But it is stymied by everything from mounting tariffs and sudden shifts in policy to regulations that prohibit foreign retailers from operating their own stores, says Sumesh Wadhwa, head of the Levi’s Indonesia unit. In July, regulators raised duties to 25% from 15%; Levi’s got only one day’s notice, and its goods were stalled at customs until it paid the balance, he says.

The Indonesian government is rolling out measures to smooth the way for global investors—the first batch earlier this month—but they have yet to produce concrete results.

“So far,” said Mr. Wadhwa, the government has shown “great intentions, very little visible action to us.”

The frustrations at Levi’s underscore the challenges many foreign companies are facing as they try to expand in one of the region’s biggest economies.

Indonesia is the third-most-populous country in Asia after China and India, and its economy—also the third-largest—has been growing at 5% to 6% for most of the past decade as it rode a global commodities boom. Increasing urbanization and rising incomes have boosted Indonesians’ spending power. Household spending grew 20% over the past five years, and last year totaled almost $500 billion, double that of Thailand.

Foreign investment also climbed, to $28.5 billion in 2014 from $16.4 billion in 2010, though growth has stalled over the past year, according to Indonesia’s Investment Coordinating Board.

Now economic growth is sputtering, sinking to a six-year low of 4.67% in the second quarter, in part because of a plummeting rupiah and China’s weaker-than-expected appetite for exports such as coal and palm oil.

That has left many multinationals increasingly impatient with a host of obstacles to doing business in the country, including high tariffs, curbs on foreign investment, long-neglected infrastructure and rules that shift often and without warning.

Some companies say barriers are growing instead of shrinking: Indonesia has asked smartphone makers to source more parts locally starting in 2017, tightened restrictions on foreign labor, and added e-commerce as well as some oil-and-gas and electricity-installation services to the list of sectors closed to foreign investment.

President Joko Widodo has pledged to help. On Sept. 9, he said the government was revising 89 regulations that hinder business, easing licensing requirements for exports and imports, doing away with several overlapping rules and making it easier for tourists to get visas. He also promised more deregulation this month and in October.

One regulation the government has said it plans to relax is a surprise January decree that banned the sale of beer in convenience stores, cutting profits nearly in half for the country’s brewers.

Michael Chin, president director of Indonesia’s biggest beer producer, PT Multi Bintang, which is majority-owned by Heineken Holding NV of the Netherlands, said the move “sounds positive,” but the details—which might include letting local governments decide where alcohol can be sold—remain unclear.

Jakob Friis Sorensen, the head of shipping company Maersk Line Indonesia, says high import tariffs that depress trade, and a ban on using foreign currencies in domestic transactions, top his list. The currency rule in particular has forced multinationals that once settled accounts in dollars to hedge themselves against swings in the rupiah, a costly step that pushes up prices for their goods, Mr. Sorensen says.

Heavy-equipment providers say they have been hit by a ban on the export of raw ores, aimed at pushing mining companies to process more metal domestically.

Indonesia should streamline the process for setting up companies, says Willson Cuaca, managing partner at East Ventures, a Singapore-based venture-capital firm that has invested about $15 million in early-stage startups since 2010, mostly in Indonesia. In Singapore, entrepreneurs can set up a company in less than two hours, he says, while in Indonesia it takes at least a month to get the documentation needed to open a bank account.

The biggest challenge for Levi’s, says Mr. Wadhwa, is a rule that requires single-brand foreign retailers to operate through franchisees. Levi’s now has about 60 shops in Indonesia, and sales have been growing at a double-digit rate for the past five years, he says. The company would like to open 15 new stores a year, but the franchisees are willing to open less than half that number, Mr. Wadhwa says.

The rule also makes it hard to retain and develop staff, he says, because training and salaries are determined by franchisees.

Levi’s has also been hurt by the higher import tariffs implemented in July, in a bid to aid domestic producers. Those apply to more than 1,000 goods, including apparel.

Indonesia’s new administration is more transparent than previous regimes, and its officials are willing to listen to companies’ suggestions for improving regulations, says Mr. Wadhwa. “But it’s taking a long time,” he says.