Starting a Dairy Products Business in Indonesia? Here’s What You Must Know in 2025

Introduction: Why the Dairy Sector Is Ripe for Business

The demand for dairy products in Indonesia has seen significant growth over the last decade, fueled by an expanding urban middle class, increasing health awareness, and the rising popularity of western-style diets. From supermarkets in Jakarta to boutique cafes in Bali and hotel breakfast buffets across Lombok, the appetite for milk, yogurt, cheese, and other dairy-based items has created a lucrative window for both local and foreign entrepreneurs.

Despite being one of Southeast Asia’s most populous nations, Indonesia still imports a large share of its dairy needs, highlighting a clear gap between demand and domestic production. This gap presents a compelling opportunity for those looking to enter or expand in the dairy products business in Indonesia.

However, like any fast-growing sector, this industry comes with its own set of regulatory and operational hurdles. From strict product registration with BPOM to navigating import restrictions and halal certification laws, setting up a compliant dairy products business in Indonesia requires careful planning and a clear understanding of legal requirements.

In this article, we break down the key legal and regulatory essentials every investor should know before diving into this promising sector in 2025.

Understanding the Market Landscape in 2025

The dairy industry in Indonesia continues to expand in 2025, but the country still struggles to meet its domestic dairy consumption needs through local production alone. According to BPS Indonesia Dairy Statistics, national milk production currently covers only about 20–25% of total demand, with the rest being fulfilled through imports—mostly in the form of powdered milk, UHT milk, and cheese. This reliance on imports presents both a challenge and a key opportunity for anyone entering the dairy products business in Indonesia.

Several major players dominate the market, including Greenfields, Indomilk, Ultra Milk, and Cimory. These brands control a large share of the packaged milk and yogurt segments, distributing through supermarkets, convenience stores, and e-commerce platforms. However, there is growing consumer interest in specialized products like lactose-free milk, organic dairy, probiotic yogurt, and artisanal cheeses—niches that are still underserved and ripe for innovation.

Urban millennials, young families, and health-conscious consumers are driving this trend, especially in cities like Jakarta, Surabaya, Denpasar, and Bandung. This shift in preference is opening the door for startups and boutique producers to build a distinct identity within the saturated dairy space.

If you are planning to launch a dairy products business in Indonesia, it's important to identify where your product fits in the broader ecosystem. Will you be targeting high-volume segments like UHT milk, or focusing on premium products that appeal to niche markets?

Understanding these dynamics early on can help align your marketing, distribution, and compliance strategies with real-world market behavior—essential for building a competitive and sustainable dairy products business in Indonesia.

Legal Entity Setup: Choose the Right Business Structure

Before launching a dairy products business in Indonesia, foreign entrepreneurs must first choose the correct legal structure. The two most common forms are PT (Perseroan Terbatas) for local ownership and PT PMA (Penanaman Modal Asing) for foreign-owned entities. If your company has any foreign shareholding, even 1%, it must be registered as a PT PMA under Indonesia’s investment laws.

The PT PMA allows foreign companies to legally conduct business activities, import goods, lease property, hire employees, and pay taxes in Indonesia. Establishing this type of legal entity requires compliance with regulations issued by the Indonesia Investment Coordinating Board (BKPM) and processed through the OSS (Online Single Submission) system.

The process includes several steps:

1. Business classification selection (KBLI code)
2. Name reservation and deed of establishment by a notary
3. Approval from the Ministry of Law and Human Rights
4. OSS registration and business license (NIB)
5. Sector-specific licenses (e.g., BPOM for dairy)

For a dairy products business in Indonesia, you’ll need to ensure your KBLI code aligns with food manufacturing or wholesale trade of dairy products. Some codes may be subject to Negative Investment List restrictions, but as of 2025, most dairy-related activities are open to foreign ownership up to 100%.

It’s important to note the minimum capital requirement for a PT PMA is IDR 10 billion (~USD 650,000), with at least IDR 2.5 billion (~USD 160,000) injected as paid-up capital at the start. This applies even if you're starting with small-scale operations.

Choosing the correct legal structure is crucial for avoiding compliance issues later. To set up a legally sound dairy products business in Indonesia, partnering with a local advisor or legal consultant can save time and prevent costly errors.

Licensing & Product Registration

One of the most critical aspects of launching a dairy products business in Indonesia is ensuring proper licensing and registration. The food and beverage sector—especially dairy—is strictly regulated to protect public health, religious practices, and product quality.

BPOM (Badan Pengawas Obat dan Makanan) is the government agency responsible for approving all processed food and drink products. Before you can legally produce, distribute, or sell items like milk, cheese, yogurt, or ice cream, you must complete BPOM registration. This includes submitting product samples, nutritional details, labeling designs, and lab test results for safety verification. Without this license, your dairy products cannot be sold in Indonesian markets.

Additionally, Halal certification has become a legal requirement under Indonesia’s Halal Product Assurance Law (UU No. 33/2014). By 2026, all food and beverage products sold in Indonesia—including dairy—must be certified halal unless otherwise exempt. This is especially crucial if your dairy products business in Indonesia intends to supply to Muslim-majority regions or major retailers.

Another essential compliance step is obtaining SNI (Standar Nasional Indonesia) certification. While not mandatory for all dairy items, SNI standards are strongly recommended to enhance product credibility and meet distribution requirements in retail chains and e-commerce platforms. This applies to packaging, hygiene, production methods, and labeling.

Failure to meet these licensing and registration steps can result in import bans, product recalls, or even business suspension. To avoid these risks, it’s important to build your dairy products business in Indonesia on a foundation of full compliance—especially when entering a highly regulated and competitive market.

Importing vs. Local Production: What’s Permitted and What’s Not

A crucial decision when launching a dairy products business in Indonesia is whether to import your goods or produce them locally. While Indonesia allows the importation of dairy products, there are important limitations and regulatory hurdles that businesses must navigate.

Fresh milk and certain raw dairy ingredients (like cream and whey) are considered sensitive imports and often require additional documentation, including veterinary certificates, food safety clearance, and import approvals from the Ministry of Agriculture. There are also quantity limits and strict inspection procedures at ports of entry. Importers must register with the Indonesian Customs (Bea Cukai) and have a valid Import Identification Number (API).

For imported dairy goods to remain viable in Indonesia’s tropical climate, maintaining the cold chain is mandatory. This means refrigerated containers (reefers), certified warehouses, and distribution fleets must be used—especially for items like yogurt, cheese, and butter. Failing to meet cold chain regulations can result in product spoilage and rejected shipments.

Due to these challenges, many entrepreneurs prefer to work with local dairy suppliers or white-label producers, particularly when starting a dairy products business in Indonesia. These partnerships allow faster entry to market while building brand recognition. Others choose a hybrid model: importing premium branded items while producing more cost-sensitive SKUs locally.

Whether you import or produce locally, aligning with the right compliance strategy is key to ensuring your dairy products business in Indonesia is both profitable and sustainable.

Food Safety, Labelling, and Packaging Compliance

Ensuring food safety and proper labeling is not just good practice—it’s a legal requirement for any dairy products business in Indonesia. As dairy is a perishable and regulated product category, the standards set by BPOM (National Agency of Drug and Food Control) and Kemendag (Ministry of Trade) are especially strict.

All packaged dairy products sold in Indonesia must include nutritional information clearly written in Bahasa Indonesia, regardless of whether the product is locally produced or imported. This includes total calories, macronutrients (carbohydrates, fats, proteins), vitamins, and minerals. Labels must also display the product name, net weight/volume, halal status, manufacturer/importer information, and BPOM registration number.

Additional required information includes:

• Storage temperature (e.g., “Keep refrigerated at 2–4°C”)
• Expiry date and production date
• Batch codes for traceability

Packaging materials must also comply with BPOM packaging standards, which ensure that no harmful substances migrate into the dairy product. Materials must be food-grade, tamper-proof, and capable of maintaining product integrity throughout its shelf life. If you're using glass, plastic, or tetra packs, these must be certified as safe and appropriately sealed.

Failure to meet labeling and packaging requirements may result in your products being rejected at customs, removed from shelves, or penalized under food safety laws. For a dairy products business in Indonesia, attention to detail in packaging compliance is a critical step in brand credibility and legal standing.

If you're unsure about the specifics, working with a regulatory consultant or legal advisor can help streamline the compliance process and prevent costly setbacks.

Taxation, BPJS, and Payroll Obligations

Setting up a legally compliant dairy products business in Indonesia means managing your tax, social security, and payroll responsibilities from day one. These obligations apply whether you're running a small dairy processing facility or a full-scale production and distribution enterprise under a PT PMA structure.

As a foreign-owned PT PMA, your business will be subject to the standard corporate income tax rate of 22% on net taxable income. However, new businesses may be eligible for tax incentives under Indonesia’s investment priority sectors—especially if your operations contribute to agricultural development or rural employment. Always confirm your eligibility with the DJP (Direktorat Jenderal Pajak) or a trusted tax advisor.

In addition to corporate tax, you’ll also need to handle withholding tax (PPh 23) when paying third-party vendors, contractors, and distributors. This typically ranges between 2–15%, depending on the service or supply category. For dairy importers, customs duties and VAT (10–11%) may also apply when bringing goods into the country.

Employee obligations are just as important. All employees, whether in the office or at your dairy production site, must be registered with BPJS Ketenagakerjaan and BPJS Kesehatan, Indonesia’s social security and healthcare systems. Employers are responsible for monthly contributions, with rates between 0.24%–5.7% of salaries, depending on the coverage type.

For a sustainable and ethical dairy products business in Indonesia, ensuring that your tax, payroll, and BPJS responsibilities are properly managed will not only keep you compliant—it also supports a productive and protected workforce.

Hiring Local Talent and Manpower Licensing

Building a compliant and efficient workforce is a key part of establishing a dairy products business in Indonesia. While foreign investors are allowed to bring in key experts, Indonesian labor regulations strongly encourage the hiring of local talent—especially in production and operational roles.

Indonesia restricts the employment of foreign workers in labor-intensive roles like packaging, warehousing, machine operations, and food processing. These positions must be filled by Indonesian nationals. Foreigners can only be hired for managerial or highly specialized positions, such as plant consultants, technical engineers, or quality assurance specialists—each requiring approval from the Ministry of Manpower (Kemnaker).

To legally employ both local and foreign workers, your HR department must register with the OSS (Online Single Submission) system and obtain a Manpower Utilization License (IMTA) for every expatriate staff member. This includes submitting a RPTKA (Foreign Worker Utilization Plan) that outlines the job role, duration, and training commitments for Indonesian understudies.

Moreover, there are mandatory local-to-foreign hire ratios. Typically, a company must hire at least 3–5 local workers for every 1 foreigner employed. Non-compliance may result in fines, visa issues, or even business license suspension.

For a smooth operation, it’s recommended that your dairy products business in Indonesia build strong partnerships with local HR consultants or recruitment firms familiar with food sector requirements. These partners can assist in workforce planning, compliance, and even BPJS onboarding.

Embracing local talent not only ensures legal compliance but also builds goodwill within the community and enhances your brand’s reputation in Indonesia’s competitive dairy industry.

Distribution Channels and Retail Permits

Once your production is up and running, getting your products into the hands of consumers is the next big step. A successful dairy products business in Indonesia must navigate various distribution channels—retail stores, wholesale partners, HORECA (hotels, restaurants, cafés), and e-commerce platforms—all of which come with specific licensing and compliance needs.

To legally distribute dairy products through retail or wholesale, your company must hold a TDP (Tanda Daftar Perusahaan) or Trade Business License, now integrated within the NIB (Nomor Induk Berusaha) system under OSS. This license authorizes you to trade food and beverage products in physical stores, supermarkets, and traditional markets across Indonesia. For companies planning to sell through e-commerce, you may also need to register as an online merchant under Ministry of Trade regulations.

Additionally, your facilities and distribution operations will be subject to periodic inspections from the regional health offices (Dinas Kesehatan). These inspections focus on cold storage conditions, expiry date tracking, hygiene standards, and transport vehicles—especially for temperature-sensitive products like milk, yogurt, and cheese.

If your dairy products business in Indonesia wants to scale nationally, you’ll need to work closely with modern trade channels (like Indomaret, Alfamart, or Tokopedia) that typically require product safety certificates, BPOM registration, halal certification, and sometimes even laboratory testing for every SKU.

Ultimately, aligning your distribution strategy with legal permits ensures your product reaches more consumers—safely, efficiently, and without regulatory hiccups.

Common Pitfalls to Avoid in the Dairy Products Business in Indonesia

Launching a dairy products business in Indonesia offers great potential, but even experienced investors can stumble if they overlook key legal and operational details. To save time, money, and regulatory trouble, here are common pitfalls you should avoid:

1. Delaying BPOM Registration
Many startups underestimate the time needed for BPOM approval. If you're planning to sell processed dairy goods like yogurt, cheese, or UHT milk, registration must begin well before you enter the market. Without BPOM approval, your products are not legally allowed to be distributed or sold.

2. Ignoring Cold Chain Requirements
Indonesia’s tropical climate makes refrigeration a critical part of your supply chain. If your dairy products aren't transported and stored under proper cold chain conditions, you risk spoilage, safety issues, and regulatory violations. Many businesses fail because they lack adequate cold storage partners or vehicles.

3. Failing to Meet Halal Certification Deadlines
As of the latest updates, most dairy products must comply with mandatory halal certification under the new halal law. Failure to certify products on time can lead to product recalls, sales bans, or damaged brand reputation—especially when selling to Muslim-majority regions.

For any dairy products business in Indonesia, staying ahead of these compliance areas is essential. It’s always best to work with legal consultants, food safety experts, and logistics partners who understand the dairy industry’s specific challenges in the Indonesian market.

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