PMA vs PMDN: Which Structure Fits Your Business?

If you are planning to set up a company in Indonesia, understanding sector access and ownership options can help you feel confident in choosing the right structure for your growth. 

Quick Comparison: PMA vs PMDN at a Glance 

This comparison of PMA vs PMDN across key factors aims to simplify your decision-making process. 

Factor	PMA	PMDN
Ownership	Foreign shareholders permitted	100% Indonesian-owned only
Minimum Paid-Up Capital	IDR 2.5 billion (per BKPM Reg. No. 5/2025)	No fixed national minimum
Minimum Total Investment	> IDR 10 billion per KBLI per project location	No fixed national minimum
Foreign Shareholders	Yes — up to 100% in open sectors	Not permitted
LKPM Reporting	Required (quarterly/annual)	Generally, not required
Capital Lock-Up Rule	12-month restriction applies	Not applicable
Best For	Foreign investors and overseas companies	Indonesian-owned local businesses

What is a PMA Company in Indonesia? 

A PMA (Penanaman Modal Asing) is a foreign-invested limited liability company established under Indonesian law. Unlike a representative office, a PMA is a fully operational legal entity: it can issue invoices, hire employees, sign contracts, and generate revenue locally. 

PMA companies are governed by Indonesia’s Investment Law and registered through the OSS-RBA system, which is designed to streamline your setup process and provide ongoing support. 

Can a Foreigner Own 100% of a PMA?  

Yes, in many sectors. However, this depends on Indonesia’s Positive Investment List, which classifies each business activity as fully open, partially restricted (requiring a local partner), or closed to foreign investment. Understanding how your KBLI code is classified is the essential first step before committing to any investment structure.

READ MORE:

• PT PMA Requirements: Steps to Start Your Business in Indonesia
• PT PMA Coretax Reporting Indonesia: Requirements and How to Stay Compliant 
• Everything You Need: Documents for Setting Up a PT PMA in Indonesia 

What is a PMDN Company in Indonesia? 

A PMDN (Penanaman Modal Dalam Negeri) is a domestic investment company that must be 100% owned by Indonesian individuals or entities. It is the standard structure for locally owned businesses and imposes fewer regulatory requirements than a PMA. 

A PMDN has no fixed national minimum capital requirement under current regulations, which makes it an accessible structure for Indonesian entrepreneurs at various scales. However, it cannot accommodate any foreign shareholding. 

Can a PMDN Have a Foreign Shareholder?  

No. Under BKPM Regulation No. 5 of 2025, if a foreign party holds shares, the company must be restructured into a PMA. Clarifying this process helps investors plan for ownership transitions and legal compliance.

Updated Capital Requirements Under BKPM Regulation No. 5 of 2025 

BKPM Regulation No. 5 of 2025, effective in October 2025, introduced clearer capital requirements for foreign-owned companies (PT PMA) in Indonesia. 

Under this regulation, PT PMA companies must meet two main requirements: 

• Minimum Paid-Up Capital: PT PMA companies must have at least IDR 2.5 billion in paid-up capital. This is lower than the previous IDR 10 billion requirement. 
• Minimum Total Investment: PT PMA companies must still plan a total investment of more than IDR 10 billion for each 5-digit KBLI code and each project location. In most sectors, this amount excludes land and buildings. 

The regulation also introduces a 12-month capital lock-up rule. This means the paid-up capital deposited into the company’s bank account cannot be withdrawn for 12 months from the deposit date, unless used for business purposes, such as buying assets, constructing buildings, or paying operational costs. 

Some sectors follow different rules: 

• For food and beverage businesses, the IDR 10 billion investment requirement applies to each regency or city, not to each outlet. 
• For public EV charging stations, the requirement applies per province. 
• For property development companies, land and building values can be included in the minimum investment calculation. 

For PMDN companies, there is no similar national minimum capital requirement. However, the required capital will still depend on the business activity, scale, and operational needs. 

Which Business Sectors are Open to PT PMA? 

Foreign ownership in Indonesia varies by business sector. These limits are regulated under the Positive Investment List. Some sectors are open to 100% foreign ownership, including: 

• Consulting and professional services 
• Most IT and digital businesses 
• Certain wholesale and trading activities 

Other sectors are restricted and may require Indonesian shareholder participation. These can include: 

• Media 
• Certain agricultural activities 
• Specific retail formats 

If your target sector is restricted, you may need to involve a local shareholder based on the required ownership percentage. Another option is to review whether a more suitable KBLI classification allows full foreign ownership. 

Tax and Compliance Obligations for PMA and PMDN Companies 

PMA and PMDN companies must follow Indonesia’s tax framework, which includes a 22% Corporate Income Tax, applicable VAT, and clear withholding taxes, helping you feel assured about compliance obligations.  

• LKPM reporting (Investment Activity Reports): Due quarterly and annually, with updated deadlines now set to the 15th of April, July, October, and January under BKPM Reg. No. 5/2025 
• Transfer pricing compliance for related-party transactions involving foreign shareholders 
• OSS-RBA monitoring, including the possibility of government site visits during the investment realization period 

PMDN companies are generally not subject to LKPM reporting unless they form part of a larger corporate group with cross-border transactions. 

Which Option Should You Choose: PMA or PMDN? 

Choose a PMA if: 

• You are a foreign national or an overseas company entering Indonesia 
• Your business requires foreign ownership or access to international capital 
• You plan to scale regionally, bring in expatriate staff, or apply for an Investor KITAS 

Choose a PMDN if: 

• The business will be fully owned and operated by Indonesian parties 
• No foreign investment is involved at any stage of operation 
• You prefer a simpler compliance structure without LKPM obligations 

Some businesses use phased entry strategies, starting with a PMDN for local operations and later switching to a PMA as foreign investment grows. Under BKPM Regulation No. 5/2025, this conversion is allowed, but the new entity must meet PMA capital and licensing requirements. 

How to Set Up a PMA in Indonesia 

Setting up a PMA in Indonesia typically takes 3–6 weeks when all documents are prepared correctly. The core steps are: 

• Determine Your KBLI Classification: This determines your business activity and your eligibility for foreign ownership. Misclassification is the most common cause of delays. 
• Structure Your Capital: Confirm total investment value (must exceed IDR 10 billion per KBLI) and paid-up capital (minimum IDR 2.5 billion, subject to the 12-month lock-up rule). 
• Prepare the Deed of Establishment: A notary drafts and executes the Articles of Association, including all intended KBLI codes and revenue-generating activities. 
• Obtain Ministry of Law and Human Rights Approval: This formally recognizes the entity under Indonesian law. 
• Register through OSS-RBA and Obtain Your NIB: Apply for the Business Identification Number and any sector-specific licenses based on your risk classification.

Ready to Set Up Your Company in Indonesia? 

Choosing between PMA and PMDN is just the first step. Getting the right company structure, KBLI classification, capital planning, and licensing from the start can help prevent costly delays later. 

InCorp Indonesia (an Ascentium Company) helps foreign investors and local businesses set up and operate in Indonesia with confidence. Our services include: 

• PMA and PMDN Incorporation: End-to-end company setup, from deed of establishment to NIB issuance 
• KBLI Consultation: Identifying the right business classification and ownership options 
• OSS Registration: Handling licensing through Indonesia’s Online Single Submission system 
• LKPM Compliance: Ongoing investment activity reporting where applicable 

Fill out the form below to get started, and our team will be in touch within one business day.

Frequently Asked Questions