Foreign Owned Company Registration In Indonesia

Registering company in Indonesia

PT-PMA-cartonAll foreign owned companies in Indonesia are classified as PT PMA-s (stands for limited liability company with foreign direct investment). A company is a PMA as long as any of the shares are owned by foreigners.

An exception is representative office where foreign company is exploring business opportunities in Indonesia and is not generating any income from local activities.

Foreign companies that cannot or choose not to meet the foreign ownership requirements can set up a Nominee Company instead.

In this article we will guide you through the process of PT PMA company registration. We have worked with dozens of foreign companies from various industries so everything in this article is based on real world experience.

Step 1 – preparation

Before you are ready to start the registration process, there are several important aspects you need to consider. Most importantly:

Foreign ownership limitations

Maximum foreign ownership varies from 0 to 100% and depends on the business classification. The document regulating restricted industries is Negative Investment List (DNI) and it is updated every few years. Next one is expected to be released in November 2013 and is rumored to be more open than the previous one. More detailed information can be found from our foreign ownership restrictions article.

Minimum capital and investment plan

BKPM (Indonesia Investment Coordinating Board, bureau that is approving foreign investments) requires foreign owned companies to present an investment plan for at least Rp. 10.000.000.000 or its amount in USD following current exchange rate. This is a plan and once the PT PMA is registered you will need to start reporting the investment activities every 3 or 6 months depending on your licenses. Minimum 25% (Rp. 2.500.000.000 or its amount in USD) of the investment plan needs to be paid up as capital.

Investment plan can be either cash or fixed assets such as machinery. Land and buildings are excluded from the amount.

For a paid up capital, there are 2 ways to prove it – The first one is by signing a capital statement letter by sharholders which clearly stated that the capital is ready to be paid, and Second one is by injecting to bank account. Since Bank account can not be opened before company is fully incorporated, new PT PMA can choose the first option. Read more about minimum capital.

Process for proving paid up capital for service sector companies is currently being revised, updates can be found from our article about registering consulting business.

Shareholders and corporate structure

Every limited liability company needs at least two shareholders. Those can be both individual or corporate shareholders. In your investment application you will state the amount of shares that will go to each of the shareholder. Minimum shares a shareholder can hold is at least amounted to Rp. 10.000.000, Additionally you will need to appoint at least one commissioner and director.

Commissioner is the supervisor of the director(s) and can easily be a foreigner. At least one of the directors needs to hold Indonesian tax card and this can only be obtained by locals or Indonesian residents (e.g. KITAS holders). Therefore you have an option to either appoint local director, an expat director already having residence permit or use nominee director service until you get your work permit. Read more about commissioners and directors.

Business location

Indonesia is a decentralized country and  a lot of the government’s work is done at district level. This means that you will need to decide already before submitting investment application where your business location will be and provide a domicile letter from building owner.

Local regulations vary and in some regions, such as Jakarta, domicile letter needs to be from an office building. This means you cannot use your own house as official address for the company.

UPDATE DECEMBER 2013: BKPM regulations changed and now you cannot get permanent business license with a virtual office. It’s still acceptable to use virtual office for setting up the company but then later you’d have to change to a physical office and change the following:

1. Principal license
2. Domicile
3. NPWP
4. TDP/ Business registry

Therefore we suggest to use an actual office space immediately, unless you don’t plan to have any office in the first 12 months of your operations. This will save you money. More on finding office space.

indosight-capital

Step 2 – incorporating PT PMA

Now that all the preconditions are met you are ready to start PT PMA registration. Be warned that this is a long process and takes usually 10 weeks.  Since 2015, the company registration time has become shorter and takes now about 6 weeks to complete by an experienced consultant.

Many industries require additional licenses which take additional time. More about that later in this article.

PT PMA registration process

NO.

Activities

Outcome Documents

Expected Timeline (Working days)

1

Request PT PMA name to Ministry of Law & Human Rights of RI PT PMA NAME

1

2

Review and Preparation of Principal License BKPM PRINCIPAL LICENSE

7

3

Submission and Monitoring Principal Licence

4

Minute of Article of Association of company, for shareholders to sign PT PMA Article of Association

2 to 3 (if all shareholders are in Indonesia)

5

Article of Association from Public Notary

1 to 2

3

6

Legalization of Article of Association by Ministry of Law & Human Rights of RI SK KEMKUMHAM

10  3

7

Domicile of company Domicile Letter from Kelurahan

3

8

Tax Identification Number NPWP

3

9

Registration Letter from Directorate General of Taxation SKT

3   5

10

PT registered letter to Local Government (DKI Jakarta) TDP

14   7

(Update September 2015: PT PMA process has shortened to approximately 6 weeks now)

After this process is completed,it essentially allows you to start running your business in Indonesia and conduct activities such as:

  1. Open a Corporate Bank Account in Indonesia
  2. Buying property or other assets on behalf of your company
  3. Start other preparatiosn for your operation, such as but not limited to: hiring staff, preparing office, etc.
  4. Proceed a working permit and temporary stay permit for foreign Directors and Commissioners

Izin Prinsip is valid for maximum 3 years depending on the business classification.

Additional business licenses

Besides the aforementioned process, many business classifications require additional business licenses. As there are so many classifications, we are not able to cover them in this article. Most common example of this is coal and mining business license.

Remember that you will need to start reporting company taxes and investment immediately after your PT PMA is incorporated.

Step 3 – Permanent Business License (IUT)

Once your company is up and running you will need to acquire Permanent Business License (Izin Usaha Tetap). BKPM gives 1-3 years to acquire IUT and the timeframe depends on how extensive are the business preparations.

For example, consulting and trading businesses usually get 1 year to receive IUT but theoretically could start IUT application process immediately after incorporating.

Industries such as manufacturing and hotels get 3 years for receiving IUT. In order to receive IUT, BKPM officials will come to the location and review whether the buildings and other items mentioned in the investment application have been completed.

It is best to apply for IUT immediately after you are eligible for it. This enables you to fully run your business and receive additional licenses and permits such as:

It takes 7-10 working days to receive the Permanent Business License. Read more about IUT.

Indosight

Market entry services in Indonesia

Indosight provides legal and payroll services to companies entering and expanding in Indonesia. Get in touch with our consultants regarding our company registration, payroll, compliance or visa services.


The information provided will remain confidential to Indosight and will only be used to schedule and prepare for the meeting.

20 thoughts on “Foreign Owned Company Registration In Indonesia

  1. Leon

    My company’s name Phyto Science Sdn Bhd (PT) in Malaysia, we would like to set up a packaging factory to supply goods to our country stockist in Indonesia, we need to register a PT and open a bank rekening in Indonesia. please give us a consultation or guideline to proceed.

    • Lauri

      Dear Leon,

      We have sent you a private email to discuss the specifics of your company.

      Thank you for contacting us!

  2. Then

    Hi. I am foreign investor from HongKong and want to set up a company in Jakarta Indonesia. I want to register a PT in Indonesia but I am foreigner. is it different process when I do it and when an Indonesian register a PT? I know that if i want to business in Indonesia I need a local partner. Is there any ways for me to do check with Indonesian courts for their past activities, as I heard alot of fraudulence occur in Indonesia if foreigners are not careful. Please help me with some guides on how a local and and international business set up a PT in Jakata. Where can i get information on this and are there records in the court?

    Your help will be very much appreciated.

    Thanks
    Samuel Then

    • Indosight

      Hi Samuel,

      It is possible to have 100% foreign owned business in Indonesia as long as your activities are not in the negative investment list. If they are, you will need local partners.

      It is possible to check whether your local partner has been legally established, but other than that there is not much information you can receive. I advise to have local partners that you have met in person and know more about.

      We have also sent you more details to your email.

      Lauri

  3. Justin Cheong

    Dear Indosight,

    Hi there! I am Justin and I wish to open a PT company based in Surabaya. I wish to open a Bubble Tea business in Surabaya. I have a few questions,

    1.) If I am the director of the company, can I apply for KITAS myself and converting to a KITAP after 5 consecutive years?

    2.) What are the requirements of opening a PT company in Indonesia?

    3.) The time frame and documents needed for a PT company registration?

    Could you advise me and furnish me with more details.

    I can be contacted at

    Thank you very much.

    Justin, Cheers.

  4. Dumitru POPERESNIUC

    Hi,
    The company I work for is Alewijnse from the Netherlands with its Romanian office responsible for International activities of the group (business area: maritime electrical services). We would like to set up a Representative Office in Surabaya. In order to support our local shipbuilding projects and to facilitate knowledge transfer activities in Indonesia, we need to register a Rep.Office and in Indonesia. Would you please give us a guideline to proceed together with costs for your services and time schedule for them?
    Thank you in advanc.

    Kind regards,

    Dumitru Poperesniuc
    +40 731 560 946

  5. Teng Hon Yeong

    I would like to set up a Indonesian PT registered company, for general trading within the Riau Islands.

    Kindly advise us on procedure and data need to be provided.

    Thank you
    Teng

    • Indosight

      Thanks Teng, our consultant will be in touch with you very soon.

  6. shah

    I would like to set up a Indonesian PT registered company, for IT business.

    Please advice.

    Thank you

    • Indosight

      Thank you Shah for the inquiry! Our consultant will contact you ASAP with some additional questions and based on that will prepare detailed overview of the process and fees.

  7. arlene

    hi, Lauri

    I would like to set up a Indonesian PT PMA registered company for medical instruments, so there’s any restricts on this business catagory.

    And, can you tell me the differences between the principal license and permanent business license?

    Waiting for your early reply, thanks very much.

    • Indosight

      Hi Arlene,

      Are you going to import or manufacture medical instruments? You can send details to our email contact@indosight.com so we can check what are the restrictions for your business activities.

      Principal license is an approval of your investment so that you can get started in Indonesia and you need to acquire permanent business license once you are ready to fully operate.

      Lauri

  8. eric19800509

    if i have already done the paid-up capital, when will i be supposed to pay the left registered capital as foreign investor?

    • Indosight

      The rest you are expected to pay as you realize your investment plan.

  9. paek

    If a PMA company and a foreign company invests together to form a JV, will the PMA’s capital regarded as “foreign” when there’s cap limit of foreign ownership(negative list)?

    • marlissa

      Hi Paek,

      Yes, the PMA Company is consider as a foreign shareholder.
      Hope this helps! I also sent you an email for further information.

  10. Chris Hsieh

    Hi,

    I’m Chris, and I would like to register a local PT, not PMA, company. Because I wont be able to invest $250,000 at the first year. I have read your info regarding to Nominee. My question is, if I use a nominee to register a local PT, will I be able to be the director of the company, even though I am a foreigner. After the company setup, I can apply for Kitas ?

    Thank you

    • Angeline Taniwan

      Dear Chris,

      Yes, you can but be informed that you have to put a minimum of 1 billion rupiah as paid up capital in your company article of association (Akta Pendirian), but since it is a local PT, you don’t actually need to inject this much. If you wish to know more and get our help for this, talk to our consultant by dropping us an email contact@indosight.com

      Cheers,
      Angeline Taniwan

  11. Tracy Le

    My company is in Vietnam, we would like to do business in Indonesia but we don’t know which kind of company is the most suitable for us ? My company do design consultant . when we set up a company, what do we prepare for this? I’m so grateful àn hope your help!

    • Angeline Taniwan

      Dear Tracy,

      First, you need to make sure if you want to generate income or not in here. If yes, then you need to establish PT/ PT PMA. If not, you can just established KPPA. You can talk to our consultant regarding this by kindly drop us an email to contact@indosight.com

      Regards,
      Angeline Taniwan

Leave a Reply

Your email address will not be published.

Related articles

Minimum capital requirement in Indonesia
Minimum capital requirement for setting up PT PMA

Foreign owned companies, called PT PMAs, are required to have a minimum capital of at least Rp. 10 billion (~$US750,000 with current exchange rates). This is Indonesia’s government way to protect local small businesses from foreign competition and limit the foreign investments only to large scale companies. In the past the enforcement of the law […]

Indonesia Company Registry
Company registry in Indonesia

Indonesian government has an online Indonesian company registry where you can search for the existing companies, both local and foreign, that are already registered in Indonesia. This can be useful for at least two reasons: See which names are already taken Find out whether your potential business partner is (already) registered in Indonesia Find the […]

7 Common Mistakes To Avoid While Setting Up Company In Indonesia

There are many common mistakes foreigners make while setting up a company in Indonesia. Some of them are because of lack of preparation, some of them due to knowingly trying to twist the law.

Running small business in Indonesia

Nowadays you can read almost every day how another multinational is bringing its millions of dollars to Indonesia. But what if you are looking to start a small business in Indonesia? Let’s look at some of the obstacles and potential solutions.

Representative office in Indonesia
Opening A Representative Office in Indonesia

Opening a representative office is the fastest way to get a legal and market presence in Indonesia. It is also easier than setting up a limited liability company. It comes, however, with more limitations. In this article, I will explain everything you need to know about establishing a representative office in Indonesia, and when you […]

Foreign Ownersihp restrictions
Foreign Ownership Restrictions and Negative Investment List

How much of the shares can you own in a company in Indonesia? Are foreigners allowed to hold shares in an Indonesian company? All foreign ownership restrictions are regulated by Law of Investment (25/2007) and  presidential decree (36/2010) called the Negative Investment List (DNI). Latest update on 2014 Negative Investment List can be found here. Note […]