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How to Register Foreign Company as PT PMA in Indonesia

Posted 22.06. 2015 by Nurmia Agustina / Last update on 22.05. 2017

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Undoubtedly, Indonesia offers great business opportunities whether for local citizen and also for the foreign people. To carry out and start profitable business in Indonesia, foreigner needs to be incorporated as a foreign limited liability company in Indonesia.

The Incorporation of a limited liability company is governed by the Company Law No. 40 of 2007 (the “Company Law”). Once a business decides to expand and takes an advantage of this growing market, it will need expert help in navigating the rules on how to register a company in Indonesia.

 

Advantages of PMA

Most foreign-owned companies establish the Indonesian version of a Limited Liability Company (LLC), which is known as a PMA—Penanaman Modal Asing –in Indonesia, since it can take the form of a 100% foreign-owned limited liability company or can be established as a limited liability company through a joint venture with Indonesian partners.The advantages of this type of company are that it gives the foreign investor full control over the direction of the company, no restriction on where a PMA can operate in Indonesia, and reduces the risk in finding a suitable local partner.

Certain business fields require a foreign-owned company to establish a local partner and are allowed up to a certain percentage of ownership depending on the sector. The specifics of this are covered in the Negative Investment List. However, there are some business activities that are closed for foreign ownership based on Negative Investment List, therefore should  be established as Local Indonesian companies (refers to President Regulation of Republic of Indonesia No.39/2014 concerning list of business field that are closed to Investment and business field that are conditionally open for investment). In this case for foreign investors still have alternative option by establishing a local nominee company in form of local limited liability (i.e. Perseroan Terbatas) with 100% local shareholder but keeping under foreign investors control.

Investment Plan for PMA

Regarding the updated regulation from BKPM (Read: New Regulation on Capital Submission Proof), investors should invest above USD 1 million or refers to IDR 10 billion as their investment plan with the minimum paid-up capital is above USD 250,000 or refers to IDR 2.5 billion. Investment plan can be either cash or fixed assets such as machinery however it is excluded for Land and buildings (Read: How to Own Land and Property in Indonesia).

Paid-up capital shall be paid after the company is established and has a bank account (stated by notary letter). Company needs to reach investment realizations above USD 1 million for obtaining Business license as their permanent license, import license, and other licenses which relate to company’s sector.
 

The Steps for PT.PMA company in Indonesia

Procedure Institution Expected Duration
Approval of company name (should consist 3 words) The Ministry of Law and Human Rights 2 days
Review, Revision, and Approval of Principle License as their temporary license BKPM 14 days
Article of Association (AKTA) Notary 4 days
Legalized of Legal Entity (Deed of Establishment/ SK Kehakiman) The Ministry of Law and Human Rights 3 days
Certificate of Domicile Landlord of the office building and Local Council 3 days
Tax Payer Registration Number (NPWP) and letter of registered tax (SKT) Tax Office 3 days
Company Registration Certificate (TDP) Provincial Government 10 days

 

  1. Company Name approval. The application for a company name is conducted through an online system, which can be accessed by a notary. The Ministry of Law and Human Rights can reject the name for a variety of reasons, including if it already exists or is similar to the name of another company. Based on the latest Indonesia’s regulation, the company name should consist three words. It shall not contain words that are considered as vulgar or obscene in Indonesia.
  2. Principle License (BKPM Approval). The Indonesian Investment Coordinating Board (BKPM) is the central authorized body for receiving, reviewing and approving foreign investment applications as well as monitoring approved and running projects. The investor should submit their application and investement plan which describes their investment realizations above USD 1,000,000. The investment plan willl be reviewed and revised by BKPM. Once it has been approved, BKPM will issue the Principle License as an Temporary Investment Permit. Principle License will be valid for one year and can be extended for two years. Then company needs to apply for Business License within three years.
  3. Article of Association (Akta Perusahaan). After obtaining a Principle License from BKPM, the investor is allowed to establish a Foreign Owned Limited Liability Company (PT. PMA) by arranging for a Article of Association through a notary, which is valid as an Article of Association for the company.
  4. Ratification of Legal Entity (SK Kehakiman). The Article of Association shall be submitted to the Ministry of Law and Human Rights to be legalized.
  5. Certificate of DomicileThe next step is to obtain a Certificate of Domicile from the landlord of the office building and from the Sub District (“Kelurahan”), which states the address of the company.
  6. Tax Registration Number (NPWP). The company shall obtain a Tax Payer Registration Number (NPWP) and a letter of registered tax (Surat Keterangan Terdaftar Pajak/SKT) at the Tax Office located at the same sub district. NPWP is valid as company’s tax ID and beneficial for proposing bank loan, obtaining other necessary company’s documents as well as for company’s tax payment (Read: Corporate and Personal Income Tax in Indonesia).
  7. Company Registration Certificate (TDP). To finalize PT PMA company registration, the company must arrange a Company Registration Certificate from Provincial Government to officially register the company in the region.

 

The PMA company registration process in Indonesia is very precise and can be demanding.  In addition, as the ASEAN nations update and alter business regulations, having an expert partner on the ground in Indonesia can be critical to success. Engaging professional assistance helps companies navigate local regulations and understand the culture of business in Indonesia. You can check more for complete overview of business services here

Feel free to contact us for a free quotation on how to register a foreign company in Indonesia.



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22 Responses to “How to Register Foreign Company as PT PMA in Indonesia”

  1. Kevin says:

    Hello. Just wanted to say how much I appreciate your articles. Thank you.

  2. Ruthie says:

    It’s really a great and useful piece of info. I am glad that you
    just shared this helpful information with us. Please keep us up to date like this.
    Thank you for sharing.

  3. Latashia says:

    Thank you for providing detail information about company registration in Indonesia. We will come to you soon.

  4. Carma says:

    Good write-up. I certainly appreciate this site. Keep it up!

  5. Maria Fannd says:

    Thank you for complete information about company registration. We will contact you soon.

  6. Martin Malonda says:

    Thank you for your assistance. Agreed process of company registration was done on time! Martin Malonda

  7. Mark Seneker says:

    Thank you for complete requirements for our company registration and delivery of the entire registration process on time. Mark Seneker

  8. Titi Dimagra says:

    Hi,

    thanks for your blog. We found here all necessary information and will contact you soon.

    Titi

  9. […] that, the company’s paid up capital should be IDR 2.5 million. This condition often hindered new foreign companies or start-up businesses to invest in Indonesia. Therefore, the government tried to formulate a new […]

  10. mushtaq hussain says:

    hi this is mushtaq hussain kindly please send me the total expenses to register a company in indonesia in USD.

  11. Libor Uhlík says:

    Dear Mushtaq,

    thank you for contacting Cekindo. Our consultant will contact you very soon.

    If you have any other question, just let us know.
    Thank you

    Libor Uhlík

  12. […] Since the government of Indonesia wants to protect its micro, small, and medium enterprises, there is a policy stated that to open a business in Indonesia, the company needs to be registered as a foreign limited liabilities or PMA. To establish a foreign company, it is obligated to meet a certain requirements regarding to minimum investment and paid up capital (Read: How to establish PT PMA in Indonesia). […]

  13. […] procedures for investment control and implementation. The dissolution process for both local PT and PT PMA are almost same, with the exception of a PMA’s obligation to revoke its business license from the […]

  14. […] types that foreign investors can choose when they decide to expand their business to Indonesia: PT PMA, Representative Office, and Local PT Company. For Local PT Company there is also more option how to […]

  15. […] are some cases that some companies are not ready yet to establish a foreign owned company or PT PMA in Indonesia. It happened caused by many reasons such as: not really sure about the potential market for the […]

  16. […] and transferred into your name. The form of  our shelf companies are local PT company, not PT PMA. For complete overview about Shelf company requirements (Read: Complete Business […]

  17. […] the application and all the necessary documents, must to be submitted to the Ministry of Public Works and the administration fee must be paid. The fee can amount to either $5,000 in the case of […]

  18. Yew Quin Chye says:

    Hi ,

    We will like to have your quotation for the incorporation of a company PMA with a local Indonesian
    nominated as a partner .

    Our company is set up to export agriculture and frozen sea food product from Indonesia and possibly import
    other consumer products into Indonesia .

    Kindly advise as what other restriction we might face eventually .

  19. Siti Junima Faradella says:

    Hi Yew,

    Thank you for contacting Cekindo.

    Following your inquiry, we have wide experiences in assisting your client from various industries to register their company in Indonesia. Based on your email, we noted you would like to set up company for export business and already have a partner in Indonesia. Please be informed that your business activities (trading) is open for maximum 100% foreign ownership. Further, please find below my explanation of PT PMA in Indonesia.

    Foreign Investment Limited Liability Company or PT PMA

    Indonesian company which shares own by foreign is classified as PT PMA. As PMA you will have to forward investment plan of US$ 1,000,000 with 25% paid up capital in order to obtain Permanent Business License (IUT). For the minimum investment plan is above USD 1,000,000, which is allocated as your plan of investment in Indonesia for land, building, work capital, etc. The minimum paid in capital for USD 250.000 shall be deposit after the company is established and has a bank account. After establishing PMA, you will receive principal license as temporary license however, you need to apply for permanent business license after fulfilling the investment realisation above USD 1 million and generally it will take around 1 year to fulfil investment realisation.

    For your reference, we will send directly to your email the general proposal for company registration in Indonesia including our other management services such as visa application, tax reporting, payroll processing and many others which can support your business in Indonesia.

    Should you have any questions, please don’t hesitate to let me know.

    Thank you and looking forward to hear from you,
    Della

  20. […] you can choose one among these three options: 1) Establishing a Local Company, 2) Establishing a Foreign-Owned Company (PT PMA), and 3) Opening a Representative Office. Each of the options offer their own advantages and […]

  21. Yustin says:

    Hi,

    How about I want to make a PMA for managing property? Can I buy or lease under PMA as well as managing the property?

  22. Siti Junima Faradella says:

    Hi Mr. Yustin,

    Thank you for contacting Cekindo.

    Based on your inquiry, we note that your business plan as managing property. However we would like to reconfirm the business activity you are planning, because the type of your business activity will determine the regulatory requirement for the company set up. In the mean time for your information there are 2 types of legal entity you may choose, local company and foreign owned company, you can check the explanation here.

    Should you have any further question, please do not hesitate to contact us.

    Thank you,
    Della

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