Limited Liability Company (LLC) in Indonesia: A Brief Guide
Indonesia’s growing economy and strategic location make it an attractive destination for both local and foreign investors. Among the various business structures available, the Limited Liability Company (LLC), or Perseroan Terbatas (PT), is the most widely used due to its legal protection, credibility, and operational flexibility.
This guide provides a comprehensive overview of PTs in Indonesia, covering types, benefits, regulatory requirements, and the step-by-step process for establishing a compliant company.
What is a Limited Liability Company in Indonesia?
In Indonesia, the equivalent of a Limited Liability Company (LLC) is known as a Perseroan Terbatas (PT). A PT is the most common and preferred business structure for both local and foreign entrepreneurs due to its flexibility, credibility, and legal protection.
As a separate legal entity, a PT limits shareholders’ liability to their investment, safeguarding their personal assets from the company’s debts or financial losses.
Types of limited liability companies in Indonesia
There are two main types of Limited Liability Companies (PT) in Indonesia, each designed to suit different ownership structures and business needs. Understanding their distinctions is essential before you start your company registration or incorporation in Indonesia.
1. Foreign Company (PT PMA)
PT Penanaman Modal Asing (PT PMA) is a preferred option for foreign investors. It allows foreign businesses or individuals to own shares within the company, either entirely or partially, depending on the industry sector. Some sectors have restrictions on foreign investment, necessitating the involvement of Indonesian partners.
To determine eligibility, check the Negative Investment List, which outlines the permissible foreign ownership percentage.
2. Local Company (PT)
A Local Indonesian Limited Liability Company (PT) is 100% owned by Indonesians and faces no restrictions on business activities. Capital requirements vary:
- Small Size: IDR 50,000,000 – IDR 500,000,000
- Medium Size: IDR 500,000,001 – IDR 10,000,000,000
- Large Size: Above IDR 10,000,000,001
What are the Advantages of Establishing a PT in Indonesia?
1. Full Legal Operating Rights
A PT PMA provides a recognised legal framework for foreign investors to operate in Indonesia. It allows the company to engage in commercial activities, enter into binding contracts, hire employees, and participate fully in the Indonesian economy.
2. Flexible Ownership Structure
Depending on the business sector, foreign investors may own up to 100% of company shares, as permitted under the Positive Investment List. This flexibility enables greater control and decision-making power for foreign stakeholders.
3. Profit Repatriation
PT PMA shareholders can legally transfer profits, dividends, and capital back to their home countries in compliance with Indonesian foreign exchange and tax regulations, ensuring smooth international financial operations.
4. Visa and Work Permit Eligibility
The PT structure facilitates the issuance of KITAS (Limited Stay and Work Permits) for company founders, directors, and foreign employees , allowing them to live and work legally in Indonesia.
5. Access to a Growing Market
With a population exceeding 270 million and the largest economy in Southeast Asia, Indonesia offers vast market opportunities and a strong consumer base for both products and services.
6. Enhanced Business Credibility
Operating as a registered PT lends legitimacy and trustworthiness to your business, enhancing credibility with clients, suppliers, financial institutions, and government authorities.
7. Property and Asset Protection
Through a PT PMA, foreign investors gain the legal right to lease, build, and secure property or business assets, offering a structured approach to asset ownership under Indonesian law.
8. Potential Tax Incentives
A PT PMA may qualify for tax incentives and duty exemptions, including reduced import duties and investment-related tax benefits, helping companies optimise profitability and operational efficiency.
Requirements for Establishing a PT PMA (Foreign-Owned Company)
Foreign investors typically choose the PT PMA (Perseroan Terbatas Penanaman Modal Asing) structure to operate in Indonesia. The key requirements include:
- Minimum Investment Plan:
A minimum total investment of IDR 10 billion (approximately USD 650,000) per business activity, excluding the value of land and buildings.
- Minimum Paid-Up Capital:
At least 25% of the total investment plan, or a minimum of IDR 2.5 billion (around USD 160,000), must be paid up at the time of incorporation.
- Shareholders:
A minimum of two shareholders is required, who may be individuals or corporate entities, either local or foreign.
- Directors and Commissioners:
At least one Director and one Commissioner must be appointed. The Director should generally be an Indonesian resident or hold a valid temporary stay permit (KITAS/KITAP), while the Commissioner has no residency requirement unless mandated by specific industry regulations.
- Registered Office:
The company must have a registered physical office address in Indonesia to meet domicile requirements for licensing and correspondence purposes.
What is the General Process for Establishing a PT?
Establishing a PT in Indonesia is typically facilitated by a licensed notary and completed through the government’s Online Single Submission (OSS) system. The main steps include:
1. Company Name Reservation
The first step is to choose a unique company name and submit it for approval through the Ministry of Law and Human Rights (MOLHR). The reserved name ensures your business identity is legally protected.
2. Drafting the Deed of Establishment
A licensed Indonesian notary drafts and notarises the Articles of Association (AOA) in Bahasa Indonesia. This legal document outlines the company’s structure, shareholders, and operational rules.
3. MOLHR Legalisation
Once notarised, the notary electronically submits the deed to MOLHR to obtain the company’s legal entity status, officially recognising your PT under Indonesian law.
4. Tax Registrations
After legalisation, the company must obtain a Taxpayer Identification Number (NPWP) from the local tax office to comply with Indonesian tax regulations.
5. Business Licensing via OSS
Register the company through the Online Single Submission (OSS) system to receive a Business Identification Number (NIB), which functions as the general business license. Depending on your business type and risk classification, additional sectoral licenses or permits may be required.
6. Opening a Corporate Bank Account
At last, open a corporate bank account in Indonesia to deposit the company’s paid-up capital and manage daily business transactions.
Why Choose 3E Accounting for Registering a LLC in Indonesia?
Starting a PT (Limited Liability Company) in Indonesia involves navigating legal procedures, tax registration, and business licensing. 3E Accounting simplifies the process with expert guidance and full-service support for both local and foreign investors, ensuring a smooth and compliant company setup.
By partnering with us, you gain access to end-to-end services, from company name reservation and Articles of Association drafting to MOLHR legalisation, tax registration (NPWP), OSS business licensing, and corporate bank account setup.
