

Indonesia is a hierarchical society that prefers building relationships face-to-face prior to conducting meetings. To encourage frankness and avoid miscommunication (Indonesians are uncomfortable delivering bad news) it is important to establish a strong personal relationship.  Of equal importance is the concept of "saving face." The Indonesian approach to time is known as "Jam Karet" (rubber time), meaning that everything has its time and place. Time will not bring money. Good relations and harmony will.

Proper Greetings

When handed a business card, treat it with respect and carefully examine the name, titles, and business affiliation before putting it in a business card case or on the table next to you. Typical greetings may include shaking of hands accompanied with a slight bow (or placing one's hands over your heart) to show respect. During introductions you will often be introduced to the eldest or most senior person first.

Public and Social Behavior

Generally Indonesians are indirect communicators who speak quietly and in subdued tones. The listener must read between the lines and pay attention to gestures and body language to understand the nuances of what is not being said in order to fully absorb the real message.


Embassy Locations and Registration

Americans living or traveling in Indonesia are encouraged to register with the nearest U.S. embassy or consulate through the State Department's travel registration Web site so that they can obtain updated information on travel and security within Indonesia. Americans without Internet access may register directly with the nearest U.S. embassy or consulate. By registering, American citizens make it easier for the embassy or consulate to contact them in case of emergency.

(Note:  Addresses and contact information subject to change.)

Embassy of Indonesia in Washington, D.C.
2020 Massachusetts Avenue NW
Washington, D.C. 20036
Phone:  202-775-5200
Fax:  202-775-5365

U.S. Embassy in Jakarta
Jl. Medan Merdeka Selatan No. 5
Jakarta Pusat 10110
Phone: 62 (21) 3435-9054 or 9055
Fax:  62 (21) 385-7189


Employment-Legal Requirements

Firms employing foreigners (expatriates) are required to submit a manpower report to the Ministry of Manpower and Transmigration and receive approval from the Investment Coordinating Board.  Employment of foreigners is permitted only in positions that cannot be filled by Indonesians and only if training is provided so that Indonesians can eventually replace the expatriates. 

If a work agreement for an unspecified period of time is made verbally, the employer is under an obligation to issue a letter of appointment (surat pengangkatan) for the employee. Letters of appointment should include, at a minimum, information on the name and address of the worker or employee; the date the worker starts; the type of job or work that the worker is supposed to do; and the wage the worker will be paid. Labor contracts are common, and they can be renewed from one to three years.

A standard work week is 40 hours per week broken down into either a five- or six-day week. Overtime of no more than three hours per day up to a maximum of 14 hours per week is permitted. In practice, a three-month probationary period is included in all employment contracts, during which time employment may be terminated by either party with no further obligations due. 

Terminating Employees

Employers intending to terminate a contract must first attempt to reach an agreement with the employee.  If an agreement is reached, documentation must be submitted to the local labor court. If an agreement cannot be reached, the dispute must move on to mediation with an outside mediator, and finally to the labor court. This system is still fairly new to Indonesia and not yet widely enforced despite best efforts. 

Indonesian law requires a 30-day notice for termination of a contract. Termination because of labor activities, religious activities, political activities, marriage, pregnancy, childbirth, or illness of less than one year is prohibited by law.

Termination procedures in Indonesia can be an expensive proposition. Under some circumstances, employers must pay compensation for time worked, severance pay, and service pay. Calculating severance pay is also complicated. Generally, severance pay is calculated at one month of salary for employment of less than one year with an additional month of salary added for each full year completed. Upon completion of a full year of employment, for example, two months of salary is to be paid. Three months is due upon completion of two years of employment, and so on. 

Legally Mandated Benefits and Leave

Annual leave - 12 days (after 6 years a worker is entitled to one month of leave and 2 months of leave in the 7th and 8th years). 

Maternity leave - 1.5 to 3 months (1.5 to 3 months before and 1.5 months after birth). The law also permits a maximum 3-month extension before the expected date if a request is accompanied with a medical certificate.

Additional leave includes national holidays, religious observations, family obligations (including marriage), and sick leave.  Employees are also entitled to a one-month bonus before the Lebaran holiday (Ramadan).  Female employees may not be obligated to work on the first and second days of their menstrual periods.


Entry and Exit Requirements

American citizens are required to have a visa to enter Indonesia. U.S. citizens may apply for a visa on arrival at several airports, including Jakarta. An onward/return ticket is required to apply for an entry visa at these Indonesian ports of entry.  The Indonesian government requires a passport valid for at least six months from the date of arrival to enter the country. Indonesian authorities regularly deny entry to all foreign nationals who arrive with less than six months validity on their passports. The U.S. embassy cannot obtain entry permission for Americans in this situation.

Indonesian visas require an entire passport page. Travelers without a blank visa page in their passport may be denied entry. Additional visa pages may be added in the United States through a passport agency or at most U.S. embassies and consulates. All visas received on arrival are nonexpendable. Travelers must exit the country to be able to purchase another visa on arrival. Travelers are strongly advised to purchase the 30-day visa on arrival to avoid problems if travel plans change unexpectedly.

U.S. citizens may also apply for a visa at the Indonesian embassy in Washington, D.C. or at an Indonesian consulate in the United States. In some cases, U.S. citizens may also apply at Indonesian embassies and consulates in other countries. A visitor's visa for business purposes and social/cultural stays of longer duration require a letter of intent/sponsorship from the Indonesian employer and/or sponsor.

Indonesia strictly enforces its immigration/visa requirements, and travelers have been jailed for visa violations and/or overstays. Volunteer work with local or international NGOs is not permitted on tourist visa status. Penalties for such immigration/visa violations may include a prison sentence of up to five years and a fine of 25 million rupiah. Travelers are encouraged to contact an Indonesian consular office to determine the appropriate visa category before traveling to Indonesia. All airline passengers, including children, are subject to a departure tax, which must be paid in cash (rupiah).

Visa stays range from up to 60 days to long-term multiple entry stays up to 365 days long. Processing time typically takes three to five business days. But it is recommended that application be made two to four weeks in advance.

Important: There are three regions (Aceh, Maluku, and Irian Jaya or West Papua) in Indonesia that applicants cannot visit without special permission and approval.  Travelers who wish to enter the restricted regions must obtain special authorization from Indonesian authorities, and they should advise their embassy or consulate generals about any intention to do so. It may take two weeks or longer for such permission to be granted (or denied). Visitors that enter these regions without permission are subject to arrest, detention, and will be prosecuted according to Indonesian law.


Intellectual Property

Nature of Rights and Available Protection


Indonesian patent law provides two types of patents. A standard patent is granted for a period of 20 years. It cannot be extended and commences from the filing date. A simple patent is granted for a period of 10 years. It cannot be extended and commences from the filing date.

Unless proven otherwise, those who are first declared as the inventor in the application are deemed the inventor.  Unless agreed otherwise in an employment contract, the party entitled to obtain a patent on an invention produced is the one who has commissioned the work.


A mark is a sign in the form of a picture, name, word, letters, figures, composition of colors, or a combination of these elements that has distinguishing features and is used in the activities of trade in goods or services. Trademark means a mark that is used on goods traded by a person, several persons jointly, or a legal entity to distinguish the goods from other goods of the same kind. A mark is granted for a 10-year period from the filing date and may be renewed for an additional 10-year period if applied for within 12 months of the original expiration date.

A service mark is used for services traded by a person, several persons jointly, or a legal entity to distinguish the services from other services of the same kind.

A collective mark is used on goods and/or services having the same characteristics that are traded jointly by several persons or legal entities to distinguish the goods and/or services from others of the same kind.

An application with a priority right must be filed within a period of six months at the latest, commencing from the first Filing Date of the Application in another country, which is a member of the Paris Convention for the Protection of Industrial Property or a member of the World Trade Organization.


Science, arts, and literature works are protected including books, computer programs, pamphlets, typographical arrangement of published works, all other written works, and other forms of art, expression, photography, or architecture.

Copyrights are generally valid for 50 years as of the first publication.


Patent infringement carries both civil and criminal penalties enforced within the Commercial Court for Civil Cases. Typical enforcement steps include sending a cease-and-desist letter to the infringer followed by a lawsuit if behavior has not stopped. 

Alternative dispute resolution is also available through mediation, arbitration, or conciliation.


Legal and Registration of a Business Entity

Registration Formalities (Including Timing)

The length of time to set up a business in Indonesia takes approximately a month and a half, though it can take longer. Steps are being put into place to reduce the process to 30 days.  Some common forms of business organization include representative offices (trading, public works, or regional representative office), limited liability companies, and joint ventures. Foreigners are permitted to lease and own land in Indonesia, but there are a number of restrictions to doing so. Legal advice should be sought prior to leasing or purchasing land or buildings.

The World Bank lists 9 steps to establish a business in Indonesia. 

They are presented here in streamlined form:

  1. Obtain the standard form of the company deed ; arrange for a notary electronically; obtain clearance for the Indonesian company's name at the Ministry of Law and Human Rights.
  2. Notarize company documents before a notary public.
  3. Obtain a certificate of company domicile from the local municipality..
  4. Pay the State Treasury for the non-tax state revenue (PNBP) fees for legal services at a bank. 
  5. Apply to the Ministry of Law and Human Rights for approval of the deed of establishment.
  6. Apply at the One Stop Service for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP) and the company registration certificate (Tanda Daftar Perusahaan/TDP).
  7. Register with the Ministry of Manpower.
  8. *Apply for the Workers Social Security Program (Jamsostek Program).
  9. *Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP). 

* Takes place simultaneously with another procedure. 

(Source:  The World Bank Doing Business - Indonesia) 

The Embassy of Indonesia lists several useful links on their Web site for governmental offices and agencies. But unfortunately many are not in English. One site that may be of assistance is the National Government Portal for Indonesia.


Safety and Crime

Terrorism attacks may occur in Indonesia, and there is a continued threat of demonstrations and other violent actions that may affect travelers.  Check the U.S. State Department Web site for the most current information about travel safety to Indonesia. 

Credit card fraud and theft is a serious and growing problem in Indonesia, particularly for westerners. Travelers are advised to either minimize their use of credit cards or keep a close watch on their credit card numbers at all times.  Crimes of opportunity such as pickpocketing and theft occur throughout the country.

When hiring a taxi, either in the city or at the airport, it is recommended to use one either from a major hotel queue or by calling a reputable taxi company instead of hailing one off the street.  Criminals in Jakarta regularly rob customers in taxis painted to look like taxis from reputable companies. Booking taxis by telephone directly from the company is the best way to avoid falling victim to this crime.



Individual taxpayers who do not have a Tax Identification Number (NPWP) will be subject to higher income tax withholding than the normal rate. A tax exemption may apply to individuals (including their family members but excluding children above 21 years old) who have an NPWP. Those who do not have an NPWP may be required to pay an additional exit tax. Check with the local tax authority or tax professionals as the tax structure may have changed.

A double-taxation agreement does exist between Indonesia and the United States. The tax year in Indonesia follows the traditional calendar year starting January 1st and concluding December 31st. 

Individual and Employee Taxation

Determining Tax Residence

Individuals present for more than 183 days in a 12-month time frame or who have a physical presence they intend to maintain are considered residents and will be taxed on any income obtained worldwide.

Nontax Resident Employees

Nonresidents do not need to register for tax purposes as they are not required to pay taxes provided they are not employed within the oil and gas sector. Employees within this sector will be assessed taxes based upon their titles. Nonresidents are typically taxed a flat rate, though the rate can vary depending on specific or unusual circumstances. 

Employee Taxes

In 2009 Indonesia implemented a reduction in income taxes levied on individuals and corporations.  The current tax rates for individuals are listed below can be found on the Republic of Indonesia Ministry of Finance Web site.

Corporate and Employer Tax Obligations

Businesses are responsible for payment of the following taxes: corporate tax, social security contributions, value-added tax, and an employer's health insurance tax.  Specific rate information can be found on the Republic of Indonesia Ministry of Finance Web site. 


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