Direct Answer
A Vietnamese manufacturer sets up a factory in Indonesia through a PT PMA, a foreign-owned limited liability company. The main steps are:
- Choose the right manufacturing KBLI code.
- Plan an investment above IDR 10 billion per KBLI code and project location, excluding land and buildings. Deposit at least IDR 2.5 billion in paid-up capital.
- Incorporate the company and get a NIB through the OSS system.
- Secure land in an industrial estate.
- Get the factory licences.
- Plan local content (TKDN) early.
Key Takeaways
- A PT PMA is the standard legal route for a foreign-owned factory in Indonesia. It lets you own the operation, import machinery, hire staff and sell locally or abroad.
- Two money rules apply. You need IDR 2.5 billion in paid-up capital, plus a total investment plan above IDR 10 billion per business line and project location, excluding land and buildings.
- Factories normally have to sit in an industrial estate. Exceptions exist where no estate is available, or inside a special economic zone.
- Local content (TKDN) can decide your market access and incentives. Start the plan before you buy machines.
- VinFast shows the phased approach: a smaller first phase, then expansion once the plant is running.
Why VinFast Subang Is a Useful Model
VinFast is the clearest example of a Vietnamese manufacturer building a plant in Indonesia. Its Subang factory in West Java opened in phases from mid-December 2025. It is VinFast’s fourth global production site and its first in Southeast Asia outside Vietnam.
The numbers show how a phased plan works:
- Land: the site covers 171 hectares.
- Phase one: about USD 300 million, with capacity of 50,000 vehicles a year.
- Build time: about 17 months from groundbreaking to operation.
- Long-term plan: total commitment above USD 1 billion, with capacity growing to 350,000 units a year.
- Jobs: about 1,700 at the start. At full capacity, reports estimate 5,000 to 15,000 direct jobs.
- Local content: a stated target of 80% TKDN by 2030.
- Supplier park: VinFast is also preparing a supplier park to bring local parts makers, including small industries, into its supply chain.
Reports differ on the phase-one rupiah value (roughly IDR 3.5 to 5.4 trillion) because of exchange rates and what each outlet counts. Treat the USD 300 million figure as the most consistent.
Most Vietnamese manufacturers will not build a 171-hectare plant. The lesson still applies to a furniture workshop or an electronics line. Start with a clear legal entity, a well-chosen site and a phased budget. Then scale up once production runs.
Step 1: Choose the Right Legal Structure
A PT PMA is the only legal way for foreigners to directly own and run a revenue-generating business in Indonesia. A representative office cannot sell anything or earn income, so it cannot run a factory.
A PT PMA also suits a factory because it can:
- sign land or lease contracts
- import machinery
- hire workers
- register for tax
- sell under the Indonesian entity
Basic structural rules for the company:
- at least two shareholders
- at least one director, with one director living in Indonesia
- at least one commissioner who is not also a director
- a registered Indonesian business address
A PT PMA cannot own freehold land (Hak Milik). It can use other land rights, such as the Right to Build. To compare options in detail, read our guide to common business structures for foreign investment in Indonesia.
Step 2: Pick Your Manufacturing KBLI Codes
KBLI is the five-digit code that describes what your company does. It controls your risk level, licence path and foreign ownership rules. Pick the code by what the factory physically makes, not by a general description. Examples:
- Furniture: the industry covers furniture made from many materials, with separate codes by material. For example, KBLI 31021 covers plastic furniture.
- Electronics: these fall in the manufacturing section of KBLI. Confirm the exact five-digit code for your product, such as consumer electronics or components.
- EV and vehicles: vehicle assembly and parts use separate codes. A plant that assembles cars and a plant that makes parts need different lines.
- Consumer goods: the code depends on the product category, such as food, plastics or textiles.
Each five-digit KBLI code needs its own investment value above IDR 10 billion, per project location. A company with two unrelated codes therefore needs a plan above IDR 20 billion in total. Choose codes with care, and avoid adding extra ones “just in case.” Our guide on what KBLI is in Indonesia explains how to match a code to your activity.
Step 3: Plan Your Capital
Two separate figures apply to a PT PMA. Both come from BKPM Regulation No. 5 of 2025, in force since October 2025.
PT PMA Capital Requirements and Setup Time
| Requirement | Amount | Notes |
|---|---|---|
| Minimum paid-up capital | IDR 2.5 billion | Deposited in the company’s Indonesian bank account |
| Total investment plan | More than IDR 10 billion | Per 5-digit KBLI and project location, excluding land and buildings |
| Typical setup time (company only) | About 4–8 weeks | Depends on business type |
The investment plan counts machinery, other fixed assets and working capital for one operating cycle. It is built up over time and not deposited all at once. Budget well beyond incorporation. A factory also needs money for:
- factory premises and fit-out
- machinery
- utilities
- environmental studies
- permits and customs
- accounting and payroll
- BPJS insurance
Step 4: Choose an Industrial Estate
Indonesian law says industrial companies must locate in an industrial estate (kawasan industri). There are exceptions: the regency or city may have no estate, the estate’s plots may be taken, or the site may sit in the industrial zone of a special economic zone.
An estate developer must hold an industrial estate licence (IUKI) before selling or leasing plots. A new estate must cover at least 50 hectares. When you shortlist estates, compare:
- plot size and expansion room
- access to ports and toll roads
- power, water and gas supply
- the labour pool nearby
- land rights and lease terms
- room for suppliers close to your line
Land rules matter too. A buyer or lessee must build the factory or its supporting buildings within four years of acquiring the land, with a possible one-year extension. If your supply chain depends on trucking, our guide on how to start a logistics company in Indonesia shows how local logistics work.
Step 5: Register, License and Prepare to Operate
After the company deed and legal approval, the sequence is:
- Register for the tax number (NPWP).
- Register through OSS-RBA and receive your NIB.
- Open a corporate bank account and deposit the paid-up capital.
- Apply for any sector-specific licences.
Your NIB alone does not mean you are fully licensed. Depending on risk level, you may need a standard certificate or a full operating permit. Factories also face industry-specific items. Examples are an importer identity for machinery, regular industry reports through the SIINas system, and mandatory SNI certification for covered goods.
After you start, quarterly investment reports (LKPM), monthly tax filings and BPJS contributions begin. For the full licence picture, see our business licenses and permits guide for Indonesia.
Step 6: Plan Local Content (TKDN) Early
TKDN means “Domestic Component Level.” It measures how much of a product’s value comes from Indonesia. Under the 2025 Ministry of Industry rules, the calculation uses three factors:
- direct materials at 75%
- direct labour at 10%
- factory overhead at 15%
A PT PMA with its own factory, local workers and onshore investment may claim at least 25% TKDN for goods. If more than half the production workforce are Indonesian citizens, it can claim the full labour weight.
Why it matters for each sector:
- EV: VinFast targets 80% TKDN by 2030. Industry statements cite government targets rising from 40% in 2026 to 60% in 2027. Check the current rules for your exact product.
- Electronics: smartphones and similar devices must meet a 35% threshold.
- Furniture and consumer goods: rules are less rigid, but higher TKDN gives priority in government and state-company buying.
TKDN also affects incentives and procurement access. Early planning helps shape supplier choices, staffing and where you assemble.
Step 7: Sort Out Visas and Management
Vietnamese managers who will run the plant need the right permit. The E28A Investor KITAS suits shareholders who serve as director or commissioner of a PT PMA. It requires share ownership of at least IDR 10 billion. Applications go through the sponsoring company, which generally must have operated for at least six months. Read the full E28A Investor KITAS guide and our overview of what an Investor KITAS is.
Directors on an Investor KITAS must stay in management roles. Day-to-day operational work is restricted. Technical staff who run machines usually need a different permit type.
A Simple Example
A Vietnamese furniture maker plans a 5,000 square metre plant. Its path might look like this:
- Form a PT PMA with one furniture KBLI code.
- Plan an investment above IDR 10 billion for machinery and working capital.
- Lease a plot in an industrial estate near a port.
- Get the NIB, then confirm the factory permits.
- Hire mostly local workers and buy local wood and fittings to raise TKDN.
- Add a second line later, which may need a new KBLI.
About EZPZ Indonesia
EZPZ Indonesia is your one-stop solution for expats and foreign investors in Indonesia, specializing in PT PMA company setup, KITAS visa processing, and business research. Since 2021, we have helped clients navigate Indonesia’s regulations and requirements, making it easier to build and grow their businesses with confidence. Let us handle the complexities so you can focus on your success in Indonesia.
Get a Free Quote →Talk to a Manufacturing Setup Specialist
A factory setup mixes company law, land, licences and local content. A mistake in the KBLI or capital plan can delay production by months. EZPZ Indonesia helps foreign manufacturers plan the PT PMA, match the right codes and prepare licensing steps. Request a manufacturing-setup consultation here.
Frequently Asked Questions
Can a Vietnamese company own 100% of a factory in Indonesia?
Often yes, through a PT PMA, but it depends on your KBLI code and the Positive Investment List. Check your code before you plan.
How much capital does a manufacturing PT PMA need?
You need IDR 2.5 billion in paid-up capital. You also need an investment plan above IDR 10 billion per five-digit KBLI and project location, excluding land and buildings.
Must the factory be in an industrial estate?
Usually yes. Exceptions apply where no estate exists, estate plots are full, or the site sits in a special economic zone.
What is TKDN and does it apply to me?
TKDN measures local content in your product. It matters most for EV, electronics and any business that sells to government buyers.
How long does setup take?
Company registration often takes 4 to 8 weeks. The factory build, licences and machinery installation take longer. VinFast built its first phase in about 17 months.
