how to start a business as a foreign-owned company in Indonesia

How to Start a Business in Indonesia for Foreigners?

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When you have all these exotic beauties, abundant raw natural resources, and nice people, such potential would be gone to waste if they are not well-managed. Indonesia has an undeniable beauty that is hard to miss, even a visitor that comes as a tourist first, would love to be part of that opportunity to run a business or spread their investment asset in the country. So, how to start a business in Indonesia if I am a foreigner? What is PT. PMA? What are my rights and responsibilities borne with the foreign-owned company in Indonesia? If you are still not sure how to pursue your business in Indonesia, E-VISA Bali is going to answer all these questions today, in the following.

How to Start a Business as a Foreign-Owned Company in Indonesia under PT. PMA

If you are keen starting a business in Indonesia, you are going to need a help from PT. PMA. What is it? PMA stands for Penanaman Modal Asing. It refers to a kind of investment by foreigners by conducting a business in the Indonesian territory. The business will be run in the form of a PT or a limited liability company under Indonesian Law that domiciles in the country. Mostly, large business fields are involved in the establishment of PT. PMA. Therefore, the source of funding can be fully from foreign investors (individual foreign citizens, foreign business entities, and/or foreign governments) or joint ventures with domestic investors. Moreover, a business permit is another thing to take into account based on your business field. 

Indonesia is open to foreign investment. However, before the forming of your PT. PMA, you must ensure your business line is classified into an open sector and made into the priority investment list in Indonesia published by BKPM (Investment Coordination Board). The list gives you an insight into your limits for certain business lines and other requirements.

The Minimum Capital and Investment Plan for PT. PMA

In order to form a PT. PMA, foreign investors should meet the minimum investment plan that amounts to over IDR10 billion. For wholesale trade business, food and beverage services business, and construction services, the amount of investment plan does not include land and building. While the investment plan for the industry business line already includes land and building.

On the other hand, the minimum capital you should deposit to the Bank Indonesia upon the establishment of your PT is IDR 10 billion. After your incorporation, you need to observe the tax compliance by obtaining a Tax Identification Number (NPWP) for your company.

Incorporation Benefits from Starting a Business with PT. PMA in Indonesia

On completion of the establishment of your PT. PMA, you can now conduct your business line and activities in Indonesia, such as:

  • Property purchase on behalf of your PT. PMA
  • Product registration
  • Getting your business license
  • Preparing your operational
  • Pursuing work and stay permits for your foreign employees

Indonesian Citizen for Director Position Is Advisable If You Are Starting a Business in Indonesia

In the former time, nearly all the directors in PT. PMAs were foreigners and when they returned to their home countries and abandoned the company, it was so difficult to locate their whereabouts. To avoid this incident, it is advisable to appoint a director from the local citizen of Indonesia. In case a PT. PMA insists on a foreign director, make sure the foreigner has a permanent stay permit card (KITAP). This indicates the foreigner has a permanent domicile in the Indonesian territory as well.

The Procedures to Starting a Business through PT. PMA

Foreign-owned company in Indonesia is in the form of PT or a limited liability company under the Omnibus Law on Job Creation that is based on the Regulation of the Minister of Law and Human Rights 21/2021, the procedures can be described as follows:

  1. Supporting documents required

1. Electronic statement from the applicant regarding the completed documents for the establishment of a PT;

2. A copy of the PT establishment deed uploaded to the Legal Entity Administration System (SABH);

3. Minutes of the deed of establishment of PT/minutes of the deed of change of establishment of PT;

4. Proof of PT. capital deposit

5. A letter of commitment from the founder to obtain a decision, approval, or recommendation from a technical agency for a PT in a certain line of business or a photocopy of a decision, approval, and recommendation from the relevant technical agency for a PT in a certain business field;

6. A letter of commitment from the founder to obtain a taxpayer identification number (NPWP) and a report on receipt of the annual tax return; and

7. A copy of the statement letter regarding the complete address of the PT from the building manager or authorized agency or the original statement letter regarding the complete address of the PT which is signed by all members of the board of directors together with all the founders and members of the board of commissioners of PT.

  • Filling in the format for the establishment of PT through electronic Legal Entity Administration System (SABH) and attaching the supporting documents with the help of a notary
  • Issuance of PT legal entity registration e-certificate by the Minister of Law and Human Rights.

Feel Free to Consult Your Inquiries on Your Company Registration in Indonesia with EVISA Bali

Do you have any additional concerns about the procedure to starting a business using PT. PMA in Indonesia? Drop us your question at info@evisabali.com.

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