Indonesia’s regulatory environment continues to evolve as the government refines how trade activities are supervised and enforced. One of the most discussed developments in recent months is PP No. 3/2026, particularly its impact on businesses that rely on virtual offices. For companies operating in the direct selling sector, this regulation marks a clear shift in expectations around physical presence and operational accountability.
While headlines often reduce the issue to a simple “virtual office ban,” the reality behind PP No. 3/2026 is more nuanced. The regulation reflects deeper concerns about consumer protection, traceability, and risk-based licensing—concerns that directly affect how direct selling businesses are structured, registered, and legally supported in Indonesia.
PP No. 3/2026 and Indonesia’s Regulatory Direction
PP No. 3/2026 is an amendment to Government Regulation No. 29 of 2021 on the administration of the trade sector. Rather than introducing a new regulatory regime, it strengthens existing provisions by addressing enforcement gaps identified over the past few years.
Indonesia’s push for easier business registration through OSS and risk-based licensing has succeeded in lowering entry barriers. However, regulators have also learned that ease of entry must be balanced with effective supervision—especially in sectors with high consumer exposure. PP No. 3/2026 reflects this recalibration, particularly for business models that operate outside traditional retail environments.
Why Direct Selling Is Treated Differently
Direct selling businesses operate through networks of individual sellers who engage directly with consumers, often outside fixed retail premises. This structure creates unique regulatory challenges. Consumer complaints, misleading claims, and disputes over compensation schemes are harder to manage when the principal company lacks a clear and verifiable operational base.
Under PP No. 3/2026, the government reinforces the idea that direct selling businesses must demonstrate real operational substance. This includes having a physical office that regulators can inspect, verify, and use as a point of accountability. The requirement is not about limiting business innovation but about ensuring that businesses with higher consumer risk operate transparently.
The Regulatory Issue with Virtual Offices
Virtual offices have long been used by businesses entering Indonesia as a cost-efficient way to establish a legal address. In many sectors, this remains acceptable. However, PP No. 3/2026 highlights the limitations of virtual offices for direct selling activities.
A virtual office often does not reflect where management decisions are made, records are kept, or consumer complaints are resolved. For regulators tasked with supervision, this creates uncertainty. Inspections become symbolic rather than effective, and enforcement actions become more complex.
By limiting virtual office use for direct selling businesses, PP No. 3/2026 closes a gap that previously weakened regulatory oversight. Physical presence allows authorities to confirm that a company’s licensed activities align with its actual operations.
Risk-Based Licensing and Physical Presence
Indonesia’s risk-based licensing framework plays a central role in PP No. 3/2026. Businesses classified as higher risk are subject to stricter compliance requirements, including operational readiness and ongoing supervision.
Direct selling falls into this category because of its broad consumer reach and decentralized sales model. Physical offices are therefore treated as a compliance tool, not an administrative burden. They provide a stable base for inspections, reporting, and dispute resolution.
From a legal standpoint, this shift reinforces the importance of aligning company registration structures with actual business activities. Mismatches between licensed activities, office arrangements, and operational reality can now trigger greater scrutiny.
What This Means for Company Registration
For businesses planning to enter the direct selling market, PP No. 3/2026 changes how company registration should be approached. Choosing a virtual office address may no longer be suitable, even at the early stages of market entry.
Registration decisions must now consider:
- Whether the intended business activity falls under direct selling classifications
- Whether the office arrangement meets inspection and supervision requirements
- Whether the registered address reflects genuine operational presence
This is where professional company registration advisory becomes critical. Registering a company that later fails compliance checks can lead to restructuring costs, licensing delays, or regulatory exposure.
Legal Advisory Implications Under PP No. 3/2026
Beyond registration, PP No. 3/2026 raises broader legal questions. Businesses must interpret how the regulation interacts with existing licenses, distribution agreements, and operational models.
Legal advisory support is particularly relevant when:
- Transitioning from a virtual office to a physical office
- Reviewing existing licenses and OSS data for alignment
- Responding to regulatory inquiries or inspections
- Structuring direct selling networks to comply with trade regulations
Without proper legal interpretation, businesses risk misunderstanding the scope of PP No. 3/2026, leading either to overreaction or non-compliance.
Virtual Offices Are Not Universally Prohibited
It is important to clarify that PP No. 3/2026 does not eliminate virtual offices across all sectors. The restriction applies specifically to direct selling businesses due to their higher regulatory risk profile.
Other sectors may still use virtual offices depending on licensing requirements and risk classification. However, the regulation signals a broader message: business substance is becoming increasingly important in Indonesia’s regulatory assessments.
Frequently Asked Questions (FAQ)
Does PP No. 3/2026 ban virtual offices in Indonesia?
No. PP No. 3/2026 limits virtual office use for direct selling businesses. Other sectors may still use virtual offices subject to licensing rules.
Does this apply to foreign-owned companies?
Yes. The regulation applies equally to domestic companies and PT PMA entities operating in the direct selling sector.
Can existing companies continue using virtual offices?
Existing companies should review their compliance position. Continued use of virtual offices may increase regulatory risk during inspections or licensing reviews.
Is a physical office required before registration?
For direct selling activities, planning for a physical office at the registration stage is strongly advisable to align with PP No. 3/2026.
Conclusion
PP No. 3/2026 reflects Indonesia’s effort to balance ease of doing business with effective regulatory oversight. By limiting virtual office use for direct selling businesses, the government is reinforcing accountability, consumer protection, and operational transparency.
For businesses, the regulation is not a barrier but a signal. Long-term success in Indonesia increasingly depends on aligning legal structures, operational presence, and regulatory expectations from the outset.
How CPT Corporate Can Help
Navigating PP No. 3/2026 requires more than understanding the rule—it requires translating regulation into compliant business structure.
CPT Corporate supports businesses through:
- Company Registration Services, ensuring business structures and office arrangements align with current trade regulations
- Legal Advisory Services, helping companies interpret regulatory changes, review compliance risks, and respond confidently to regulatory requirements
Whether you are planning market entry or reviewing an existing setup, the right legal and registration strategy can prevent costly adjustments later. Understanding PP No. 3/2026 early is the first step toward sustainable operations in Indonesia.
