Guide on How to Open A Foreign-owned Company in Indonesia

A foreign-owned company in Indonesia is legally established as a PT PMA (Foreign-Owned Limited Liability Company). It is the only structure that allows foreign individuals or companies to directly own shares, generate revenue, and operate commercially in Indonesia.

To form a PT PMA, you need at least two shareholders, a minimum paid-up capital of IDR 2.5 billion (about USD 150,000), a registered business address, and a notarized Deed of Incorporation. The process takes 4 to 6 weeks and can be completed remotely with a licensed consultant.

2026 capital update: Under BKPM Regulation No. 5 of 2025 (Article 26(10)), the minimum paid-up capital for a PT PMA was reduced by 75%, from IDR 10 billion to IDR 2.5 billion (~USD 150,000), effective since October 2, 2025. The total investment plan for each KBLI code remains at IDR 10 billion.

Key Takeaways

• A PT PMA is the legal structure for foreign investors to operate and generate revenue in Indonesia.
• The correct KBLI code determines foreign ownership limits, licensing requirements, and business classification.
• The minimum paid-up capital is IDR 2.5 billion, and the total investment plan exceeds IDR 10 billion per KBLI code.
• Forming a PT PMA includes key steps such as deed approval, NPWP registration, NIB issuance, and sector-specific licensing.
• PT PMAs must maintain ongoing compliance, including LKPM reporting, tax filings, and license renewals.

What is a Foreign-Owned Company in Indonesia?

A PT PMA is a limited liability company established under Indonesian law with at least one foreign shareholder. A company is classified as a PT PMA regardless of the percentage of foreign ownership, even 1% foreign shareholding triggers PT PMA status and its corresponding compliance requirements.

Through a PT PMA, foreign investors can:

• Own shares directly (up to 100% in eligible sectors)
• Generate revenue and issue commercial invoices in Indonesia
• Hire Indonesian and foreign employees
• Sponsor work permits (KITAS) for foreign staff
• Open a corporate bank account
• Register products with BPOM, Kemenkes, or other Indonesian authorities
• Sign commercial contracts and hold business licenses

A PT PMA differs from a Representative Office (KPPA), which cannot generate revenue or conduct commercial transactions, and from a local PT (PT PMDN), which is restricted to Indonesian shareholders only.

Thinking about forming a PT PMA? InCorp Indonesia manages the full process on your behalf — from sector verification and document preparation to NIB issuance and bank account setup. Get a free consultation →

Is Your Sector Open to Foreign Ownership?

Before forming a PT PMA, confirm that your intended business activity allows foreign investment. Indonesia regulates this through the Positive Investment List (Presidential Regulation No. 10 of 2021), which classifies sectors into three categories:

Fully Open Sectors

Over 200 business sectors allow up to 100% foreign ownership with no local partner required. These include manufacturing, trading, logistics, technology, professional services, food and beverage, cosmetics, and medical devices.

Conditionally Open Sectors

Some sectors allow foreign investment but require a partnership with a local cooperative or MSME, or impose a foreign ownership cap (e.g., 49% or 67%). Examples include certain equipment rental activities and some tourism-related services.

Closed Sectors

A small number of sectors are completely closed to foreign investment. This includes narcotics production, gambling, chemical weapons manufacturing, and coral extraction.

Your KBLI code determines which category applies. Choosing the wrong code is the most common and costly mistake in PT PMA formation. It can also limit your ownership percentage, trigger unexpected licensing requirements, and delay the opening of your bank account.

Important 2026 deadline: All companies must update to the new KBLI 2025 classification system by June 18, 2026. New PT PMAs should register under KBLI 2025 codes from the start.

PT PMA Requirements: What You Need

It’s important to understand the PT PMA requirements that shape your investment structure, licensing, and operations in Indonesia.

Shareholders

• Minimum 2 shareholders (individuals or corporate entities)
• Can be 100% foreign in eligible sectors
• No requirement to reside in Indonesia
• Liability limited to the value of shares held

Directors and Commissioners

• Minimum 1 director and 1 commissioner
• Both can be foreign nationals
• Foreign directors managing daily operations from inside Indonesia must hold an Investor KITAS
• Most banks require at least one resident director to open a corporate bank account

Capital

Requirement	Amount
Minimum paid-up capital	IDR 2.5 billion (~USD 150,000)
Total investment plan per KBLI	(~USD 600,000)

The paid-up capital need not be deposited at the time of registration. A capital declaration letter is accepted at incorporation, with the actual deposit made after the corporate bank account is opened. The capital cannot be transferred out for non-business purposes for 12 months from the date of the deposit (Article 27 of BKPM Regulation No. 5 of 2025).

READ MORE:

• How to Meet PT PMA Minimum Capital Requirements in Indonesia
• Starting a PT PMA Indonesia: Who Can Hold Structural Roles?
• Setting Up A Local PT. Company: A Guide For Foreign Investors

Business Address

A PT PMA must have a registered address at a commercial location in Indonesia. Residential addresses are not permitted. Virtual offices and serviced offices are legally accepted in most sectors and cities, including Jakarta, Bali, Semarang, Batam, and Surabaya.

Step-by-Step: How to Form a Foreign-Owned Company in Indonesia

Setting up a foreign-owned company in Indonesia involves several legal and licensing steps. Understanding them early helps investors prepare the right structure and avoid delays.

Step	Estimated Timeline	Details
Sector Verification and KBLI	1–2 days	Check if the business sector is open to foreign investment and identify the correct KBLI code.
Company Name Reservation	1–2 days	Reserve a company name through the Ministry system. PT PMA names must have at least three words.
Deed of Incorporation	3–5 days	A notary prepares and notarizes the company deed and Articles of Association.
Ministry Approval	3–7 days	The deed is submitted for approval to confirm the company as a legal entity.
Tax ID Registration (NPWP)	1–2 days	Register the company for a corporate tax ID through Coretax.
NIB Issuance via OSS-RBA	1–2 days	Obtain the Business Identification Number through OSS-RBA.
Sector-Specific Licenses	7–20 days	Apply for any additional licenses required for the business sector.
Corporate Bank Account	3–7 days	Open a corporate bank account after the main documents are completed.

Incorporation Documents

Document	Description
Passport copies of shareholders and directors	Required for identity verification
Signed Power of Attorney	Needed when documents are signed remotely
Capital declaration letter	Supports the company’s capital structure
Business address documents	Used to verify the registered office address
Proposed company name and KBLI codes	Required for reservation and incorporation drafting

PT PMA vs. Representative Office vs. Local PT

Choosing the right business structure in Indonesia affects how you operate and grow. Understanding the differences helps you start with the right setup.

Aspect	PT PMA	Representative Office	Local PT (PMDN)
Foreign Ownership	Up to 100% in eligible sectors	N/A	Not permitted
Generate Revenue	Yes	No	Yes (Indonesian owners only)
Hire Employees	Yes	Yes	Yes
Sponsor Work Permits	Yes	Yes	Yes
Minimum Capital	IDR 2.5 billion	None	Lower — varies by size
Estimated Setup Time	4–6 weeks	3–4 weeks	3–5 weeks
Best For	Full commercial operations	Market research / pre-entry	Indonesian investors only

If your goal is to sell products, generate revenue, or operate commercially in Indonesia, you need a PT PMA. A Representative Office is only appropriate before full market commitment.

Common Mistakes in Foreign-Owned Company Formation

Setting up a foreign-owned company in Indonesia requires more than completing the incorporation process. Avoiding common mistakes early can help protect your investment, prevent delays, and support smoother business operations.

Selecting the Wrong KBLI Code

Misclassifying your business activity can restrict foreign ownership, lead to incorrect licensing requirements, or block opening a bank account. Always verify your Indonesia KBLI before submitting any documents.

Using a Nominee Arrangement

Having an Indonesian national hold shares on a foreigner’s behalf is explicitly illegal under Article 10(1) of Law No. 25 of 2007. These agreements are void in Indonesian courts and expose both parties to criminal liability. The legal alternative is direct foreign shareholding through a properly structured PT PMA.

Missing the KBLI 2025 Deadline

All companies must align their business activity codes with KBLI 2025 by June 18, 2026, or face NIB suspension and operational disruption.

Underestimating the Investment Plan

The minimum paid-up capital is IDR 2.5 billion, but the total investment plan per KBLI code must exceed IDR 10 billion. If your PT PMA operates under two KBLI codes, your total investment plan requirement doubles to IDR 20 billion.

Ignoring Ongoing Compliance

After formation, PT PMAs must file quarterly LKPM investment reports to BKPM, monthly and annual tax returns, and renew sector-specific licenses before expiry. Non-compliance leads to fines and a suspension of NIB.

Why InCorp Indonesia for PT PMA formation

InCorp Indonesia (an Ascentium Company) has assisted companies from various countries in establishing PT PMAs in Jakarta, Bali, Semarang, Batam, and Surabaya.

We manage every step of the formation process, including KBLI verification, document preparation, notary coordination, OSS-RBA submission, bank account facilitation, and post-formation compliance. Start your PT PMA formation →

Also planning to sell products in Indonesia? Once your PT PMA is formed, InCorp can register your products with BPOM, Kemenkes, or the Ministry of Health as a combined service — saving you weeks of additional setup time. Learn about product registration →

Frequently Asked Questions