PT PMA (Perseroan Terbatas Penanaman Modal Asing), also known as PMA Indonesia, is a common form of Foreign Owned Company in Indonesia. This is a form of a legal entity established under the Indonesian Law, which allows foreigners to do foreign investment in order to open a business in Indonesia and generate revenues or profit. Since 2021, signing up for Foreign investment companies in Indonesia can be done online through Online Single Submission (OSS) portal.
The establishment of a PT PMA is regulated by Company Law No. 40 of 2007 (Peraturan Perseroan Terbatas). This comprehensive legislation sets forth the legal framework for establishing and operating companies in Indonesia, including foreign-owned entities. The Company Law outlines the requirements, procedures, and obligations that must be followed when establishing foreign companies. It covers various aspects such as capital investment, shareholding structure, corporate governance, and compliance with Indonesian regulations.
Understanding and adhering to the provisions of the Company Law is essential to ensure a smooth and lawful establishment of Limited Liability companies in Indonesia. Navigating the intricacies of company registration in Indonesia can be a daunting task.
In this article, we will provide you with five essential tips to help you successfully establish a PT PMA in Indonesia and own a foreign-owned company with confidence.
Tips for setting up a PT PMA in Indonesia
Determine the Business Activities of PT PMA
The first thing you have to settle before establishing a PT PMA is the Business Activity of the company you’re going to set up. This is due to the prevailing Investment Negative List( Daftar Negatif Investasi or DNI) regulated in Presidential RegulationNo. 39 of 2014.
The DNI regulates all Business Conditioning allowed to do by PT PMA, and the limitations on the composition of Foreign Shareholders for PT PMA operating in certain business conditioning. There are some business conditioning which is restricted to be operated by PT PMA, similar to Retail, e-commerce, Real Estate Agents, and Land Transportation. On the other hand, some business conditioning can be operated by PT PMA with limited foreign shareholding composition, similar to Construction, trip Services, and Distributor. There are some business conditioning that can be operated by PT PMA which is completely possessed by 100 foreign shareholders, which are Consultations, Web Portal, and Trading, especially Import and Export.
Understand the right Investment Law
PT PMA companies are subject to minimum capital requirements, which vary depending on the business sector. The capital can be in the form of cash, assets, or a combination of both. A minimum investment for paid-up capital of IDR 10 billion is required if you want to establish a PMA company in Indonesia.
Foreign investors also need to obtain investment approval from the Indonesian Investment Coordinating Board (BKPM) or other relevant authorities, depending on the business sector.
Make a clear Business Plan and Shareholding Structure
A well-crafted Business Plan is compulsory to secure a strong basis for any foreign investment type in Indonesia. This is because a detailed business plan helps to define your business activities in Indonesia and demonstrates your commitment to the local market. It should include a comprehensive analysis of the market, competition, target audience, and financial projections.
Additionally, the business plan should outline the shareholding structure of the company, specifying the percentage of foreign ownership and any local Indonesian shareholders. This shareholding structure is crucial as it determines compliance with the Positive Investment List or Negative Investment List, which categorizes business activities based on the level of foreign ownership allowed. By clearly defining your business plan and shareholding structure, you can ensure that your investment aligns with the regulatory requirements and enhances your chances of success in the Indonesian market. It also provides a roadmap for future growth and expansion, enabling you to make informed decisions and attract potential investors or partners.
Design a firm Shareholding Structure
Aside from the Business Plan, a PT PMA must have a firm and strong shareholding structure. A correct structure should have at least two shareholders one local shareholder and one foreign shareholder. The percentage of foreign ownership allowed depends on the business sector and is subject to certain restrictions in some sectors. Local Indonesian shareholders are also allowed and may be required in certain cases.
Engage with a Reliable Agent for Incorporation
While hiring an agent is important for your company’s incorporation in Indonesia, choosing an unreliable one means that you will lose not only your money, but also your time, effort, and reputation.
Thus, you need to do a thorough check on your agent to make sure that they are registered professional agents in Indonesia with expertise in Indonesian laws and foreign establishment incorporation. By engaging with a reliable agent to handle your foreign investment company, you could cut unnecessary steps by knowing which business license you should have for your company.
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
