A Comprehensive Guide to Setting Up Your PT PMA
Are you ready to set up a foreign company (PT PMA) in Indonesia? This guide is here to help you understand everything you need to know before you get started for Indonesia PT PMA Setup.
Why Register a Company in Indonesia?
The country is among Asia’s most popular business destinations behind Singapore and Hong Kong. There are a lot of business opportunities to be found if you know what you are doing.
The benefits of a foreign company set up in Indonesia include the following:
- You have full control over the direction you want your business to go.
- There is no restriction on where your company can operate in Indonesia.
- Only some business sectors in the country require that you have a local partner before you can establish your company. Details of these sectors are in the Negative Investment List.
What Is the Negative Investment List?
This is an important list to consider before you attempt to invest in Indonesia. On this list, you will find the business sectors that are closed off to foreign ownership. This means that you cannot get involved in these specific sectors and they are only for the locals.
Indonesia’s PT PMA
In Indonesia, a foreign company is also known as a PT PMA. There are two types of companies that fall under this category:
- Limited Liability Companies (LLC) – These are called a PT (Perusahaan Terbatas) company. If your company falls under the limited liability category regardless of your capital structure type, you are considered a PT.
- Limited Liability Companies with Foreign Ownership – In this case, you would be called a PT PMA (Penanaman Modal Asing). You are still a limited liability company, but with foreign ownership.
Local shareholders will not affect the capital requirements of your company. It is only affected if you do not own any shares in the company. The capital you pay will be based on the following:
- A Micro Company: Less than Rp.50 million
- A Small Company: Rp. 50 – 500 million
- A Medium Company: Rp. 500 – 10 billion
- A Large Company: More than Rp10 billion
A PT PMA foreign company only needs to pay 25% of the total equity. If you want to change your capital, you must convert to become a company that is locally own or increase your existing capital.
Investment Capital Required
A foreign investor needs more than USD1 million to invest. In the local currency, this is IDR 10 billion. This is the initial investment plan that requires a USD250,000 paid-up capital.
The capital can be in the form of fixed assets or cash. This capital must be paid once the company has been established with a bank account. You must reach more than USD1 million in investment realisations to get a business license as your permanent, import, and other licenses that are related to your business sector.
How to Setup Your PT PMA Foreign Company in Indonesia
To set up your company here, these are the steps that must be taken:
- Obtain Approval for Your Company Name – This should take about two days. The approval is issued by the Ministry of Law and Human Rights. Your company name should consist of only three words in it. It should be easy to understand and it should not contain any profanities or vulgar words that are considered offensive locally.
- Principle License Approval – This will act as your temporary license. You would need to get this reviewed, revised, and approved by the BKPM. The process takes about 14 days to complete.
- Prepare Your Articles of Association – This will take about 4 days and it is done with a Notary.
- Obtain Your Deed of Establishment – You will then need to legalise your Deed of Establishment, otherwise known as your Legal Entity. Locally, it is called SK Kehakiman. This will be issued by the Ministry of Law and Human Rights within 3 Days.
- Acquire Your Certificate of Domicile – You can obtain this from the landlord of the office building and Local Council within 3 days.
- Get Your Taxpayer Registration Number – The second last step is to get your taxpayer registration number, also known as an NPWP. Once you have that, you will need your letter of registered tax (SKT). This can be acquired within 3 days from the taxpayer office.
Once you have done all that, the final stage is to get your Nomor Izin Berusaha (NIB) from the Provincial Government. You should be able to get this within one day.
Registering a PT PMA in Indonesia Post Covid-19
It is now much easier to register your business since 2020. Prior to the Covid-19 pandemic, a foreign investor would need to wait up to 2 months to get their company set up and registered. As of last year, the process is much faster, sometimes no more than 1.5 months to complete.
Registrations have become a lot easier to thanks to the Online Single Submission (OSS). It would still be all the same registrations steps above, except this time via the OSS portal.
Ready to Setup Your Business? Contact Us, We Can Help
The government might have made the process easier, but you would still need assistance navigating foreign territory. In Indonesia, the rules can appear complicated if you don’t understand the local language and requirements. That is the common challenge with operating abroad, and that is why we are here to help you.
Let us take the stress out of establishing your PT PMA by doing the hard work for you. Our professionals have years of industry insight and experience, and this is invaluable when you are starting a business of your own. For more information about our services, contact the 3E Accounting team today.