All you need to know about Establishing a Company in Indonesia
Limited liability company with Foreign direct investment company (Perusahaan Terbatas Penanaman Modal Asing / PT PMA)
100 Percent foreign direct investment
The Investment Law regulates FDI by granting a right of entry to foreign businesses through a government licensing procedure principally controlled by BKPM. It specifies that foreign investment shall be in the form of a limited liability PMA Company incorporated in Indonesia, in which the investor goes into partnership with an Indonesian person or entity as shareholders. Foreign investors can hold between 30% to 95% ownership in various industries or even up to 100%, but this varies within sectors and business fields.
Foreigners are permitted to invest with no restriction on the maximum size of the investment, the source of funds or whether the products are destined for export or for the domestic market. This is except in an industry sector which is listed as closed to foreign investment on the Negative Investment List (“Negative List”) which attaches to the Investment Law under Presidential Regulation. The principal starting position (not always the case in practice) is that all industry or fields of business are open to foreign investment unless mentioned otherwise in the Negative List. This is provided that certain conditions are fulfiled and foreign investment in an industry is not also regulated in Ministerial or other laws, regulations and decrees.
Corporate Joint Ventures (JVs)
Foreign direct investment companies may be in the form of Joint Ventures between foreign and domestic capital owned by Indonesian citizens or organisations, or through straight investment.
An incorporated JV is a legal entity that has limited liability status, commonly referred to as a limited liability company (perseroan terbatas) (PT). PTs are organised under Law No. 40 of 2007 regarding Limited Liability Company (Company Law).
In many situations foreign companies are forced into including a local partner by the law. This is when their industry falls to negative list of investment and 100% foreign ownership is not allowed. In such cases a company can look for an active local partner or have a nominee shareholder than holds the necessary amount of shares without any control over the company. The former can be regulated by contracts and is safe practice if handled by experienced advisor.
You do not necessarily need to establish a PT PMA from scratch. You can also decide to acquire an existing PT PMA or an existing Perseroan Terbatas (PT). Regarding the latter, as the PT is a local limited liability company, it needs to be converted into a PT PMA after acquisition.
Requirements to set up PT PMA
In order to set up a PMA in Indonesia, at least 2 shareholders are required and one individual must hold the role of President Director and the other as President Commissioner. As a foreign President Director, an Indonesian tax number called an NPWP and a work permit called a KITAS is required as of 2013 BKPM regulations. Alternatively, a nominee director who already holds a KITAS or a native Indonesian President Director can be appointed.
Foreign investment officially must adhere to a minimum capital requirement of 10 billion IDR ($750,000 USD) and a minimum paid up capital of 25% of that figure or no less than 2.5 billion IDR ($190,000 USD). In the majority of cases the deposit of paid up capital is not required in practice and the shareholders are required to sign a Capital Statement Letter pledging the funds as well as an investment proposal to the effect of the minimum capital requirements.
PT PMA COMPANY ESTABLISHMENT PACKAGE
We are offering the most affordable price in Batam, Riau Archipelago and Jakarta Province, Indonesia to establish your PT PMA only USD 2,500. Guarantee success 100% or we will return your money.
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Our Services includes:
Investment Permit: Document research, review & preparation, investment approval permit.
Company Incorporation: Preparation of Articles of Incorporation, Proof of Deposit of Capital, Deed of Establishment, Gazetting of Articles of Incorporation.
Operating Licenses & Other Documents: Domicile Certificate, NPWP – Tax Number/s, TDP – Company Registration, Bank Account assistance for opening new accounts.
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- Free Legal Advice by our Lawyers on matters such as Staff Recruitment, Community and Government Relations
- IUT – Permanent Business License
- Preparation of compliance corporate kit which includes corporate seal, share certificates, register and minutes book
The three-hour investment service system that was introduced on 11 January 2016 aims to speed up the investment process for investors. In three hours eight licensing procedures should be completed (after investors have delivered all required paperwork). These procedures involve the investment permits, the tax number (NPWP), a deed of the business establishment, a decree from the Ministry of Justice and Human Rights, a certificate of company registration, the permit to employ foreign workers, an importing producer identification number, and a customs identification number.
Originally, this service was only available to big investors who either invest at least IDR 100 billion (approx. USD $7.5 million) or generate 1,000 new job positions for Indonesian workers. However, a Presidential Instruction also opened this special service to investment in four infrastructure-related sectors.
These sectors are: energy and mineral resources, communication, public works, and communication & information.
Local limited liability company (Perusahaan Terbatas / PT)
One of the most well-known company types in Indonesia is Local Company also known as PT. It’s commonly used by both local entrepreneurs and, in some occasions, foreign investors.
Depending on the type of business activities, certain business fields might have limitations or are closed for foreign ownerships. Furthermore, it is mandatory to fulfill a minimum investment of USD 800,000 to obtain a business license for PMA company. Therefore, you may consider establishing a local PT company which is allowed to conduct specific business activities and there is no obligation to spend USD 800,000 investment in Indonesia.
To set up a local PT company, the amount of paid up capital should be based on the size of your company:
- Small : above IDR 50,000,000 – 500,000,000
- Medium : above IDR 500,000,000 – 10,000,000,000
- Large : above IDR 10,000,000,000
Medium scale start with IDR 1,100,000 above is allowed to hire foreign employee.
PT LOCAL COMPANY ESTABLISHMENT PACKAGE
We are offering the most affordable price in Batam, Riau Archipelago and Jakarta Province, Indonesia to establish your Local PT only IDR 17.000.000. Guarantee success 100% or we will return your money.
Our Services includes:
Company Incorporation: Preparation of Articles of Incorporation, Deed of Establishment, Gazetting of Articles of Incorporation.
Operating Licenses & Other Documents: Domicile Certificate, NPWP – Tax Number/s, TDP – Company Registration, SIUP – Trading Business License
Foreign Company Representative office
Foreign representative offices are typically formed to facilitate transactions between local and foreign buyers and suppliers. A Representative Office facilitates making such transactions easier but a Representative Office cannot perform operating activities characterized by a PT.
For market research, promotional services, or for trading activities on behalf of a parent company, a representative office can be chosen. This is how foreign companies can register their presence on the market in Indonesia, without having to set up one of the entities mentioned above. Additionally, because branches are not allowed in Indonesia, one can focus on establishing a representative office.
Set up of Foreign Company Representative Ofiice (KPPA)
We are offering the most affordable price in Batam, Riau Archipelago and Jakarta Province, Indonesia to establish your Foreign Company Representative Office only IDR 15.000.000. Guarantee success 100% or we will return your money.
Our fee’s Include the following documemts/services:
– Foreign Representative Office License
– Domicile Certificate
– Tax Registration
– Certificate of Busines Registration
– English Translations of relevant documents
– Assistance with Bank Account opening
If you have any questions about Establishment of PT or require further consultation and assistance, you can arrange for a free meeting consultation with DF LAW Consulting at: