Alexandrino Pais

Frequently Asked Questions

What other things should be considered when hiring local and foreign employees in Indonesia?

There are a few things to consider, such as:

• Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
• Increase the competence of workers by giving or encouraging job training.
• Follow the termination procedures (Terminating an employee in Indonesia can be long, tedious, and expensive.
• Observe working hours, holidays, and overtime regulations
• Give mandatory employee benefits, including social security and health insurance
• Withhold only the right amount of income tax on behalf of the employees
• Follow the wages and other benefits outlined by the law
• Process work permits for foreign employees
What is PT (Perseroan Terbatas)?

PT (Perseroan Terbatas) is the Indonesian term for a limited liability company.

What is a PT PMA?

Limited liability company with foreign direct investment ranging from 1-100%

If investors intend to conduct business in Indonesia, what kind of organization must they establish?

Within the scope of foreign direct investment in Indonesia, foreign investors can typically do business in two ways:

• Set up a PMA (Perusahaan Modal Asing)

PMA is a local subsidiary in the form of a limited liability corporation for foreign investment reasons

• Set up a RO (Representative Office)

According to Law No. 25/2007 on Investment, foreign investors are required to establish a PMA company in order to make direct investments and conduct commercial and business activities in Indonesia. A PMA firm in Indonesia is a legally recognized business entity that can engage in various commercial and business operations as long as it complies with the current laws and regulations. As for RO, its purposes include conducting market feasibility studies and liaison activities.