Home Blog Your Guide to Setting up a Venture Capital Business in Indonesia Business Licenses | Company Registration | Indonesia Your Guide to Setting up a Venture Capital Business in Indonesia InCorp Editorial Team 18 June 2024 4 minutes reading time Table of Contents Reasons Behind the Growth of Venture Capital Companies in Indonesia Requirements for Starting a Venture Capital Business in Indonesia Establishment Procedure for Venture Capital Business in Indonesia How InCorp Indonesia Can Assist A venture capital business obtains financing through many sources, such as financial schemes and capital participation. The company then uses the fund to develop a venture capital partner or debtor business. Venture capital is often seen as private equity. However, there are some principal differences among the two entities. In Indonesia, the venture capital business is a direct investment instrument that has thrived over the years due to the country’s attractive investment outlook, emerging markets, diverse demographics, and unique geographical conditions. This guide will help you understand where the venture capital trend is headed in Indonesia and how you can set one up. Reasons Behind the Growth of Venture Capital Companies in Indonesia The growth of capital ventures in Indonesia has been explosive during the past several years, and the number of investments has increased more than 60-fold. In 2017, a total of US$3 billion was collected in venture capital, twice the amount compared to 2016 in startup funding. Indonesia’s government is undoubtedly thrilled with the influx of venture capital money, which has contributed to the flourishing of local businesses, increasing spending, and growing job opportunities. These are all good indicators of a healthy economy in the country. President Joko Widodo has also driven policies like tax credits and subsidy programs to encourage more venture capital in Southeast Asia. Money from venture capital not only bridges the gaps that cannot be done by existing businesses in Indonesia, but it also has fewer limitations when compared to conventional financing methods. Other reasons that boost venture capital growth in Indonesia include the following: Wealthy groups and individuals exist in Indonesia Increasing demand for data mining and management, especially in fintech The surging number of startups Some of Indonesia’s most well-known venture companies are MDI Ventures, Convergence Ventures, BRI Ventures, East Venture, and Ideosource. Besides that, you can also find names like Sequoia, Y Combinator, AC Ventures, and PT Prasetia Dwidharma, among others, that are active in Indonesia regarding startup funding. Read more: 6 (Small) Business Opportunities to Venture into to Indonesia Requirements for Starting a Venture Capital Business in Indonesia Venture capital companies in Jakarta and all over Indonesia can conduct business activities, including venture funds management and fee-based service activities, with approval from the Indonesian Financial Services Authority. Permitted types of legal entities for starting a venture capital business are limited liability companies, cooperatives, and limited partnerships. Other requirements are detailed below: IDR 50 billion paid-up capital for a limited liability company IDR 25 billion paid-up capital for a cooperative IDR 25 billion paid-up capital for a limited partnership company All paid-up capital must be paid in cash A venture capital company of foreign investment can only be set up in the form of a limited liability company with a maximum foreign ownership of 85% Establishment Procedure for Venture Capital Business in Indonesia A venture capital business license must be obtained from the OJK before a venture capital firm can conduct venture capital business activities regarding startup funding. Here’s a brief explanation of the process: The Board of Directors applies for the business license at OJK by submitting the required documents. OJK approves or rejects the application within 30 business days of receipt. Once the application is approved, the firm will receive the business license and can proceed with the business activities no later than 6 months after receiving the license. Read more: How to Prepare a Joint Venture Agreement in Indonesia Guide to Doing Business in Jakarta Mailchimp Free eBook Indonesia Business Insight Subscribe Full NameEmail I have read InCorp's Privacy Policy and agree to InCorp using my information provided to contact me about related content, and services.*Subscribe How InCorp Indonesia Can Assist InCorp Indonesia offers you and your business a new beginning in Indonesia with our best experience and knowledge. We help you start your business nationwide with cutting-edge services that minimize your overall venture capital business setup in Indonesia. We are decade-old professional business consultants who work closely with our clients to ensure efficient communications and outcomes for company registration, licensing, business outsourcing, legal advice, and other business services. We’ll guide you in setting up your venture capital company in Indonesia based on your budget and requirements, complying with all legal procedures. Fill out the form below to send us your inquiry. Read Full Bio Verified by Hotdo Nauli Senior Legal & Delivery Manager at InCorp Indonesia Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). Frequently Asked Questions Does a PMA company in Indonesia have to meet certain criteria before it can distribute dividends? Dividends can be distributed from company net profits after allocating reserves, depending on a positive profit balance. Approval from the general meeting of shareholders is necessary. Interim dividends may be distributed if specific requirements are met. How much is the minimum fund required to establish a PT PMA business in Indonesia? The investment requirement for PMA companies in Indonesia varies based on their classification under the Indonesia Industrial Standard Classification (KBLI). Generally, a minimum investment of IDR 10,000,000,000 (ten billion Indonesian Rupiah), excluding investment in land and buildings, is needed to conduct one business activity in one location. What responsibilities does a PMA company have in terms of non-tax compliance? In Indonesia, a PMA company is typically required to submit various reports to relevant authorities, such as: Annual financial report Investment realisation report Manpower and employee welfare report Expatriate utilisation report Company loan repot Foreign exchange and prudential principles report However, depending on the business activities and classification relevant authority may require additional reports from a PMA company. Can a foreigner form a CV? A foreigner is not allowed to form a CV in Indonesia Get in touch with us. 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