Foreign investment in Indonesia has surged decisively over the past decade. Data from the Ministry of Investment shows that foreign direct investment outstripped 47 billion dollars in 2023, with manufacturing, mining, and digital services accounting for more than half of the total inflows.
Indonesia is now among the top markets for foreign capital in Asia. Investors entering the country must use the PT PMA structure, which governs foreign ownership under Indonesian law. PT PMA structure assures investment rights while maintaining compliance with national economic regulations.
The process involves stricter documentation than that of local companies. Regulations were strengthened after Indonesia introduced the Online Single Submission platform to centralise registration, licensing and compliance. Investors planning to enter regulated sectors such as financial services, renewable energy, or logistics must comply with these requirements thoroughly to avoid delays.[/vc_row]
What Defines a PT PMA Under Indonesia Corporate Law?
A PT PMA is the principal vehicle for foreign investment in Indonesia; it is a limited liability company through which overseas firms can legally operate in the country. It is established through a notarial deed, registered under the 2007 Company Law, and supervised by the Ministry of Investment. The deed sets forth who owns the company, the nature of its business and the obligations it must meet. Once the registration is complete, the company gains full legal standing to conduct commercial activity in Indonesia, providing foreign investors with a clear, recognised structure within which to operate.
The investment prospect of Indonesia shifted significantly in 2021, when the government issued the Positive Investment List. The list included more than 70 industries, ranging from data centres and software services to logistics and consulting, and offering full foreign ownership. Other areas, particularly those tied to national interests such as public transportation, media and parts of the mining sector, continue to carry ownership caps. Because each industry falls under a specific regulatory framework, choosing the correct classification during registration is crucial, as it determines the maximum foreign ownership the company may hold and the licenses it must secure before operating.
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Legal Definition of Foreign Ownership
A company becomes a PT PMA when at least one shareholder is a foreign national or foreign legal entity. This classification determines which investment rules apply during establishment and operation.
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Corporate Basis for PT PMA Formation
The legal foundation lies in Indonesia’s Investment Law and Company Law. These regulations outline ownership rights, governance obligations and reporting standards for foreign-owned companies.
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Sector Classification Framework
Indonesia divides industries into open, restricted and closed sectors. The Positive Investment List encourages foreign entry into high-potential sectors while protecting strategic industries.
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Role of the Online Submission System
All PT PMA registrations occur through the OSS portal. This system consolidates licensing, documentation, and approvals into a single digital interface.
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Commercial Rights After Establishment
A registered PT PMA can enter contracts, hire personnel, expand operations and apply for sector-specific licences once its NIB is issued.
What Capital Requirements Apply to a PT PMA in Indonesia?
Investors who plan to operate in manufacturing, logistics or resource-based industries may need higher capital commitments because of infrastructure, equipment and compliance costs.
| Category | Information |
|---|---|
| Minimum Investment Commitment | 10 billion Indonesian rupiah |
| Purpose of Capital Threshold | Ensures medium or large-scale foreign operations |
| Paid Up Capital Ratio | 25% of authorised capital (subject to assessment) |
| Capital Declaration | Included in the deed of establishment and licensing review |
| Sector Variations | Higher capital is often required for manufacturing, logistics, energy, and natural resource sectors |
| Use of Capital Information | Evaluated by banks, suppliers, and regulators |
| Purpose of Capital Regulation | Prevents undercapitalised market entry |
| Authorised Capital | Reflects the intended company scale; recorded in a notarial deed |
| Paid Up Capital | Declared during incorporation; must align with operational needs |
| Verification | Authorities may request bank statements or financial confirmations |
Indonesian law requires a foreign-owned company to follow a defined corporate structure. A PT PMA must have at least two shareholders, one director, and one commissioner. The director handles day-to-day decisions and signs official filings. The commissioner reviews performance and ensures that management complies with the Articles of Association and sector rules. It is a basic system of accountability that separates control from oversight.
At least one board member must hold an Indonesian tax identification number. The number allows the company to register for tax, issue payroll, and communicate with the authorities. Without it, routine compliance cannot move forward.
Foreign investors can enter as individuals or through companies. Individuals submit passports and personal identification. Corporate shareholders provide proof of their legal standing in their home jurisdiction, along with resolutions approving the investment. A notary verifies these records before the deed of establishment is finalised. Authorities rely on these documents to confirm that the shareholder is legitimate and authorised to invest.
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Shareholder Composition
A PT PMA must have at least 2 shareholders to maintain its eligibility for limited liability under Indonesian corporate law.
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Role of the Director
The director manages daily operations, handles legal documentation and acts as the main point of contact for government authorities.
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Role of the Commissioner
The commissioner supervises management decisions and ensures compliance with the company’s governing documents and sectoral regulations.
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Tax Identification Obligation
At least one board member must hold an Indonesian tax identification number to complete tax registration and ongoing reporting.
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Documents for Foreign Corporate Shareholders
Foreign companies must submit legalised or apostilled documents confirming their formation and authority to invest. These documents establish the legitimacy of the overseas entity.
What Documentation Is Required for PT PMA Incorporation in Indonesia?
The incorporation process begins with collecting identity documents, business activity codes and corporate records. Individual shareholders provide passports and personal details.
Corporate shareholders submit notarised or apostilled documents confirming their legal existence. The company must also propose a name that satisfies Indonesia’s naming rules, which require at least three distinct words and ensure differentiation from existing registered companies. Once the name is approved, the notary drafts the deed of establishment.
A registered office address is mandatory. In major business cities such as Jakarta and Surabaya, virtual offices are permitted for service-based PT PMA companies. The registered address becomes the official location for correspondence, tax reporting and regulatory notices.
After the document is submitted, the notary forwards the deed to the Ministry of Law and Human Rights for approval. Investors may then proceed to licensing, tax registration and operational planning.
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Identity Documents for Individuals
Personal identification, including passport copies and addresses, must be included in the incorporation file. These documents establish the identities of shareholders.
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Corporate Documentation for Foreign Entities
Certificates of incorporation, shareholder registers and company articles must be legalised or apostilled. These documents confirm the legitimacy of foreign corporate investors.
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Company Name Registration
Proposed names must comply with Indonesian naming rules. They must contain three distinct words and remain unique in the national registry.
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Drafting of the Articles of Association
The Articles define the company’s structure, capital commitments and permitted activities. They form the basis of corporate governance.
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Registered Office Requirement
Every PT PMA must have a registered address. This address is used for official correspondence, regulatory communication and inspection procedures.
What Licences and Compliance Requirements Must a PT PMA in Indonesia Follow?
After the deed receives approval, the company must register for a Business Identification Number through the OSS platform. The NIB functions as the primary operating licence for most sectors.
Additional licences may apply depending on industry classification. Manufacturing businesses must obtain location permits and environmental approvals. Hospitality businesses require tourism-related permits. The finance, insurance, and investment sectors face more comprehensive regulatory screening.
Ongoing compliance continues throughout the company’s operations. PT PMA companies must register for taxes, maintain accounting records and file monthly and annual reports. Hiring foreign workers requires work permits that follow skill transfer regulations. Authorities conduct periodic reviews to ensure that companies adhere to sustainability, labour and tax standards. Compliance is essential because violations can result in penalties or suspension of licences.
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Business Identification Number Requirement
The NIB confirms that the company is officially registered. It is essential for contract signing, tax registration and operational commencement.
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Sector Specific Licensing
Specific industries require additional licences based on their nature. Manufacturing, mining and hospitality businesses must obtain specialised permits.
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Environmental Approvals
Industrial operations undergo environmental assessments. These evaluations ensure that the company meets sustainability and safety regulations.
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Tax Registration and Reporting
Companies must secure a tax number and file regular tax returns. These filings demonstrate financial transparency and compliance.
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Foreign Worker Regulations
Companies that hire foreign employees must obtain work permits. These permits are issued after assessing qualifications and compliance with employment rules.
Conclusion
Indonesia’s investment framework has become more structured in recent years, and the PT PMA remains the country’s primary gateway for foreign businesses. The rules governing ownership, capital, governance, and licensing are detailed, and each step of the process reflects Indonesia’s efforts to balance openness to investment with regulatory oversight. For companies entering the market, the challenge often lies not in meeting the requirements themselves, but in understanding how the rules interact across ministries, digital portals and sector-specific regulations.
Firms that prefer support with these procedures often turn to service providers that specialise in Indonesia’s corporate system. 3E Accounting Indonesia is among the firms that assist with incorporation, documentation and compliance, particularly for investors who need clarity on sector classification or licensing through the OSS platform. Their role is mainly administrative and advisory, helping companies navigate the formalities without overselling what the process can guarantee.
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Frequently Asked Questions
A PT PMA is the legal structure that allows foreign individuals and foreign companies to operate in Indonesia. It is the only form of limited liability company that permits foreign ownership in most sectors. Without a PT PMA, foreign investors cannot legally enter into contracts, hire staff, or engage in commercial activity in the country.
Indonesia requires a minimum investment commitment of ten billion Indonesian rupiah for a PT PMA. Regulators view this as the baseline for medium or large-scale operations. Some sectors, such as manufacturing, logistics and resource-based industries, often require higher capital to reflect infrastructure and compliance needs.
Yes. Many sectors allow one hundred per cent foreign ownership under the Positive Investment List. However, sectors that affect national interests, such as media, public transport, and parts of the mining sector, may be subject to ownership limits. Foreign ownership rights depend on the sector classification chosen during registration.
Every PT PMA must have at least two shareholders, one director and one commissioner. The director manages operations and represents the company before government authorities. The commissioner supervises management decisions and ensures compliance with regulations. At least one board member must hold an Indonesian tax identification number.
Individual shareholders must submit copies of their passports and personal identification. Foreign corporate shareholders must provide legalised or apostilled certificates of incorporation, articles of association, shareholder registers and board resolutions authorising the investment. These documents ensure that the foreign entity is legitimate and properly authorised to invest.
Yes. Special Economic Zones such as Batam and Kendal provide corporate tax reductions and customs benefits. Export-oriented and high-technology projects often receive priority treatment. These incentives aim to encourage long-term investment in Indonesia.
Abigail Yu
Author
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
