Looking to consolidate regional assets or launch a multi-tiered investment strategy in Southeast Asia? As a business consultant with over 20 years of experience in FDI and manufacturing, I’ve seen firsthand how Indonesia’s holding company structure can offer flexibility and scale. The corporate structure of a holding company provides strategic management, financial oversight and operational efficiency, it’s a powerful vehicle for growth in the heart of ASEAN.

But the path to setting up a successful investment holding company in Indonesia is full of regulatory nuances. Missteps in legal alignment, ownership transparency or tax planning can quickly derail your plans or unravel your entire structure. As the parent company, a holding company oversees its subsidiaries, providing strategic guidance and centralised management.

Holding companies also enable business expansion by allowing acquisitions and supporting growth across different markets and industries. This guide will demystify the process, providing a clear roadmap to legally and strategically set up your investment holding company in Indonesia for 2025 and beyond. With on-ground expertise in Jakarta and a legacy of cross-border structuring projects, my team and I are here to help you build a foundation for long term success.

Key Points

• Strategic Hub: Indonesia is more than a standalone market; it’s a strategic anchor for regional capital consolidation and investment activities.
• Compliance is Non-Negotiable: The foundation of a successful holding company is a compliant structure, typically a Foreign Investment Company (PT PMA), with foreign ownership subject to specific regulations in Indonesia and strict adherence to Indonesia’s Ultimate Beneficial Ownership (UBO) disclosure rules. Per OJK Reg 13/POJK.03/2017 and OJK Circular 14/2018, all PT PMAs must report UBOs—any individual with ≥25% ownership or control—via the OJK registry and notify BKPM. Failure to comply can result in fines up to IDR 1 billion and suspension of corporate filings.
• Sector Access: Per Presidential Reg 10/2021 Appendix I and Investment Law 25/2007 Article 6, sectors are classified as ‘open’, ‘conditional’, or ‘prohibited’. Only ‘open’ sectors allow 100% foreign ownership; ‘conditional’ sectors require BKPM approval and may impose local‑partner or minimum capital conditions.
• Global Tax Alignment: As of 2025, Indonesia is aligning with global tax standards. Per MoF Reg 109/PMK.03/2023, the country enforces Pillar Two for multinational enterprises (MNEs) with revenues over €750 million, requiring an effective 15% minimum tax. PT PMAs must calculate their global effective tax rate (ETR) and remit any shortfall domestically to comply with Qualified Domestic Minimum Top-up Tax (QDMTT) obligations.
• Navigating regulatory hurdles: such as sector-specific restrictions and approval delays, is crucial for a smooth setup process.
• Capital and Repatriation Rules: Investors must meet minimum capital requirements, which, under Investment Law 25/2007 Art 6 and BKPM Reg 5/2021 Art 9, typically requires a planned investment value of no less than USD 700,000 for a PT PMA. This capital is paid into a blocked account, though a statutory floor of USD 100,000 exists for many activities. Investors must also understand Bank Indonesia’s rules on foreign exchange and dividend repatriation, which reflect the government’s focus on economic stability.
• Governance is Key: A holding company is a long term vehicle. Strong governance, including clear board structures, internal controls and risk management is essential to protect your assets and ensure sustainable growth.

Why Indonesia is a Good Base for Holding Companies

Choosing Indonesia as the base for your holding company is a strategic decision that puts you at the centre of regional growth. Holding companies in Indonesia contribute significantly to economic growth by managing multiple subsidiaries across various business sectors, overall development and diversification.

They also play a crucial role in structuring foreign investments and cross-border asset management, making Indonesia an attractive destination for international business expansion. It’s about leveraging the country’s economic gravity to your advantage.

Market and Regulatory Benefits

Indonesia has direct access to ASEAN’s largest economy, a market that continues to attract significant capital inflows. The country’s expanding network of double tax treaties provides a favourable environment for international investment, while increasing regulatory stability offers a more predictable operational landscape. New ownership disclosure rules are also enhancing transparency, which boosts investor confidence and credibility in the market.

But holding companies with influence over multiple businesses may face more regulatory scrutiny, so compliance and transparency is even more critical.

Investment Sectors Where Holding Structures Work Well

An investment holding company structure is particularly effective for managing diverse assets across various sectors. Holding companies often own multiple businesses, either as subsidiaries or through other business entities, to establish corporate control and manage a wide range of operations.

It’s ideal for:

• Consolidating ownership in real estate, infrastructure projects and joint ventures.
• Organising multi-brand retail or franchising groups under one corporate umbrella.
• Managing strategic shareholdings across high growth verticals like fintech, logistics and consumer goods.

Mixed holding companies operate in different sectors, leveraging synergies and diversification benefits, while pure holding companies solely own and manage other businesses without engaging in operational activities themselves.

Legal Entity and Ownership Structure Options

The foundation of a successful investment holding company is a compliant and transparent structure. Choosing the right legal structure, such as a corporation or LLC, is essential to ensure proper registration and liability protection. A holding company is a business entity that owns and controls other companies rather than engaging in commercial activities.

Get this right from the start is crucial for long term success and risk mitigation.The registration process for a holding company in Indonesia is similar to any other company, including foreign owned entities like PT PMA. Some foreign owned companies may have divestment obligations but these can be waived if Indonesian shareholders agree not to demand shares upon divestment.

Choosing the Right Entity Type

For foreign investors, the main choice is the PT PMA (Penanaman Modal Asing), a foreign owned limited liability company, as most foreign entrepreneurs prefer this structure due to its regulatory clarity and suitability for foreign investments. This entity provides a clear legal framework and is the standard for foreign investment. Some may consider local nominee arrangements but these come with significant risks and are not advisable. Depending on your strategy you may opt for a single holding company or a tiered structure with dedicated sub-entities for different assets or business lines, creating a clean and efficient organizational model.

Ultimate Beneficial Ownership (UBO) Disclosure in 2025

Indonesia has increased its focus on corporate transparency. Compliance with the Ultimate Beneficial Ownership (UBO) disclosure regulations is mandatory. This requires companies to identify and report their true beneficial owners to the authorities. The risks of non-disclosure are severe, ranging from a freeze on your company’s assets to the rejection of license applications. Make sure you have the proper documentation and adhere to the verification process is a critical compliance checkpoint, highlighting the importance of compliance with all legal and tax regulations to avoid penalties.

Register a Holding Company in Indonesia

Step-by-Step Registration Process

Registering a holding company in Indonesia requires a structured approach to ensure full compliance with local regulations. The process starts with choosing the right business structure. Most foreign investors opt for a Limited Liability Company (PT PMA) because it provides a clear legal framework and is the standard for foreign investment.

Under Indonesia's Investment Law 25/2007, as amended, and BKPM Reg 5/2021, a PT PMA is the prescribed vehicle for 100% foreign ownership. This entity must be registered with the Investment Coordinating Board (BKPM) and is subject to sectoral restrictions outlined in the Positive Investment List. It's important to note that nominee arrangements are not legally recognized in Indonesia.

Once the structure is chosen, the next step is to prepare and submit all necessary documents, including the company’s articles of association, to the relevant authorities. Approval from the Investment Coordinating Board is a key milestone, followed by registration with the local tax office to get the company’s taxpayer identification number.

This number is required for all future business operations and regulatory filings. Given the complexity of Indonesian regulations, many foreign investors benefit from engaging investment advisory services to guide them through the process and ensure everything is in order. Navigating the registration process with expert support can help avoid costly mistakes and set up your holding company in Indonesia.

Key Documents and Timelines

To register a holding company in Indonesia, investors need to prepare a complete set of documents. These include the company’s articles of association, proof of meeting the minimum share capital requirements and a detailed investment plan outlining the company’s business activities. The accuracy and completeness of these documents is crucial as any discrepancy can cause delay or even rejection of the application.

The registration timeline can take several weeks to a few months depending on the complexity of the company structure and the responsiveness of the authorities. Stay proactive and organized throughout the process. By having all documents in order and knowing the expected timeline, foreign investors can expedite the setup of their holding company and start business operations in Indonesia with confidence.

Business Activities and Management of a Holding Company

Permitted Activities and Restrictions

A holding company in Indonesia is established to own and control subsidiary companies, manage investments and provide strategic oversight across its portfolio. These companies play a key role in growth and streamlining operations by centralizing management and supporting the expansion of multiple subsidiaries. However holding companies are generally not allowed to engage in direct business operations that are outside of their purpose or scope of business licenses.

To be compliant, holding companies need to obtain all necessary business licenses and permits relevant to their business activities. Make sure all operations are in line with Indonesian laws and regulations and the company’s registered objectives. By understanding and adhering to these permitted activities and restrictions, holding companies in Indonesia can operate efficiently, support their subsidiary companies and maintain a good reputation with regulators and stakeholders.

Management Structure and Operational Best Practices

Operational best practices for holding companies include having transparent reporting systems, clear communication with subsidiary companies and robust internal controls. These will not only enhance operational efficiency but also maximize tax benefits and minimize risks. By having control through good governance and efficient management, holding companies can achieve their strategic goals, protect their assets and drive long term value for the whole group.

Holding Company Tax Considerations

A well structured holding company can offer tax efficiencies such as exemption on dividends passed between domestic subsidiaries. However you must manage withholding tax on income from foreign sources and structure operations to avoid creating an unintended Permanent Establishment (PE) which could trigger unforeseen tax liabilities.

A major development for 2025 is Indonesia’s implementation of global tax reforms. A Ministry of Finance regulation was issued to put the global minimum tax into effect as reported by Reuters in 2025. This aligns with the OECD’s Pillar Two model rules which applies to multinational enterprises with annual consolidated revenues exceeding €750 million.

As professional services firm EY noted in March 2025these rules introduce an Income Inclusion Rule (IIR) and a Qualified Domestic Minimum Top-up Tax (QDMTT) which will change the tax landscape for large international groups operating in the country.

Ongoing Compliance Obligations

Beyond tax, holding companies have continuous reporting duties. Per Investment Law 25/2007 Art 46 and BKPM Reg 5/2021 Art 14, PT PMAs must file an annual investment activity report to BKPM by March 31. Under Tax Admin Law 2019, the annual Corporate Income Tax (CIT) return is due by April 30. Late filing for either report can incur progressive administrative fines. Under MoF Reg 213/PMK.03/2017, PT PMAs with cross-entity transactions must prepare Transfer Pricing (TP) documentation (Master File & Local File) and submit Form DGT-1 annually, adhering to arm’s-length standards. Non-compliance can lead to TP adjustments and penalties up to 200% of the tax shortfall. Certain asset or revenue thresholds can also trigger mandatory financial audits.

Capital, Banking and FX Strategy

Efficiently managing capital flow is at the heart of any holding company. This includes everything from initial capitalization to the strategic repatriation of profits. As part of the holding company registration process, it is important to submit an investment project plan for approval to ensure compliance and facilitate regulatory acceptance.

Injecting Capital into the Holding

A PT PMA requires a minimum investment plan which typically requires a paid up capital of around USD 700,000. Investors can plan for staged capitalization to align with project milestones. It’s also important to maintain a healthy debt to equity ratio and structure any intercompany loans between a parent entity and the Indonesian holding company.

FX, Dividends and Repatriation

All foreign exchange transactions and capital flow are subject to Bank Indonesia’s reporting and transfer rules. While profits can be repatriated, investors must account for withholding tax and consider re-investment strategy. Indonesia’s regulation on capital flow such as rule requiring exporters to retain some earnings onshore as reported by China Briefing shows that the government is keen to maintain economic stability. Therefore a clear and compliant repatriation strategy is essential for any holding company.

Risk, Governance and Strategic Planning

An investment holding company is a long term vehicle. Its success relies on good governance and proactive risk management to protect against financial and legal vulnerabilities. Holding companies achieve risk diversification by spreading financial and operational risk across multiple subsidiaries, reducing overall risk. Strategic management is key to oversee subsidiaries and ensure the success of the whole corporate structure.

In addition to good governance, holding companies exercise control and control subsidiaries through ownership rights and management oversight, allowing them to direct management and operational decision within the group.

Key Risks for Investors

Investors must be aware of several risks. In addition to these, sector specific restrictions and approval delay can be significant challenge for foreign investors when establishing a holding company in Indonesia. Nominee arrangement is complex and questionable enforceability makes it a risky choice. Tax residency can also arise and can nullify the benefit of double tax treaty if not managed properly. Misaligned control rights between the board and shareholders especially in minority controlled subsidiaries can lead to dispute and value erosion.

Governance Essentials for Holding Success

Strong governance is your best defense against these risks. This includes:

• Careful director appointment and well defined board composition with clear fiduciary duties.
• Implementing rigorous financial audit, internal control and risk reporting mechanism.
• Ensuring strong legal protection are embedded in shareholder agreement especially when holding minority stake in subsidiaries.

Case Insight:

Structuring a Compliant Multi-Tier Holding Vehicle

I recently advised a family office to consolidate its ASEAN assets. Their goal was to have a tax efficient structure to support long term growth. By having centralized management in the multi-tier holding structure, the family office was able to apply consistent strategy and streamline operation across all subsidiaries, improve efficiency and resource allocation.

We designed a multi-tier vehicle with a fund in a strategic jurisdiction like Singapore as the top level parent, which then owned an Indonesian holding company. This Indonesian entity then held shares in various operating subsidiaries across real estate and consumer goods sectors. This tiered structure allowed for clear asset segregation and optimized tax and repatriation strategy across different jurisdictions.

Why Investors Choose Viettonkin for Holding Company Setup

Designing and implementing a holding company requires a partner with regional vision and local precision. Holding company benefits in Indonesia include liability limitation, asset diversification and increased flexibility for investors, so it’s important to structure your holding company with professional help.

End-to-End Structuring Support

My team provides support for every stage of the process including:

• Entity selection, governance drafting and nominee protection strategy.
• Manage all regulatory filings and ensure full UBO compliance.
• Set up post launch tax framework and internal audit process.

Regional Advantage, Local Precision

With offices in all major ASEAN jurisdictions and over 2,000 successful projects, we are trusted by Fortune 500 companies and high net worth individuals. Our strength lies in combining broad regional perspective with deep on the ground local expertise.

A holding company primarily owns subsidiary companies and is not actively involved in the day to day activities or conduct business operations of those subsidiaries. Instead, its main focus is on oversight, asset management and exercising control through ownership rights, while operational matters are handled by the management teams of each subsidiary company.

Indonesia is a powerful and strategic base for your investment holding company – if done right. The opportunity to unlock growth is massive. Partner with us to design, launch and govern your Indonesia holding structure with regulatory clarity and long term vision. Our team of legal, tax and FDI specialists is here to deliver a structure you can scale with confidence across ASEAN and beyond.

Also read: Understanding Types of Business Entities in Indonesia