Setting Up Business in Surabaya: A Guide for Foreign Investors

Foreign investors setting up business in Surabaya need to establish a PT PMA (Perseroan Terbatas Penanaman Modal Asing), Indonesia’s Foreign Investment Limited Liability Company. The minimum paid-up capital is IDR 2.5 billion, and the investment plan per business line must exceed IDR 10 billion. The process runs through the OSS RBA system and typically takes four to eight weeks from notary appointment to NIB issuance. Surabaya follows the same national regulatory framework as Jakarta, but offers lower industrial land costs, direct access to Tanjung Perak Port, and a labor pool concentrated in manufacturing and logistics.

This guide covers everything a foreign investor needs to know before, during, and after setting up in Surabaya: company structure, permitted sectors, the 2026 minimum wage, incorporation steps, and ongoing compliance obligations.

Why Set Up Business in Surabaya Rather Than Jakarta?

Most foreign investors still default to Jakarta. That instinct is understandable: Jakarta is where the regulators are headquartered and where foreign business networks are most established. But Surabaya operates on a different logic.

Surabaya is the capital of East Java Province and Indonesia’s second-largest city, with a population of over three million within the city and more than ten million across the greater Gerbangkertosusila metropolitan area spanning Surabaya, Gresik, Bangkalan, Mojokerto, Sidoarjo, and Lamongan. For investors in manufacturing, logistics, food processing, and export-oriented industries, this extended economic zone is as important as the city itself.

Three structural advantages set Surabaya apart from Jakarta for the right type of business:

Port access

The Port of Tanjung Perak, Indonesia’s second-busiest seaport, handled 4.3 million TEUs in 2024, a 4.9 percent increase from the prior year, and ranked 47th globally in Lloyd’s List One Hundred Ports 2025. For any business model that depends on goods moving in and out of eastern Indonesia, Surabaya is the operationally logical choice.

Lower land and operating costs

Industrial land in East Java’s established industrial estates (kawasan industri) in Sidoarjo, Gresik, and Pasuruan runs significantly below equivalent land in the Bekasi-Karawang-Cikarang corridor near Jakarta. This difference directly affects project feasibility for capital-intensive operations.

Trans-Java connectivity

The Trans-Java Toll Road, fully operational since 2024, has reduced travel time between Surabaya and Semarang by over 40 percent, making Central Java’s lower-cost labor markets accessible as part of an East Java-centered supply chain strategy.

What Company Structure Does a Foreign Investor Need in Surabaya?

The legal entry point for foreign investors is the PT PMA (Perseroan Terbatas Penanaman Modal Asing). This applies regardless of whether the company is based in Surabaya or anywhere else in Indonesia. PT PMA gives the investor the right to conduct business, issue invoices, hire employees, and operate commercially under Indonesian law.

Under BKPM Regulation No. 5 of 2025, the key capital requirements are:

• Minimum paid-up capital: IDR 2.5 billion per company
• Minimum investment plan: IDR 10 billion per KBLI code, excluding land and buildings
• Minimum shareholders: 2

This distinction between paid-up capital and investment plan value is frequently misunderstood. The IDR 2.5 billion is the amount that must be deposited and used for real business activities within 12 months. The IDR 10 billion investment plan figure represents the total projected investment value and is used for business scale classification and licensing purposes.

The permitted level of foreign ownership depends on the business sector and is governed by the Positive Investment List (Daftar Positif Investasi) under Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021. Many sectors allow 100 percent foreign ownership. Others require a local partner or apply specific percentage caps.

For investors already operating a PT PMA in Jakarta who want to expand to East Java, a branch registration under the existing entity is often more efficient than establishing a new legal entity. For companies that want a market presence without commercial activity, a Representative Office (KPPA) is available but cannot issue invoices or generate revenue.

XPND has a permanent office in Surabaya at Ruko Central Bisnis Park, Jl. Dr. Ir. H. Soekarno MERR No. 27, Semolowaru, Sukolilo, with a local team handling incorporation, immigration, and compliance for clients across East Java. For more detail on PT PMA requirements, see XPND’s guide to setting up a PT PMA in Indonesia.

Which Sectors Have the Most Momentum for Foreign Investors in Surabaya?

Manufacturing and industrial processing

East Java has become the preferred relocation destination for manufacturers shifting out of congested West Java corridors. Industrial estates in Sidoarjo, Gresik, Pasuruan, and Mojokerto offer fully serviced land with utilities, customs access, and labor pools within a two-hour radius of Tanjung Perak Port. Electronics components, automotive parts, consumer goods, and light machinery are all actively represented.

Logistics, warehousing, and port-related services

Tanjung Perak’s throughput growth and the consolidation of inter-island shipping under PT Pelabuhan Indonesia following the 2021 Pelindo merger have strengthened Surabaya’s position as eastern Indonesia’s logistics nerve center. The port’s Teluk Lamong terminal, expanded in 2025, operates as a semi-automated green port adding capacity to the main port complex. Foreign investors entering Indonesian logistics must navigate customs access permissions, OSS RBA classifications for warehousing and freight forwarding, and environmental approvals for large-scale storage operations.

Food and beverage processing

East Java’s proximity to agricultural production areas in Central Java and direct port access for export create strong conditions for food and beverage manufacturing. The sector requires compliance with BPOM product registration, Halal certification through BPJPH where applicable, and environmental permits for processing facilities.

Renewable energy and environmental services

Industrial demand from the Gerbangkertosusila corridor and national green manufacturing policy have driven interest in solar components, water treatment, waste management, and energy efficiency services. The sector carries dense regulatory requirements including AMDAL or UKL-UPL environmental assessments and technical approvals from sector-specific ministries.

Healthcare and life sciences

Population growth, a rising middle class, and expanding hospital infrastructure across East Java have created consistent demand for private healthcare services, medical devices, and pharmaceutical distribution. Product registration through BPOM, distribution permits, and professional licensing apply across the sector. Foreign investors in healthcare often structure through a joint venture with a local partner due to ownership restrictions in certain sub-sectors.

What Is the Minimum Wage in Surabaya for 2026?

Surabaya’s city-level minimum wage (UMK or Upah Minimum Kabupaten/Kota) for 2026 is IDR 5,288,796 per month, the highest among all 38 districts and cities in East Java. This was set by East Java Governor’s Decree No. 100.3.3.1/937/013/2025, effective January 1, 2026, representing a 6.11 percent increase from 2025 under the formula established in Government Regulation No. 49 of 2025.

For companies evaluating multiple sites across the Gerbangkertosusila corridor, wage rates across the key industrial districts in 2026 are:

For comparison, Jakarta’s UMP for 2026 is IDR 5,729,876. Surabaya’s rate is lower, but the cost of living and commercial real estate differential between the two cities means the overall operating cost gap is wider than the wage difference alone suggests.

All employers must register employees with BPJS Kesehatan and BPJS Ketenagakerjaan within 30 days of their start date, and implement a Wage Structure and Scale (Struktur dan Skala Upah or SUSU) for employees with more than one year of service.  Companies planning workforce changes should also understand Indonesia’s severance framework, covered in detail in Indonesia Severance Pay: How to Calculate Under the Omnibus Law.

How Long Does It Take to Set Up a PT PMA in Surabaya?

The incorporation process for a PT PMA in Surabaya follows the national OSS RBA framework under Government Regulation No. 28 of 2025 and typically takes four to eight weeks from notary appointment to NIB issuance for standard business activities. Complex licensing requirements, particularly for manufacturing and environmental permit categories, can extend this timeline.

The key steps are:

Step 1: Name reservation through AHU Online (Kementerian Hukum dan HAM). The name must be unique, consist of at least three words, and meet the requirements under PP 43/2011.

Step 2: Deed of establishment before a notary. This establishes the company’s articles of association, shareholder structure, directors, commissioners, and KBLI classification.

Step 3: Kemenkumham approval through the SABH system. The notary submits the deed and obtains the ministerial decree ratifying the legal entity.

Step 4: NIB issuance through OSS RBA. The NIB is the company’s single business identification number and serves as the primary license for low-risk activities.

Step 5: Sector-specific licensing based on KBLI risk classification. Low-risk activities require only the NIB. Medium-risk activities require a Sertifikat Standar. High-risk activities require additional ministerial approval and in some cases environmental assessment completion before the business license is issued.

One practical consideration specific to Surabaya: the business domicile address must be verifiable and located in a zone that matches the company’s KBLI classification in the city’s spatial planning (tata ruang) records. OSS RBA cross-checks the address against regional spatial data, and a mismatch is one of the most common causes of licensing delays in East Java.

What Compliance Obligations Apply After Incorporation in Surabaya?

Once incorporated, a PT PMA in Surabaya carries continuous compliance obligations:

LKPM (Laporan Kegiatan Penanaman Modal): Investment realization reports submitted quarterly for medium and large-scale companies, semi-annually for small-scale companies. Consistency between reported figures and accounting records is assessed by the system.

Corporate tax: 22 percent corporate income tax on net taxable profits. Monthly PPh 21 withholding, BPJS contributions, and VAT reporting through the Coretax system apply from the first month of operations.

WLKP (Wajib Lapor Ketenagakerjaan Perusahaan): Annual workforce report filed within 30 days of commencing operations through SIAPkerja. Non-compliance directly obstructs RPTKA processing for companies employing foreign workers.

KBLI 2025 migration: All companies must update their KBLI codes to KBLI 2025 (BPS Regulation No. 7 of 2025) by June 18, 2026. Companies incorporating in 2026 should register directly under KBLI 2025 codes.

For a complete compliance calendar covering LKPM deadlines, tax obligations, and NIB update timelines, see XPND’s PT PMA Annual Compliance: The Complete Checklist for 2026.

Surabaya vs Jakarta: What Actually Differs for Foreign Investors?

The regulatory framework is national. OSS RBA is the same platform. PT PMA structure is the same. What actually differs comes down to four things.

Sectoral fit. Jakarta is stronger for financial services, professional services, technology, and regional headquarters functions. Surabaya is stronger for manufacturing, logistics, agribusiness, and any business that depends on physical goods moving through eastern Indonesia. For investors evaluating Indonesia against other regional markets, XPND has published a detailed comparison in Doing Business in Indonesia vs Vietnam: Which Market Is Right for You?

Land and infrastructure costs. Industrial land in East Java’s industrial estates runs significantly below the Bekasi-Karawang-Cikarang corridor. For capital-intensive operations, this affects project feasibility directly.

Labor pool. Surabaya and surrounding districts have large, established workforces in manufacturing, logistics, and trade. Highly specialized technical roles may still require Jakarta-based recruitment or expatriate hire.

Local compliance dynamics. Both cities operate under national regulations, but coordination between local DPMPTSP, regional environmental agencies, and the OSS system varies. Having a local partner with existing relationships in the Surabaya regulatory environment consistently reduces timeline risk more than any amount of regulatory knowledge on paper.

How XPND Supports Business Setup in Surabaya

XPND operates a permanent office in Surabaya as part of a five-city network across Indonesia. The Surabaya team works directly with foreign investors on PT PMA incorporation, licensing, immigration for expatriate staff, payroll management, and ongoing compliance, with direct access to local government systems, notaries, and the regional business environment.

If you are evaluating Surabaya as an entry point or planning to expand an existing operation into East Java, XPND offers a free initial consultation with no obligation.

Contact the Surabaya team directly at albellah@xpnd.co.id or through the XPND contact page.