As the largest economy in Southeast Asia, Indonesia offers promising opportunities for foreign investors to own and operate businesses from one sector to another. However, navigating the legal and regulatory requirements in the country can seem daunting. Establishing a PT PMA could be the ideal pathway for a business to engage in various activities in Indonesia, subject to regulations and licenses, and actively contribute to the country’s economic growth while maintaining the foreign ownership status.
In this article, we will guide you through the essential comprehension and provide valuable insights on how to establish a PT PMA in Indonesia. From understanding the legal framework to obtaining necessary permits, this guide will equip you with the knowledge and confidence to embark on your entrepreneurial journey and explore business opportunities in Indonesia.
What is a PMA?
PMA, or Penanaman Modal Asing, refers to a foreign-owned company in Indonesia. PMA addresses the PT (Perseroan Terbatas or Limited Liability Company in Indonesia) owned by a foreigner or incorporated upon Foreign Investment. This form of legal entity allows foreign investors to establish and conduct business in Indonesia after completing a set of Company Registration processes according to Indonesian Law. As a foreign investor, you become a shareholder in the PT PMA that could contribute capital, generate revenue and oversee company operations.
What is considered a Foreign Company?
A business entity in Indonesia can take the form of a local or foreign limited liability company, which is specifically denoted by a direct investment company. A foreign company refers to any private company where the majority of ownership or control is held by foreign investors or shareholders. It is established by foreign individuals or organizations seeking to conduct business activities in Indonesia.
The shareholders should provide the paid-up capital requirement and other resources necessary for the establishment and operation of the company. These people typically have a stake in the company’s shares and are actively involved in its decision-making processes.
What benefits of a PMA (Foreign-Owned) Company?
This type of company offers several benefits for foreign investors:
- Access a broad chance to invest in the vibrant Indonesian Market
- Access various investment incentives from the Indonesian government. These incentives may include tax breaks, import duty exemptions, and simplified licensing processes, depending on the sector and location of the investment.
- As a legal entity, a Foreign investment limited liability company receives legal protection under Indonesian law. This includes protection of intellectual property rights, contractual agreements, and dispute resolution mechanisms. It provides a secure environment for conducting business operations.
- A foreign owned company can repatriate their profits, dividends, and capital gains earned from their investments in Indonesia.
- The establishment of a PT PMA gains its popularity through the favourable ownership structure, access to perform sales directly in Indonesia, legal recognition, government support, and the potential for business growth and expansion.
How do I register a Foreign Company In Indonesia?
Registering this type of company involves a series of steps and requirements. As a foreign investor, it is important to navigate the registration process while adhering to Indonesian regulations.
Steps for the Establishment of PT PMA
To set up a foreign company in Indonesia, determine the desired business activities and secure a local company name that complies with Indonesian naming conventions. The business field you would like to acquire should match the recent Indonesian Investment List.
Next, prepare the necessary documents, such as the company’s Articles of Association (Anggaran Dasar) and the Investment Plan (Rencana Investasi). These documents outline the company’s structure, purpose, and investment details.
Once the documents are prepared, apply to the Indonesian Investment Coordinating Board (BKPM) online or through its regional office. This application should include relevant information about the shareholders, including their identities and investment shares. There should be at least two shareholders, as Indonesian shareholders are required to hold at least 5% of the company’s shares, while foreign shareholders can hold the remaining shares.
Upon receiving approval from the BKPM, obtain a Deed of Establishment (Akta Pendirian) from a notary. This legalizes the establishment of the PT PMA. Following this, apply for a Taxpayer Identification Number (Nomor Pokok Wajib Pajak, NPWP) and register for social security programs.
Additionally, secure any necessary business licenses and permits specific to the company’s industry and activities. These may include operational licenses, environmental permits, and other sector-specific requirements.
Finally, register the PT PMA with the Ministry of Law and Human Rights, which grants the official legal status of the company.
What is The Minimum Capital of a PT PMA Registration?
To set up a PT PMA, the minimum capital requirement serves as an indication of the seriousness and financial capacity of the investors to support the establishment and operation of the PT PMA. It also ensures that the company has sufficient funds to carry out its intended business activities and fulfil financial obligations in Indonesia.
The minimum capital requirement for a PT PMA in Indonesia varies depending on the business sector and location. The prevailing regulations state that the minimum investment value for a PT PMA should be at least IDR 10 billion (approximately USD 700,000) or the equivalent in other currencies. However, certain sectors such as banking, insurance, and energy may have higher minimum capital requirements due to specific industry regulations.
What is Investment List?
Upon choosing desired business sectors in Indonesia, there are items every businessperson should understand. These include the Negative Investment List and Positive Investment List, or Daftar Positif dan Daftar Negatif Investasi, which refers to a set of regulations that determine the sectors and business activities that are open to foreign investment (Positive List) and those that are restricted or closed to such investment (Negative List).
These lists are issued by the government’s regulation to regulate and guide foreign investment in the country.
Is there an option to set up a business in Indonesia without investing through PT PMA Company?
Another option to access the Indonesia Market is to set up a Representative Office (KPPA). Setting up a KPPA offers an alternative option to establish a presence in Indonesia without the significant incorporation of a foreign investment.
Are you ready to unlock the potential of foreign investment in Indonesia and get involved to explore business opportunities in the captivating Indonesian Market?
Whether choosing to set up a PT PMA or Representative Office, it is essential to carefully consider the specific objectives, activities, and legal implications before deciding the best type of legal entity for your business, taking into account company law, foreign direct investment regulations, and the nature of the business you wish to conduct in Indonesia.
As the best provider of Legal Services in Indonesia, Let’sMoveIndonesia offers professional PT PMA registration assistance for foreigners who need to establish a PT or KPPA in Jakarta and Bali. With our expertise and knowledge of Indonesian company law and foreign direct investment regulations, we provide a seamless and efficient process for setting up a business entity.
Check out our PT PMA Registration Page to learn more about registering your PT PMA with LetsMoveIndonesia or speak to our consultants now through our FREE Consultation!
Want to know more? Then check out our useful guides below by clicking the links:
Company Establishment in Indonesia – Your questions answered
Registering a Trademark in Indonesia – How to protect your business
Business Establishment – The Process and Requirements
