Interested in Setting up a Local Company in Brebes? 5 Facts to Know

Located in Central Java, Indonesia, Brebes is expected to reach 7% growth in the following one or two years. With the rapid development of infrastructure and facilities in Brebes, this industrial estate has got investors excited and ready to set up a company.

There are two common types of legal entities for foreign investors to choose from when starting a business in Indonesia: a local company (PT) and a foreign limited owned company (PT PMA).

Why Set Up a Local PT

There are advantages and disadvantages to both PT and PT PMA. But a PT company can be more beneficial over a PT PMA: if a foreigner’s objective is to invest in a sector closed to foreign ownership and to enjoy a simpler setup process and faster market penetration in Indonesia.

5 Interesting Facts about Local PT Establishment

1. Only Indonesian Nationals can Own a Local PT 

A local PT requires 100% local ownership by an Indonesian citizen or corporate. In other words, the Indonesian government does not allow foreigners to have ownership of a PT company.

This restriction makes some of the sectors open to local PT companies only impossible for foreigners to take part in.

2. Special Purpose Vehicle Arrangement: A Solution for Foreigners to Set up PT Companies

The only way that foreigners can participate in sectors close to foreign investments is by establishing a PT company through a Special Purpose Vehicle arrangement.

Through a Special Purpose Vehicle arrangement, the appointed Indonesian citizen will become the shareholder of the PT company on behalf of the foreigner – the beneficiary and the real owner.

3. Simple and Easy PT Setup Process

Starting PT establishment takes about 30 to 45 working days. The process consists of the following steps:

• The Indonesian Ministry of Law and Human Rights approves your company name.
• The Notary prepares the Article of Association.
• The Indonesian Ministry of Law and Human Rights issues the Deed of Establishment.
• Get a certificate of domicile from the local authority
• Apply for a taxpayer number and a value-added tax number at the tax office.
• Obtain a trading license, SIUP.
• Acquire certificate of company registration, TDP.

4. Lower Paid-up Capital for Foreigners with Local PT Companies

Unlike other types of legal entities, a local PT establishment allows foreigners to enjoy a much lower paid-up capital.

According to the latest changes laid out in  Job Creation Law, paid capital for Local PT in Indonesia based the company size 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

5. You can Hire Foreign Staff with a Local PT

You can hire foreign employees when you have a medium or large PT company with more than IDR 10 billion paid-up capital. However, you will have to obtain related work permits or business visas to do so.

How Cekindo Can Help with Company Setup in Indonesia

Cekindo can handle your Indonesia company setup rapidly, compliantly, and efficiently. Our legal and business professionals can help you understand the requirements of different types of legal entities.

We will also explain the advantages and disadvantages of choosing a particular legal structure. This in-depth knowledge enables you to make an informed decision about the legal entity type that you should set up in Indonesia.

Aside from the company setup, Cekindo also provides a comprehensive range of business solutions including accounting outsourcing, recruitment and PEO services, Special Purpose Vehicle arrangement, flexible workspace solutions, and many more.

Our solutions make it possible for you to run your business within a defined budget with maximum flexibility. Contact our trusted team of experts today via the form below.