Should You Establish a PT, a PT PMA or a Representative Office in Semarang?

Semarang’s strategic location in the heart of Java in Indonesia makes it an ideal location for business investors to set up a company, or in other words to carry out a company registration.

The powerhouse economies of neighboring countries such as Singapore are also easily reachable from Semarang, providing wonderful cross-border trade and investment opportunities. Furthermore, Semarang provides important access to other Indonesian major cities such as Jakarta and Surabaya.

Currently, approximately 70% of the population in Indonesia are under 39 years old, consisting of 122 million of the workforce.

As a result, it allows Semarang to offer low-cost setup and business operations as compared to other cities in the Southeast Asian countries.

Therefore, company registration in Semarang has been growing rapidly over the years with 31% of the country’s startups based in Semarang. Another bonus advantage that an investor could reap for setting up their company in Semarang is the relaxing environment that no other cities can compare.

If you’re ready or thinking about starting a business in this region full of potential, keep reading to know the different types of company registration in Semarang.

Common Entities Available in Semarang

When it comes to company registration in Semarang, you will need to consider all the possible requirements and one of those being choosing the right entity.

There are several types of legal entities in Semarang and all have their advantages and disadvantages based on your business needs.

1. Foreign-owned Company (PT PMA)
2. Local Company (PT)
3. Representative Office

Foreign-Owned Company

Also known as Perseroan Terbatas Penanaman Modal Asing (PT PMA), a foreign-owned company is a legal entity that allows foreigners to perform commercial activities in Semarang and Indonesia under the Indonesian Company Law.

Before an investor proceeds with company registration in Semarang with a PT PMA, they have to know their business activities and business classification under the Negative Investment List set out and updated by the Indonesia Investment Coordinating Board (BKPM). The list will decide the percentage of foreign shares that foreign investors can own in the company.

Key characteristics of a PT PMA in Indonesia are as follows:

1. The foreigner can be the shareholder
2. IDR 10 billion of minimum investment plan
3. Also IDR 10 billion of minimum paid-up capital
4. Foreign ownership subject to Negative Investment List and may require an Indonesian shareholder
5. Maximum foreign ownership is 100%
6. At least two shareholders
7. The most basic organisational structure shall consist of at least one director and one commissioner
8. Submission of monthly tax reports and investment activity report
9. Foreign employee sponsorship is possible

Local Company (PT)

By law, a local company can only be owned by an Indonesian citizen.

However, a foreigner can own a local company through a Special Purpose Agreement.

Usually, foreign investors choose a PT when a particular business sector is closed to foreigners.

Key characteristics of a PT in Indonesia are as follows:

1. 100% local ownership
2. Minimum capital investment from IDR 600 million to IDR 10 billion based on the size of the company
3. According to the latest changes laid out in  Job Creation Law, the classification of Local PT in Indonesia based on paid-up capital as follows:
   • A micro-enterprise: less than IDR 1 billion
   • A small enterprise: IDR 1 – 5 billion
   • A medium enterprise: IDR 5-10 billion
   • A large enterprise: more than IDR 10 billion

Representative Office (KPPA)

A KPPA is often established by a foreign parent company for overseeing their business in Indonesia; or when they are preparing to set up a PT PMA in Semarang.

Activities that can be done by a KPPA are limited and income-related and sales transactions are prohibited.

Which Legal Entity should You Choose for Company Registration in Semarang?

The best type of legal entity for foreign investors is the PT PMA as it offers investors up to 100% foreign ownership with the permission to hire foreign employees. If you are not sure, you are welcome to consult our professionals at Cekindo.

How Cekindo Can Assist with Company Registration in Semarang

As a Cekindo’s client, you will get the best of both worlds: the joint expertise of our local legal specialists and international consultants.

Together we will be able to provide you with a specialised and customised assistance that you need for your company registration in Semarang.

You even have the alternative to open a company in Semarang without having to be in Indonesia.

Contact us now for more information. Fill in the form below.