To set up a PT PMA in Indonesia – Limited Liability Company with Foreign Direct Investment – you’ll need to follow a structured process that involves preparing key requirements and completing a series of registration steps. This guide, compiled by our experts, breaks down the process to help you navigate it effectively.
Before You Register: Essential Preparations
Before you can start the official registration process, you must ensure your business meets a few fundamental requirements.
Check Business Classification
First, consult the Negative Investment List (Daftar Negatif Investasi or DNI) to determine your business’s eligibility for foreign investment. This list specifies which business sectors are open, restricted, or completely closed to foreign ownership and details the maximum ownership percentage allowed for foreign investors.
Fulfill Key Requirements
A PT PMA must meet the following criteria:
- Minimum Investment and Capital: You need an investment plan exceeding IDR 10 billion (excluding land and buildings). The minimum paid-up share capital must also be at least IDR 10 billion. Each shareholder must provide a notarized Capital-filing statement letter confirming their contribution.
- Shareholder Structure: A PT PMA requires a minimum of two shareholders. One must be appointed as a director to manage daily operations, and another as a commissioner to provide oversight. Neither is required to be an Indonesian citizen, but the director must obtain a stay permit (KITAS) and a Taxpayer Identification Number (NPWP).
- Business Location: Your business must have a commercial address with the necessary permits. This requires a copy of your building lease agreement or a land certificate. If you don’t have a physical office yet, you can use a virtual office address to expedite the process.
5 Steps of the PT PMA Registration Process
Once you’ve met the initial requirements, you can begin the formal registration process, as we discussed in our previous article: Setting Up Indonesian Business: Foreign Investor 101.
1. Company Name and Deed of Establishment
Choose a company name with three words, each with at least three letters. A public notary will then draft the Deed of Establishment, a legal document that officially creates your company. The Ministry of Law and Human Rights must officially ratify this deed.
2. Company Domicile Letter
You’ll need to obtain the Company Domicile Letter (Surat Keterangan Domisili Usaha or SKDU) from local authorities. This document confirms your company’s registered address.
3. Tax Identification Number
Next, you must acquire a company-specific Tax Identification Number (NPWP) from the local tax office. This is a mandatory step for tax compliance.
4. Register in the One Single Submission System (OSS)
Registering your legal entity in the One Single Submission System (OSS) is a crucial step. Upon successful registration, you will receive a Business Identification Number (NIB). The NIB is a unique identifier that also serves as your import license, customs identification number, and business registry number. It automatically registers your company with the national Health and Social Security System.
5. Obtain Operational and Commercial Licenses
The final step is to secure any additional operational and commercial licenses required for your specific business activities. Depending on your business’s industry, location, and risk level, you may need various permits. While some licenses may take time, you can begin your initial business activities after successfully registering in the OSS.
After Registration: Starting Your Business
With the registration complete, your PT PMA is officially authorized to operate in Indonesia. You can now:
- Purchase property and assets on behalf of the company.
- Hire employees to support your operations.
- Obtain work and residence permits for foreign employees. A foreign director can apply for a work permit only after the company is fully registered. If you need to start immediately, you can temporarily appoint a local or nominee director.
Remember that certain business sectors might require additional permits beyond those listed above.
Why Choose a PT PMA?
A PT PMA is a limited liability company that is the top choice for foreign investors in Indonesia because it offers significant advantages over other business structures like Local PTs, UDs, or CVs.
- Ownership Flexibility: In many sectors, foreign investors can hold up to 100% ownership, giving them complete control.
- Legal Protection: A PT PMA is a separate legal entity, which means the company’s liabilities are separate from its shareholders’ personal assets. This provides a crucial layer of protection for investors.
- Direct Market Access: It allows you to operate directly within the Indonesian market, facilitating a faster time-to-market for your business.
- Tax Benefits: Depending on your business sector and location, your PT PMA may be eligible for various tax incentives.
Why Partner with Us
Setting up a PT PMA in Indonesia may seem complex due to the multiple steps and specific requirements, but it is a structured and highly rewarding process for foreign investors. By understanding the initial requirements – from navigating the Negative Investment List to meeting capital and shareholder obligations – and meticulously following the five-step registration process, you can successfully establish a secure and legally compliant business. The PT PMA structure offers unparalleled benefits, including full ownership, limited liability, and direct access to the Indonesian market.
Ready to make your Indonesian business a reality? Don’t navigate this journey alone. Our team of experts at Bali Business Consulting specializes in guiding foreign investors through every stage of the PT PMA setup, ensuring a smooth and successful process from start to finish. Contact us today for personalized support and take the first step toward building a thriving business in Indonesia.
