I am a KITAS holder sponsored by my wife. I want to start a business in Indonesia. What are the primary restrictions I am going to run up against? What sort of processes do I need to do to get around those?
In general, Indonesia is remarkably hostile towards foreign investment. The overall understanding is that the country is poor because too little of it is locally owned. For this reason, it is extremely difficult for a foreigner to start a business by himself. Since your wife sponsored you, you have two basic options:
You can create your own business, but you must invest in it at least $100k USD currently (2014). This business must be a corporation.
You can have your wife as the official owner of the business, and have agreements between the business and you regarding decision making etc. This business could be any form (limited partnership, corporation, or even sole proprietor).
Holding a KITAS does not entitle you to generally invest in Indonesian small businesses. Only citizens are really allowed to do that, nor does it allow you to officially run your own business, though it does allow you to work for someone else.