When you decide to set up a business in Indonesia, the first step is to understand the types of business entities available to choose from. The most common form is called a PT Penanaman Modal Asing (PT PMA). This is a limited liability company funded by a foreign company, individual or in a joint venture with domestic investors.
You can skip the explanations and jump straight to the application form.
The biggest advantage of establishing a PT PMA is that it will allow you to own and operate a business in Indonesia, employ staff, pay taxes (of course) and most importantly is the foundation to apply for a Foreign Investor Visa (called a KITAS) which will allow you to live and work in Indonesia. The Foreign Investor Visa is covered separately, but they generally go hand in hand.
Who can establish an Indonesian Foreign Investment Company?
A Foreign Investment Company (called a PT PMA) in Indonesia can be established by a foreign individual or company where a part or all of their paid-up capital is owned by foreign interests.
Foreign Investment Companies established in Indonesia must apply through the Investment Coordinating Board (BKPM). We have excellent, long-standing contacts with the BKPM which allows us to coordinate the application process involving the Ministry of Immigration, an Indonesian Bank, Police (more on that later) and the auspicious-sounding Ministry of Law and Human Rights of Indonesia.
Capital requirements for a PT PMA
There is a minimum requirement for the paid-up capital of the company IDR 10 billion (around USD $750,000.00). However, there are dispensations and methods that allow this number to be dramatically reduced in your favour, which we will take you through during your application.
The establishment of a PT PMA does require at least 2 shareholders, either individuals or companies. For the purposes of making this plan English, it is generally held that you own 99% of the shares with a local nominee (which we can provide for you) holding the remaining 1% of shares.
The company structure requires that the PT PMA has at least 1 director (that’s you) and 1 commissioner (like a Company Secretary), which again, we can provide for you during the application process.
You will also need a company address which must be in a designated off or business district. Again, we will help you establish a local address during the process.
What you will receive after applying
- Deed of Company Establishment / Akta Perusahaan
- Ministerial Letter of Approval of the company shareholders, Board of Directors and Board of Commissioner from The Ministry of Law and Human Rights of Indonesia / SK Kemenkumham Susunan Pendiri Perusahaan
- Company Taxpayer Identification Number / NPWP
- Business Identification Number (Nomor Induk Berusaha/NIB) – include Import and Export License
- Business License or Standard Certificate / Ijin Usaha atau Sertifikat Standar (if needed depend on the business field)
After that, your business is legally established and may begin operations in Indonesia.
How much does a PT PMA cost?
The one-off cost for setting up a PT PMA is IDR 23,500,000 (around USD$1,600.00) and will take approximately 15 working days from application to completion.