Indonesia is increasingly recognized as a strategic destination for Chinese manufacturers seeking to diversify production and expand across Southeast Asia, fostering confidence in the opportunity.
However, turning that opportunity into an operating factory requires more than investment planning. Companies must first secure the right business registration, OSS licensing, environmental clearance, and industrial zoning approval.
This guide explains where Chinese manufacturing investments will go in 2026. It highlights which industrial sectors are best for different types of production. It also outlines the steps companies need to take to go from registration to factory operations in Indonesia.
Key Takeaways
- In November 2025, Indonesia and China signed 16 industrial cooperation MoUs worth IDR 36.4 trillion across the metals, textiles, batteries, drones, and AI sectors.
- In Q1 2026, China became Indonesia’s third-largest source of FDI with USD 2.2 billion.
- Sixteen strategic China-backed projects in Indonesia were valued at around USD 2.19 billion.
- Greater Jakarta, Central Java, Batam and Bintan, East Java, and Sulawesi are key industrial regions for Chinese manufacturing site selection.
- Most manufacturing sectors allow 100% foreign ownership, but sector limits, TKDN requirements, and zoning rules must still be checked before registration.
What Chinese manufacturers need before setting up in Indonesia
| Setup | What to Confirm |
| Legal Entity | Whether the business needs a PT PMA |
| KBLI Code | The correct business classification for the manufacturing activity |
| Foreign Ownership | Whether the manufacturing line is open to foreign investment |
| Capital Plan | Paid-up capital and total investment plan |
| Factory Location | Industrial estate, zoning, logistics, and labor access |
| OSS Licensing | NIB, risk level, business license, and supporting licenses |
| Environmental Approval | AMDAL, UKL-UPL, or other environmental requirements where applicable |
| Tax and Import Readiness | Tax registration, import access, machinery import, and reporting |
| Workforce Setup | Local hiring, expatriate permits, payroll, and employment documents |
| Ongoing Compliance | LKPM, tax filing, corporate records, and license updates |
China’s manufacturing investment in Indonesia
In November 2025, Indonesia and China signed 16 MoUs on industrial cooperation worth IDR 36.4 trillion. These agreements covered metals, industrial commodities, textiles, furniture, batteries, drones, solar energy, and AI-related sectors.
By the first quarter of 2026, these commitments had begun converting into realized investment. BKPM data show that China ranked as Indonesia’s third-largest source of foreign direct investment in Q1 2026, at USD 2.2 billion, trailing only Singapore and Hong Kong.
The 16 strategic Chinese projects, centered on nickel downstreaming, energy transition, and digital infrastructure, were tracking at approximately USD 2.19 billion in realized value.
Best industrial locations for Chinese manufacturers in Indonesia
Location selection determines labor cost, logistics access, and how quickly a facility can move from permit approval to production. Below are Indonesia’s five leading industrial regions by investment.
| Industrial Region | Best Suited For | Key Advantage | Ideal Sector Fit |
| Greater Jakarta (Bekasi, Karawang, Cikarang) | Companies needing mature supply chains and skilled labor | Indonesia’s most established manufacturing corridor with strong port, highway, and airport access | Automotive components, electronics, machinery |
| Central Java | Cost-sensitive manufacturing operations | Competitive labor costs versus West Java with improving infrastructure | Automotive, electronics, textiles, garments |
| Batam & Bintan | Export-oriented producers targeting Singapore access | Special Economic Zone incentives and strong international port/airport connectivity | Digital economy, aviation manufacturing, electronics |
| East Java (Surabaya, Gresik, Sidoarjo) | Producers needing large ports and eastern-market reach | Stable workforce with growing industrial estates and logistics infrastructure | Chemicals, food processing, metals, logistics |
| Sulawesi (Morowali, Konawe) | Metals and EV supply chain investors | Indonesia’s core nickel and mineral downstream processing hub | Nickel smelting, EV battery supply chain |
Step-by-step manufacturing setup in Indonesia
Setting up a manufacturing company in Indonesia is not only about registering a PT PMA. Chinese manufacturers also need to ensure that business activities, licenses, factory location, and compliance requirements are aligned before production starts.
Review the business activity and KBLI code
The first step is confirming the correct business activity and KBLI code. This determines:
- Foreign ownership eligibility
- OSS licensing requirements
- Environmental obligations
- Permitted business scope
- Future expansion options
Structure the PT PMA correctly
Foreign manufacturers usually need a PT PMA to operate legally in Indonesia. Before incorporation, investors should confirm:
- Shareholder structure
- Capital plan
- Directors and commissioners
- Business scope
- Planned factory location
Secure OSS-RBA business licensing
After the PT PMA is established, the company must apply for the right licenses through OSS-RBA. Depending on the risk level and sector, this may include:
- NIB
- Standard certificate
- Business license
- Technical or sectoral permits
Check environmental and location requirements
Manufacturing activities may require environmental approval and compliance with location requirements before production begins. Companies should review:
- Zoning suitability
- Industrial estate requirements
- Environmental approval
- Factory building compliance
- Waste-management obligations
Prepare operational compliance
Before starting production, manufacturers must prepare the compliance requirements needed for daily operations, including:
- Tax registration and reporting
- Payroll and employment documents
- Import and customs support
- Expatriate work permits and KITAS
- LKPM investment reporting
- Corporate secretarial records
Key manufacturing regulations in Indonesia to address
Before starting production, Chinese manufacturers must ensure their factory setup complies with Indonesia’s investment, licensing, zoning, and environmental regulations.
These requirements should be reviewed early because they can affect company registration, license approval, and operational readiness.
- Foreign ownership rules: Most manufacturing sectors are open to full foreign ownership under the Positive Investment List, though select sectors retain specific limits.
- TKDN / Local content requirements: Selected manufacturing sectors may need to meet local content requirements, especially when selling to government projects, state-owned enterprises, or applying for certain incentives.
- Zoning requirements: Facilities must be located within approved industrial zones to qualify for operational permits. This is checked before licenses are issued.
- Environmental approvals: Companies must obtain environmental clearance confirming operations meet national standards before production starts.
- Hazardous material rules: Businesses handling chemicals or controlled substances must comply with strict storage, use, and disposal requirements under B3 waste regulations.
Guide to Doing Business in Jakarta
Start your manufacturing setup in Indonesia with InCorp
Indonesia offers strong manufacturing potential for Chinese companies seeking regional expansion, supply-chain diversification, and long-term operational stability. However, navigating licensing, zoning, and compliance requirements requires coordinated local expertise.
InCorp Indonesia (an Ascentium Company) helps Chinese manufacturers establish and scale operations, from market entry planning to post-incorporation compliance.
Our support includes:
- Incorporation: PT PMA registration, KBLI review, foreign ownership check, and expansion planning.
- Business licensing support: OSS-RBA, NIB, manufacturing licenses, and environmental compliance coordination.
- Operational readiness: Tax, import permits, customs, payroll, HR, work permits, and KITAS.
- Ongoing compliance: LKPM reporting, corporate secretarial support, license updates, and compliance management.
Fill out the form below to start your manufacturing setup in Indonesia.
Frequently Asked Questions
Can a Chinese company set up a manufacturing business in Indonesia?
Yes. A Chinese company can set up a manufacturing business in Indonesia through a PT PMA, provided the business activity is open to foreign investment, and the company meets the applicable licensing, capital, location, and compliance requirements.
What is the best legal entity for Chinese manufacturers in Indonesia?
A PT PMA is usually the most suitable legal entity for Chinese manufacturers that want to produce, hire employees, sign contracts, import machinery, and generate revenue in Indonesia.
Can Chinese investors own 100% of a manufacturing company in Indonesia?
Many manufacturing sectors allow full foreign ownership, but this depends on the exact KBLI code and sector-specific rules.
What licenses are required to start a factory in Indonesia?
A manufacturing company usually needs a PT PMA, NIB, OSS-RBA business licensing, tax registration, and additional licenses depending on the risk level, sector, product, and location. Some activities may also require environmental approval or sectoral permits.
What is OSS-RBA and why does it matter for manufacturers?
OSS-RBA is Indonesia’s Online Single Submission system for risk-based business licensing. It determines what licenses and obligations apply based on the company’s KBLI code and risk level.
What environmental permits are required for a factory in Indonesia?
Depending on the facility's environmental risk level, manufacturers must complete either a full AMDAL assessment or a simplified UKL-UPL process before production begins; businesses handling hazardous materials also need B3 waste permits.
How long does it take to set up a manufacturing company in Indonesia?
The timeline depends on document readiness, business activity, licensing risk level, environmental requirements, and location. PT PMA incorporation can be completed first, but factory licensing and operational approvals may take longer if sectoral or environmental approvals are required.
Where should Chinese manufacturers set up a factory in Indonesia?
Common locations include Greater Jakarta, Bekasi, Karawang, Cikarang, Subang, Central Java, Batam, Bintan, East Java, and Sulawesi. The best location depends on the product, logistics, labor, suppliers, port access, and licensing requirements.
Can a PT PMA import machinery and raw materials?
Yes, a PT PMA can import machinery and raw materials if the company has the correct licenses, tax setup, customs documentation, and import-related approvals.
How can InCorp Indonesia help Chinese manufacturers after company setup?
InCorp Indonesia can support ongoing tax filing, accounting, payroll, work permits, LKPM reporting, license updates, corporate secretarial records, and compliance maintenance.
What is the first step a Chinese manufacturer should take before entering the Indonesia market?
The most effective starting point is a structured feasibility and entity-structuring review that covers ownership eligibility, TKDN exposure, and industrial zone fit before capital is committed to a specific site.
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A prompt response to your inquiry
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Ongoing support for your business
Disclaimer
The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.
We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.
Verified by
Ales Cina
Consulting Manager at InCorp Indonesia
Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights.
