Published December 21, 2021 · Updated November 3, 2026
Can a foreigner own 100 percent of a company in Indonesia? For foreigners starting a business in Indonesia, the PT PMA paid-up capital threshold has fallen to IDR 2.5 billion, making entry cheaper than most older guides suggest.
In this blog, we discuss the PT PMA, local PT and representative office (KPPA). We also cover 2026 capital rules, sector restrictions, registration steps, costs and nominee arrangements to avoid.
Which Types of Companies Can Foreigners Use for Business in Indonesia?
Foreign investors can register a PT PMA for operations or open a non-trading representative office. A local PT is for genuine Indonesian ownership, not foreign ownership through nominees.
Indonesia's investment framework is administered by the Ministry of Investment and Downstream Industry (BKPM) and delivered through the Online Single Submission (OSS) licensing system. The entity chosen at the outset determines ownership limits, capital rules, licensing path and the right to hire foreign staff.
In practice, we match each client's entity to their sector, shareholding plan and funding capacity before any document is signed. For foreign investors, the practical choice sits between the following structures.
1. Foreign Direct Investment Company (PT PMA)
A Perseroan Terbatas Penanaman Modal Asing (PT PMA) is a limited liability company. Foreigners may hold up to 100 percent in sectors open to full foreign ownership. It can trade, hire and sponsor work permits, and it remains the standard vehicle for a permanent presence.
2. Local Company (PT)
A limited liability company with 100 percent Indonesian shareholding. It does not require foreign investment approvals and its minimum paid-up capital is set by the founders. Foreign shareholding generally changes the company's investment status to PMA.
3. Representative Office (KPPA)
A Kantor Perwakilan Perusahaan Asing (KPPA) is a non-trading presence for market research, promotion and liaison. It cannot earn income from Indonesia or conduct commercial sales and purchases. It may enter permitted operational arrangements, such as an office lease, while evaluating the market.
4. Partnerships and Branch Offices
A commanditaire vennootschap (CV) is a local partnership reserved for Indonesian partners. Foreign branch offices are recognised only in a narrow set of regulated sectors, so they are rarely a practical entry route.
What Is a PT PMA and Why Do Most Foreign Investors Choose It?
The PT PMA combines limited liability protection with the ability to operate in sectors open to foreign capital, subject to applicable licences and sector-specific conditions.
As a full Indonesian legal entity, a PT PMA can sign contracts, open local bank accounts, register for VAT and import goods. It can also sponsor work permits and limited-stay permits (KITAS) for foreign directors and employees — something a representative office cannot fully replicate.
Three factors usually decide whether the structure fits a given investor:
1. Limited Liability Protection
Shareholders generally have limited liability, but personal or parent-company assets may be exposed in circumstances specified by law, including certain bad-faith or unlawful conduct.
2. Wholly Owned or Joint Venture
Where a sector caps foreign ownership below 100 percent, the PT PMA must admit a joint-venture partner. Fully open sectors permit 100 percent foreign shareholding.
3. Operational Scope
The Klasifikasi Baku Lapangan Usaha (KBLI) business-activity codes fixed at incorporation define what the company may do. Adding codes later requires a notarial deed amendment, so scope should be settled early.
How Much Capital Does a PT PMA Need in 2026?
The paid-up capital threshold for a PT PMA is IDR 2.5 billion under BKPM Regulation No. 5 of 2025, down from the previous IDR 10 billion benchmark.
Authorized capital and paid-up capital are different figures. Authorized capital is the share capital stated in the deed of establishment; paid-up capital is the value contributed for issued shares, in cash or another permitted form. Under the 2025 revision, the entry threshold for paid-up capital is IDR 2.5 billion.
Paid-up capital is company capital, not a government fee. BKPM Regulation No. 5 of 2025 provides a 12-month transfer restriction, with exceptions for assets, construction and operations. Confirm the deposit procedure and application of the restriction with the notary before incorporation.
Investors should still budget beyond the entry threshold. Generally, the investment plan must exceed IDR 10 billion per five-digit KBLI and project location, excluding land and buildings. Article 26 of BKPM Regulation No. 5 of 2025 sets exceptions for particular activities. This investment requirement is separate from the paid-up capital minimum.
In practice, we align the capital plan with the chosen KBLI codes before the deed is drafted. Getting this wrong forces costly amendments later.
Entity Options for Foreign Investors in Indonesia
| Entity | Foreign Ownership | Permitted Activities | Capital | Best Suited For |
|---|---|---|---|---|
| PT PMA | Up to 100 percent in open sectors | Full trading, revenue and hiring | IDR 2.5 billion paid-up threshold (2025) | Permanent market entry |
| Local PT | None — 100 percent Indonesian shareholders | Full trading and revenue | Modest, set by founders | Businesses with genuine local partners |
| Representative Office (KPPA) | Non-trading presence | Market research, promotion and liaison | No minimum capital | Testing demand before investing |
How Are Foreign Ownership Restrictions Determined in Indonesia?
Indonesia generally opens investment activities unless they are expressly closed or subject to conditions. Foreign-ownership restrictions depend on the applicable activity and KBLI code.
Ownership limits attach to five-digit KBLI codes rather than broad industry names. A restaurant chain, a software house and a logistics operator can face very different rules within the same broad sector.
The Ministry of Investment and Downstream Industry (BKPM) administers the list through the OSS system, which returns the applicable cap for each code. Some codes allow 100 percent foreign ownership, some cap it below that and require a joint venture, and a small number are closed to foreign capital.
In practice, we run this check before clients sign leases or employment contracts. A sector can look open while containing restricted codes, and the code chosen also drives the investment value the company must commit.
No. A local PT must be 100 percent Indonesian-owned, and parking shares with an Indonesian nominee exposes the foreign investor to legal risks that outweigh any convenience.
Some older guides suggested that a trusted local nominee makes a local PT workable for foreigners. That advice deserves to be retired. On the company register, the nominee — not the foreign investor — is the legal owner of the shares.
Indonesia's corporate registry, administered by the Ministry of Law, also requires companies to disclose their beneficial owners. A nominee arrangement that hides a foreign beneficial owner sits badly with that disclosure regime and can complicate licensing and banking.
The practical risks are concrete:
- The nominee can sell or pledge the shares without consent.
- Dividends and shareholder resolutions depend on the nominee's cooperation.
- Agreements declaring shares held on another person's behalf are void under Article 33 of the Investment Law.
- Concealed ownership can surface in any future shareholding review.
Where a sector is genuinely open, a PT PMA delivers the same trading ability with full foreign control and none of this ambiguity. Where a sector caps foreign ownership, the compliant answer is a joint venture — not a nominee.
What Are the Limits of a Representative Office (KPPA)?
A representative office may research, promote and liaise, but cannot earn income from Indonesia or conduct commercial sales and purchases.
The KPPA suits groups that want a legal presence while they test demand, meet distributors and study the market. There is no minimum capital requirement, and setup is faster and cheaper than a PT PMA.
Its limits are strict. The office cannot earn income from Indonesia or conduct commercial sales and purchases. An office lease is permitted, but appointing a foreign head requires appropriate work authorization. Under BKPM Regulation No. 5 of 2025, a KPPA must be in an office building in a provincial capital.
In practice, we advise clients to treat a KPPA as a research instrument with a defined end date, and to plan the PT PMA timeline alongside it. That way, momentum is not lost once the market case is proven.
How Do You Register a Company in Indonesia in 2026?
Registration runs from name reservation to issuance of the Business Identification Number (NIB) and typically takes four to eight weeks for a straightforward PT PMA.
Company establishment is processed through the Ministry of Law's AHU system, while business licensing is processed through OSS. The sequence for a PT PMA is:
- Reserve the company name through the Ministry of Law's AHU system, with the notary handling the application.
- Sign the deed of establishment before an Indonesian notary.
- Obtain legal-entity approval from the Ministry of Law through the General Legal Administration (AHU) system.
- Register with the Directorate General of Taxes (DJP) to obtain the company NPWP tax number.
- Obtain the Nomor Induk Berusaha (NIB) through OSS-RBA.
For a deeper walkthrough, see our guide on how to obtain a company registration number (NIB) in Indonesia, and our step-by-step guide to company registration in Indonesia, which sets out 2026 tariffs and fees in detail.
Official establishment charges are non-tax state revenue, or Penerimaan Negara Bukan Pajak (PNBP). They were revised by Government Regulation No. 30 of 2026 and apply from 1 August 2026, scaled to authorized capital.
Professional fees sit on top of the official tariffs. Notary deed and AHU filing typically cost IDR 5 to 15 million, corporate services coordination IDR 15 to 40 million, and translation and legalization of foreign documents IDR 2 to 8 million. A straightforward PT PMA therefore involves a total cash outlay of roughly IDR 28 to 73 million in 2026.
2026 Government Tariffs for Company Establishment (PNBP)
| Authorized Capital Band | PNBP Tariff (IDR) |
|---|---|
| Up to IDR 25 million | 300,000 |
| Above IDR 25 million to 1 billion | 600,000 |
| Above IDR 1 billion to 5 billion | 1,500,000 |
| Above IDR 5 billion | 5,000,000 |
What Compliance Obligations Start After Registration?
A new PT PMA generally has monthly tax obligations and quarterly investment reports. It must also file an annual corporate tax return and hold its first Annual General Meeting within six months of fiscal year end.
The deadlines below are the ones that catch newly arrived investors. DJP administers the monthly and annual filings, while investment reporting runs through OSS.
The statutory VAT rate is 12 percent under PMK No. 131 of 2024, but most business-to-business transactions are billed at an effective 11 percent. VAT registration as a Pengusaha Kena Pajak (PKP) requires evidence of a genuine business location, so a virtual office alone may not satisfy the tax office.
The Mandatory Manpower Report (WLKP) is also due within 30 days of establishment. If the first-year calendar looks heavy, contact us and we will map the obligations for your entity before launch.
Post-Registration Filing Calendar for a PT PMA
| Obligation | Deadline | Notes |
|---|---|---|
| PPh 25 corporate instalment | 15th of each month | Monthly prepayment of corporate income tax |
| PPh 21 and PPh 23 withholding | Pay by the 15th, report by the 20th of the following month | Employee salaries and service payments |
| VAT periodic return | Last day of the following month | Statutory 12 percent rate; most transactions billed at an effective 11 percent |
| Annual corporate income tax return | Four months after tax year end, normally 30 April for a calendar year | 22 percent standard rate in 2026 |
| Annual General Meeting of Shareholders | Within six months of fiscal year end | Ratifies the annual report |
| Investment activity report (LKPM) | Quarterly, via OSS | Required for PT PMA companies |
Conclusion
The right entity depends on the sector, the shareholding plan and how much capital a group is ready to commit. A PT PMA delivers full operational freedom and work-permit sponsorship in open sectors; a representative office buys time for research; a local PT is only viable with genuine Indonesian partners.
The 2025 BKPM revision lowered the general paid-up capital minimum to IDR 2.5 billion. Investment thresholds, beneficial-ownership disclosure and nominee risks still deserve professional attention before incorporation.
As a technology-enabled Corporate Services Provider, 3E Accounting Indonesia handles PT PMA and representative-office setup end to end. Support covers name reservation, the notarial deed, AHU approval, NPWP registration and NIB issuance. We also provide ongoing corporate secretarial, accounting, tax and immigration support. That one-stop coverage makes us a practical partner for any business in Indonesia for foreigners planning to launch with confidence.
Ready to Structure Your Indonesia Entry?
Tell us your sector, plans and budget. Our Corporate Professional Advisors will map the compliant route and manage the registration from name reservation to NIB.
Frequently Asked Questions
Yes. A PT PMA allows up to 100 percent foreign ownership in sectors open to foreign investment. Check the specific KBLI code in the OSS system first, because some sectors cap foreign shareholding below 100 percent.
Generally, at least IDR 2.5 billion per company under BKPM Regulation No. 5 of 2025, unless other rules apply. The investment plan generally must exceed IDR 10 billion per five-digit KBLI and project location, excluding land and buildings, subject to exceptions. Confirm the deposit procedure with the notary.
A KPPA may enter permitted operational arrangements, such as an office lease. It cannot earn income from Indonesia or conduct commercial sales and purchases. Groups that need to trade generally need a PT PMA.
No. The nominee is the legal owner on the register. Agreements declaring shares held on another person's behalf are void under Article 33 of the Investment Law. Beneficial-ownership disclosure also makes concealment risky, so foreigners should use a PT PMA or a compliant joint venture instead.
A straightforward PT PMA may take four to eight weeks. The process involves a notary, AHU, the tax authority and OSS; timing depends on the documents and licences required.
Abigail Yu
Director
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.
