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Foreign Investment Company Indonesia

PT PMA

Registration of PT PMA (Foreign Investment Company Indonesia) 

This registration process is tailored for foreign investors seeking to initiate a new company or expand their business presence in Indonesia. It provides a legal framework enabling foreign investors to participate in various sectors of the Indonesian economy, subject to specific regulations and restrictions.

Process for PT PMA Registration in Indonesia

  • Submit the company name for registration with the Notary (our notary partner can help you with this), ensuring it consists of three words. The Notary will then create a draft Deed of Establishment.

  • Receive the Decree Approval from the Ministry of Law & Human Rights.

  • Acquire the Registration Number (NIB/Nomor Induk Berusaha).

  • Secure the Business License using the Online Single Submission System.

  • Obtain the Commercial License if it is applicable to your business.

Advantages of Establishing a PT PMA in Indonesia

For foreign entrepreneurs seeking to establish a business in Indonesia, opting for the registration of a PT PMA (foreign-owned limited liability company) presents several benefits compared to registering a local PT (Perseroan Terbatas) company.

Here are some advantages of PT PMA in comparison to PT:

  • Foreign Ownership:
    A key benefit of PT PMA is its allowance for foreign ownership across various sectors. While local PT companies typically face restrictions to Indonesian ownership, PT PMAs empower foreign investors to hold a majority or 100% ownership, contingent upon the sector and prevailing regulations. This affords foreign investors greater control and flexibility in managing their businesses.

  • Market Entry:
    PT PMAs enjoy entry into a wider array of business sectors when compared to local PT companies. Specific industries, including telecommunications, transportation, healthcare, and e-commerce, may impose restrictions on local PT companies but are accessible to foreign investment through PT PMAs. This broadens the scope of market opportunities available to foreign investors in Indonesia.

  • Legal Safeguards:
    Being a registered foreign-owned entity, PT PMAs enjoy legal protection under Indonesian law. This protection encompasses property rights, intellectual property rights, contractual agreements, and access to dispute resolution mechanisms. PT PMAs offer a recognized legal framework that ensures the protection of the interests and rights of foreign investors conducting business in Indonesia.

  • International Standing and Reputation:
    Operating as a PT PMA can elevate the international image and reputation of a foreign investor's company. It showcases a dedication to long-term investment in Indonesia and signifies adherence to local regulations. This can foster increased trust among business partners, customers, and stakeholders, facilitating business growth and partnerships.

Minimum Requirements for PT PMA Registration in Indonesia

To initiate the registration process for a PT PMA (Foreign-owned Limited Liability Company) in Indonesia, a business must meet the following minimum requirements:

  • Have a minimum of 2 shareholders.

  • Provide the identity and contact details of company shareholders, including the following requirements:

    • Indonesian individuals: KTP (ID Card) and NPWP.

    • Foreign individuals: Valid passport.

    • For Indonesian companies, submit a copy of the Article of Establishment, the Approval letter from the Ministry of Law and Human Rights, a Domicile Letter, Tax ID, and other necessary supporting licenses. For detailed information on the required documents for PT PMA registration, feel free to contact us for a complimentary consultation.

    • For foreign companies, furnish a copy of the Article of Association in English or its translation into Bahasa Indonesia by a certified translator.

    • Provide the identity and contact details of company directors and commissioners:
      Indonesian directors and commissioners: KTP, NPWP, email, and phone number.
      Foreign individuals: Valid passport, email, and phone number.

  • Include a copy of the Lease Agreement between the company and building management.

    The limitation of share value for PMA based on the Minister of Law and Human Rights Regulation Number 29 of 2021 concerning Visas and Stay Permits and the Investment Coordinating Board Regulation Number 4 of 2021 concerning Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities is IDR 1,125,000,000. However, there has been a change according to the Minister of Law and Human Rights Regulation Number 22 of 2023 concerning Visas and Stay Permits. As per the new regulation, the share value for foreign nationals in PMA must be equal to or greater than IDR 10,000,000,000 per individual shareholder.

FAQ

What are the various options for company establishment?
 

For foreigners, the recommended route is to establish a PT PMA. This structure allows the foreign investor to hold 100% ownership of the business.

Alternatively, if you are Indonesian or have local partners, you can opt for a Local PT, where the ownership is entirely Indonesian.

It's important to note that in certain industries, foreign ownership may be restricted, necessitating the establishment of a Local PT.

Furthermore, information about business sectors open to foreign investors can be found in the Negative Investment List, with the latest revision outlined in Presidential Regulation No. 44/2016. If a sector mandates partial domestic ownership, collaboration with a local partner is required. Business fields not listed in the Negative Investment List are fully open to foreign investment unless specified otherwise in additional regulations.

If there is uncertainty about whether your business field aligns with PMA guidelines, please don't hesitate to contact us for advice.

What is the meaning of PT, and are there any constraints on choosing my business name?
 

PT is essentially the Indonesian equivalent of Limited, Pte, or Ltd.

In Indonesia, it is mandatory to register your company name in Indonesian, comprising a minimum of 3 words. For instance, "Indofast permit bersama." However, rest assured, this name is solely for your company establishment, and you are free to brand your business with an English name if you prefer.

When establishing a business, is it necessary to have a physical office, or can a residential location be used?
 

Prior to the incorporation process, you must select the location of your business and possess a registered address in an office building in Indonesia. Using a home address is not permissible for company registration. Alternatively, you can utilize a virtual office for a Local PT or a coworking space for PT PMA.

What is paid-up capital, and how does it impact the business setup?
 

 Paid-up capital represents the funds invested by shareholders into the business. The amount varies depending on whether the business is a PT or a PMA and the projected size of the business. There are two methods to demonstrate paid-up capital: providing a copy of the company bank statement reflecting the investment amount or signing a statement letter acknowledging the commitment to invest the capital in the future
 

The paid-up capital amounts are as follows:

PT :

  • Small: Above IDR 50,000,000 – 500,000,000

  • Medium: Above IDR 500,000,000 – 10,000,000,000

  • Large: Above IDR 10,000,000,000

It's important to note that if you intend to hire foreigners in a PT, the company size must be at least Medium with a paid-in capital above IDR 1,100,000,000.
 

PT PMA (Foreign Investment Company) :
 

As a foreign-owned company, the investment value is significantly higher than that of a PT. The investor should invest above USD 1 million / 10 billion IDR as their investment plan, with a paid-up capital above USD 250,000,000 / 2.5 billion IDR. The investment plan can be in cash or fixed assets, such as machinery.

According to Indonesia Company Law (04/2007), every limited liability company in Indonesia requires at least two shareholders, one commissioner, and at least one director. Shareholders can be individuals, corporations, or a combination of both.

Do you need to provide proof of the transfer of your paid-up capital?
 

During the company establishment process, there is no requirement to provide proof of the transfer of your paid-up capital. You may fulfill the payment once the company is established.

Are there any standard compliances you need to be aware of before establishing your company in Indonesia?
 

In addition to taxes, companies must register for social and health security programs (BPJS) mandated by the government. For PT PMA companies, it is mandatory to submit the investment report four times per year, commonly known as the "LKPM Report."

How is the tax process structured in Indonesia?
 

Every company operating in Indonesia is obligated to fulfill monthly and annual tax payments and reporting. The primary corporate taxes levied on Indonesian companies include corporate income tax, value-added tax (VAT), and land and building tax. The standard corporate income tax rate in Indonesia is 25%. Medium-sized companies with annual revenue below IDR 50 billion can seek a reduced income tax rate of 12.5%, while small companies with annual revenue less than IDR 4.8 billion qualify for a corporate income tax rate of 0.5%. We can also help you reporting your tax here in Indonesia. 

How many foreign employees can be hired after the company is established?
 

A PT PMA has the flexibility to hire as many foreigners as needed, provided there is a minimum ratio of 10 Indonesian employees for every 1 foreign employee. In the case of a Local PT, one foreigner can be employed, contingent upon having a minimum paid-up capital of 1.1 billion IDR.

What are the roles and responsibilities of the Director and the Commissioner?
 

Directors are responsible for managing the company in accordance with its Articles of Association and Indonesian Company Law. Commissioners, on the other hand, are tasked with supervising the company's activities.

Is there an annual renewal requirement for licenses once the company is established?
 

There are no mandatory annual renewals or validity restrictions, as long as the company continues its operations without amendments to its business structure or new governmental regulations.

Directors are responsible for managing the company in accordance with its Articles of Association and Indonesian Company Law. Commissioners, on the other hand, are tasked with supervising the company's activities.

Can the office address be changed after the company is established?
 

Changing the office address is possible, with the process varying based on whether the new address is within the same district or a different one. If the new address is in the same district, reporting the change to the tax office is sufficient. However, if the new address is in a different district, it necessitates amending multiple documents and permits, including the location permit, which requires signatures from district and subdistrict heads. Additionally, revisions to the Article of Association, Domicile Letter, Business License, Company Certificate Number, and notifying the tax office for a change in the taxation account are essential.

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