Indonesia’s direct selling industry is entering a new phase of regulatory oversight as the government raises compliance standards for companies operating in the sector.
Under Government Regulation (PP) No. 3 of 2026, enacted on 15 January 2026, authorities have introduced stricter requirements governing how direct selling businesses establish and operate in Indonesia. The regulation amends PP No. 29 of 2021 on Trade Administration and strengthens rules around business address verification, operational presence, and consumer protection oversight.
For companies planning to enter or expand in the direct selling sector in Indonesia, the message from regulators is clear: businesses must demonstrate genuine operational presence and maintain corporate structures that reflect real economic activity.
The new regulation also highlights the increasing importance of proper company establishment in Indonesia, particularly for foreign investors establishing market entry structures.
Stricter Compliance Under Indonesia’s OSS Licensing Framework
The regulatory update aligns with Indonesia’s risk-based licensing system administered through the Online Single Submission (OSS) platform.
Under the OSS system, businesses are no longer assessed purely based on registration documents. Authorities expect companies to demonstrate actual operational capacity that matches their declared business activities.
In practical terms, this means:
- Business activities must correspond with the KBLI classification registered in OSS
- Companies must maintain verifiable operational infrastructure
- Licensing approvals may depend on whether the company’s operational setup reflects genuine commercial activity.
By tightening compliance obligations for direct selling companies, the government aims to strengthen trade governance and regulatory accountability across Indonesia’s commercial sector.
For both domestic businesses and foreign investors, this development underscores the importance of establishing companies in Indonesia through properly structured legal and operational frameworks from the outset.
Virtual Offices No Longer Accepted for Direct Selling Companies
One of the most notable provisions introduced by PP No. 3 of 2026 is the prohibition on the use of virtual office addresses for direct selling businesses.
Under the new rules, companies operating in this sector must maintain a verifiable physical office address that reflects genuine operational presence.
Administrative addresses, shared offices, or virtual office arrangements that do not represent actual business operations may no longer meet licensing requirements.
Historically, many companies entering Indonesia used virtual offices as a cost-efficient entry strategy, particularly during early-stage market testing. The updated regulation effectively removes that option for direct selling businesses.
Companies operating in the sector must now secure compliant physical office locations as part of their licensing and operational setup.
Regulatory observers note that the policy reflects Indonesia’s broader objective of ensuring that businesses registered through the OSS system maintain real commercial operations and are subject to effective regulatory oversight.
What Are Considered Direct Selling Businesses in Indonesia?
In Indonesia, direct selling businesses refer to companies that sell products or services directly to consumers outside conventional retail environments such as stores, malls, or traditional markets.
These businesses typically operate through distributors, agents, or independent sales representatives who promote and sell products directly to customers.
Direct selling activities in Indonesia are generally classified under KBLI 47999 – Other Retail Trade Not in Stores, Stalls, or Markets.
Types of Direct Selling Businesses in Indonesia
Multi-Level Marketing (MLM)
Multi-level marketing remains one of the most common direct selling models in Indonesia.
Characteristics include:
- Sales conducted through independent distributors or members
- Participants earning commissions from personal sales and recruitment networks
- Requirement to obtain a Direct Selling Business License (SIUPL)
Typical product categories include:
- Health supplements
- Cosmetics and beauty products
- Household consumer products.
Single-Level Direct Selling
In this model, distributors sell products directly to consumers but do not earn commissions from recruiting other sellers.
Key features include:
- Revenue derived purely from product sales
- No hierarchical distributor network
- Often used by emerging brands and niche product companies.
Door-to-Door Sales
Some companies use door-to-door sales representatives who promote and demonstrate products directly at consumers’ homes or workplaces.
This model is commonly used for:
- Household appliances
- Cleaning products
- Consumer product demonstrations.
Direct Selling Through Sales Events
Products may also be marketed through home gatherings, product demonstrations, or promotional events organised by distributors.
Common product categories include:
- Beauty and personal care products
- Kitchen equipment
- Wellness and lifestyle products.
Consumer Protection Standards Raised
In addition to corporate structure requirements, the regulation introduces stronger oversight of consumer protection practices within the direct selling industry.
Authorities are placing greater responsibility on companies to ensure that sales processes, marketing practices, and customer engagement strategies meet higher transparency standards.
Businesses must now review their operational frameworks to ensure compliance in areas such as:
- Sales and marketing transparency
- Commission and incentive structures
- Consumer complaint management
- Customer dispute resolution mechanisms.
These reforms are part of Indonesia’s broader effort to professionalise the direct selling industry and address concerns around deceptive sales practices and inadequate consumer protection.
Implications for Foreign Investors
For international companies evaluating business expansion or market entry into Indonesia, the regulation introduces additional compliance considerations.
Direct selling businesses operating under KBLI 47999 already face a complex licensing environment. The introduction of PP No. 3 of 2026 adds further requirements relating to physical office verification and operational presence.
Industry advisers note that the regulation reinforces the importance of proper company establishment in Indonesia, particularly for foreign investors forming PT PMA (foreign-owned companies).
Key elements that now require careful planning include:
- Selecting a compliant physical office address
- Ensuring alignment between business activities and KBLI classification
- Meeting OSS risk-based licensing requirements
- Integrating consumer protection procedures into operational policies.
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Regulatory Direction: From Registration to Accountability
Indonesia’s regulatory framework is increasingly shifting from administrative registration to substantive operational accountability.
Authorities expect businesses registered through the OSS system to demonstrate real economic activity, proper governance structures, and transparent compliance practices.
This regulatory trend extends beyond trade regulations and is also visible across areas such as:
- Tax compliance and reporting obligations
- Investment activity monitoring
- Employment and manpower reporting requirements.
For investors, this evolving environment highlights the importance of establishing companies in Indonesia with proper legal structuring and compliance planning.
Businesses that enter the market with well-prepared licensing strategies, compliant operational structures, and strong corporate governance frameworks are far more likely to navigate Indonesia’s regulatory landscape successfully.
A Reminder for Businesses Already Operating
Companies currently operating in the direct selling sector in Indonesia should review their existing arrangements to ensure alignment with the updated regulatory framework.
This may involve:
- Verifying that business addresses meet physical presence requirements
- Reviewing consumer engagement processes
- Ensuring licensing data accurately reflects operational activities.
For companies planning market entry, early preparation will be critical.
As Indonesia continues refining its regulatory environment, authorities are signalling that compliance expectations will increasingly focus on the substance of business operations rather than documentation alone.
Supporting Business Establishment in Indonesia with Lets Move Indonesia
For foreign investors and entrepreneurs entering Indonesia’s market, navigating regulatory requirements, from company establishment and OSS licensing to ongoing compliance obligations, can be complex.
Lets Move Indonesia, a subsidiary of LMI Consultancy, provides comprehensive advisory services to support businesses establishing operations in Indonesia.
Our team assists investors in setting up PT PMA (foreign-owned companies) and local entities while ensuring alignment with Indonesia’s evolving regulatory framework.
Our services include:
- Company establishment and corporate structuring
- Business licensing through the OSS risk-based system
- KBLI classification advisory and regulatory assessment
- Physical office compliance and operational setup
- Ongoing corporate, immigration, and tax compliance support.
By integrating legal, tax, immigration, and business advisory expertise, Lets Move Indonesia helps businesses build compliant corporate structures from the beginning, allowing investors to operate confidently within Indonesia’s dynamic regulatory environment.
For tailored guidance on company establishment and business registration in Indonesia, our professional consultants can help ensure a smooth and compliant market entry.
