Company Registration in Bali: A Complete Guide for Foreign Investors

Whether you want to expand your business and enter the Indonesian market, particularly Bali, this article is what you need. It provides you with everything to know about company registration in Bali.

Everybody has heard about Bali, but not everybody knows that Bali has become one of the most potential markets in South-East Asia. Bali’s economy has been continually growing for a while. The highest growth came from the information and communication sector (9.15 percent), confirming that The Island of Gods is turning into “The Island of Entrepreneurs”.

Foreign-Owned Company (PT PMA) Registration in Bali

Definition of PT PMA

PT PMA (Perseroan Terbatas Penanaman Modal Asing) is one of the forms of limited liability companies established in Indonesia. Based on law No. 25/2007 regarding Investment (New Investment Law), it is the only legal entity through which a foreign national or a foreign company can generate revenues, profit, or engage in sales within the Indonesian territory.

PT PMA, in other words, a foreign-owned company, represents a legal entity where any of the shares (does not matter if 5% or 99%) are held by a foreign national or an institution. Even though a legal form of the company is not directly linked to a number of its foreign shares, their percentage is further classified under the new Positive Investment List.

Positive Investment List 

Following the enactment of Indonesia’s Job Creation Law, its Government has released an update of business sectors and lines (also commonly referred to as KBLI) that are now open to foreign investment in Indonesia.  This revised version of the Positive Investment List was drafted to attract more foreign investors and improve the ease of doing business in the country by open up many sectors for 100% foreign ownership.

Although it has been dubbed as the “Positive”, this long-awaited list may not carry the weight of its namesake, as there is some business sectors that still partially open and closed off for foreign investment.

Learn more about Indonesia’s Positive Investment List, and how it presented both business opportunities, benefits, and challenges in different areas of doing business in Indonesia. 

What if PT PMA Does Not Fit Your Needs?

Some investors might be distracted by large capital requirements or ownership restrictions of a PT PMA. In this case, a representative office or a local company may correspond with your needs more.

Representative Office

Foreigners who do not need to engage in commercial transactions and wish to explore business opportunities in Bali instead (through market research, networking, etc.) can take advantage of establishing a representative office.

Kantor Perwakilan Perusahaan Asing known as “KPPA” is a convenient way for foreign businesses to gain a market presence and evaluate business potential.

As services of KPPA are limited to marketing and promotion activities, a limited liability company must be established to conduct business activities and receive income.

Local Company

A local limited liability company known as “PT” is the most common company type in Indonesia. However, foreign nationals still prefer to start PT PMA. Not only that a PT must be fully owned by Indonesian citizens, but the number of work permits for foreigners is also limited based on capital size.

In general, PT can be classified into four major groups based on capital size. This division should not be underestimated as it will significantly affect human resources in your company. Keep in mind that only medium and large-sized PTs can apply for work permits for their foreign workers.

According to the latest changes laid out in  Job Creation Law, the classification of Local PT in Indonesia is 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

Under some conditions, PT can be established by a foreign national as well. A foreign investor can find a local partner with whom s/he will start a joint venture.

Read more about “How to start a PT with the help of Cekindo”.

Company Registration in Bali: Before Setting up a PT PMA

Investment Plan

Commonly mistaken with paid-up capital, the investment plan only serves as the demonstration of how much and where your funds of the investment capital will be spent. The official minimum investment to start PT PMA is IDR 10 billion.

The investment plan can be either cash or fixed assets, but the value of land and buildings is excluded from its amount.

Even though minimum paid-up capital and investment plan are not the same, both are very important when establishing PT PMA. The minimum paid-up capital represents the value that must be injected into your business. Like an investment plan, the capital can be both in a form of money and other assets with a total value of IDR 10 billion. However, the paid-up capital requirement remains the same even in the case of several business classifications.

Once your company is registered, you are obliged to report your investment activities regularly (frequency depends on your licenses).

Business Location

The location of your business is a crucial condition in the process of its incorporation. Even though regional policies might vary in individual premises, a domicile letter is in 100% cases a prerequisite document when starting PT PMA.

To get a domicile letter, a rental agreement must be submitted. The location of your business must be carefully considered as many cities do not allow a residential address (such as an apartment or a house) to be used as a business address. In some other cities, a residence address might be used upon written agreement of nearby community members.

Beware that properties in Bali have specific licenses that classify their purpose. Before signing a rental agreement, make sure that the building has a license that allows operating an office.

Exemptions in regional policies and complicated legalities are one of the main reasons more and more foreign investors decide to choose shared or virtual offices.

Get to know more about Cekindo virtual and shared office services in Bali.

Corporate Structure

Shareholders

Every limited liability company in Indonesia must have at least two shareholders. These can be individuals (natural persons) or corporations (juridical persons) or a combination of both.

When planning the organizational structure of your company, it is important to keep in mind the minimum amount of shares that belong to each shareholder. This amount, which must appear in your investment application, is stated as IDR 10 million (USD 750).

Commissioners

Based on Indonesian law, each PT PMA must have at least one commissioner. This can be either an Indonesian resident or a foreign national. In the case of a non-resident commissioner, this person cannot be a resident commissioner in another company in Indonesia as an additional work permit (RPTKA) would be required.

The main responsibility of a commissioner is to supervise a director or Board of Directors eventually.

Directors

A director in PT PMA is responsible for running day-to-day operations. Following the Indonesian regulations, the number of directors is not limited. In case of having more than one, one of them must be appointed as a president director, and the authority and tasks are divided based on an agreement.

Note that a non-resident director cannot sign documents on behalf of a company. In case a local director cannot be appointed, both work and stay permits must be processed immediately after the appointment of a foreign resident.

Process of Company Registration in Bali

The length of the process of company incorporation varies from 6 to 12 weeks depending on business classification, readiness, and correctness of the documents. In case any additional material is needed, the procedure gets even longer.

The infographic below summarizes general procedures and institutions involved.  Overall, seven governmental institutions take part in the process, and it is no secret that the process is complicated for many foreign businessmen who seek the assistance of professionals.

In Cekindo we will help you to navigate through local Balinese regulations and institutions, and ensure smooth registration of your PT PMA.

For elaborate information about each step, check our article “How to register a foreign company as PT PMA in Indonesia”

2021 Update on Company Registration in Bali

It has now been easier and simpler to incorporate a company in Bali. If previously it took a long time to register a company, now it takes between 4 to 6 weeks only to complete the company registration process. Below is a table to help you understand the registration process better.

Permanent Business License and Company Registration in Bali

Permanent Business License (Izin Usaha Tetap – IUT) is a mandatory document for any business activities conducted by foreign-owned (PMA) companies in Indonesia. Even though it is often mistaken with a temporary Principal License (Izin Prinsip), their functions are different.

A Principle License is acquired during the process of business incorporation as it is one of the prerequisite documents. Contrary, only when the process is over, and your business has fulfilled the legal regulations, at this moment you are finally eligible to apply for the permanent business license. This includes settling the paid-up capital and accomplished the investment plan.

Other Business Licenses

PT PMAs conducting business in Indonesia must acquire several business licenses based on the field in which they do business. Import licenses, medical distribution licenses, and trademarks belong to the most important ones.

Further information on these documents can be found in “Business Licenses”.

However, the business environment in Bali differs from the rest of Indonesia, and businesses there are usually operating in the field of services such as bars, cafes, restaurants, surfing schools, or hotels. In these fields, environmental, disturbance, operational, hygiene, or SIUP MB (license to sell alcohol) are generally required.

Cekindo can Assist with Company Registration in Bali

Balinese business culture is quite complicated, and many regulations are operated on a regional level. Thus, professional assistance and guidance through the procedure are more than recommended mainly through the application itself.

Our professional team is ready to assist you, consult any of your inquiries and we will help you so that you can solely focus on your business plan.

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