What kind of law does Indonesia have?

April 15, 2023

Indonesia has a rich history and diverse culture, but many people often find themselves scratching their heads when it comes to its legal system. With so many different types of law governing different aspects of life in Indonesia, it can be challenging to understand what kind of law applies to you. Whether you're a tourist or an ex-pat planning to live in Indonesia long-term, understanding the country's legal system is essential.

The Indonesian Legal System & Sources of Law

Indonesia is a republic with a population of over 260 million people. The country is divided into 38 provinces and 516 districts. The Indonesian legal system is based on the Napoleonic code, adopted in 1848. Indonesia has two systems indonesia only adheres to civil law syste. Common law systems are used in most countries, while civil law systems are used in France, Italy, Japan, and Russia.

The Indonesian Supreme Court is the highest court in the country. Other courts include the Court of Appeal, District Courts, and Special Courts. Several government ministries administer various areas of law, such as justice, trade and industry, agriculture, forestry and fishing, religious affairs, and labor relations.

There are several sources of Indonesian law, including statutes passed by parliament (legislative), regulations issued by executive branch agencies (regulatory), case law from the lower courts (judicial), and customary or religious laws (customary).

Business Incorporation and Set-up

When starting a business in Indonesia, you must adhere to the relevant Indonesian business laws. The country's central government determines these laws, which can vary depending on the jurisdiction.

There are many ways to start a business in Indonesia. Still, some of the most common methods include: forming a partnership with another company, registering as a sole proprietorship or a limited liability company (LLC), or registering as an agricultural enterprise.

Each method has its own legal requirements that must be met before your business can operate. For example, partnerships must have at least two participants, LLCs must file Articles of Incorporation and have at least one member who is an Indonesian citizen, and registered agricultural enterprises must comply with specific regulations imposed by the Ministry of Agriculture.

In general, all businesses operating in Indonesia must abide by local labor laws and regulations that protect employees and consumers. These laws may include limits on working hours, minimum wage standards, and worker rights protections.

It is important to consult with an attorney when starting or expanding your business in Indonesia to ensure you follow all the necessary rules and procedures. An attorney can also guide how best to market your business domestically and abroad and provide advice on protecting your intellectual property rights.

Filing Requirements for Business

Under Indonesian law, businesses are regulated by the civil and criminal codes. The main categories of business covered by the law include:

  • Commercial enterprises (i.e., businesses engaged in trade or commerce)
  • Business organizations (i.e., companies, partnerships, and associations)
  • Foreign enterprises operating in Indonesia
  • Investment enterprises
  • Publicly traded companies

 The principal filing requirements for businesses are:

  •  A company must have a company registration number (NIB), which the Ministry of law and human rights.
  •  A company must have a board of directors appointed by the NIB.
  •  The NIB must file an annual report with the ministry.

 Other filing requirements depend on the type of business:

  • For commercial enterprises, the NIB must register with the tax office to determine its taxable income and capital gains.
  • For investment enterprises, the NIB must submit an investment promotion plan to the Investment Coordinating Board for examination and approval before initiating any investment activities.


indonesia adheres to civil law system. but in some sectors we do refer to islamic law such as marriage law (it only applies to muslim thats why there's a religious court).


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