Business Solo: Benefits of Setting up a PT PMA

The Benefits of Setting up a PT PMA in Solo

  • InCorp Editorial Team
  • 10 July 2020
  • 3 minute reading time

Solo has been a captivating business and investment destination.

In 2019, among the 35 districts and cities in Central Java, Solo was crowned the second in the Central Java Potential Investment Challenge 2019.

As of now, the investment value in Solo is among the three highest in Central Java. Also in 2018, Central Java won the best One-stop Integrated Service Provider title in the Indonesian 2018 Investment Award.

As you can see, Central Java, particularly in Solo, has plenty of opportunities that lure so many foreign investors.

The implementation of the Online Single Submission System (OSS) has continuously created a positive investment trend in Solo for all micro, small, medium, and large companies since 2018.

In that year of the commencement of OSS, the investment in Solo recorded a value of IDR 30 trillion. The creation and adoption of OSS is the Indonesian government’s effort to make the business licensing process more convenient, easier, and faster via process integration to encourage more foreign investments.

According to Sukoharjo’s Head of Investment Division of the DPMPT (One-Stop Integrated Investment and Services Office), between 2009 and 2019, the total investment value in Solo was IDR 71 trillion.

There was an increase in investment each year during the mentioned time frame but the most significant increase happened in the year when the OSS was implemented.

Why Establish a PT PMA for Your Business in Solo

Benefits of setting up a PT PMA in Indonesia - infographicFor business owners to have a lasting presence of their businesses in Indonesia with full compliance with local employment rules, setting up a PT PMA is often the best option.

There can also be additional valid reasons why foreigners prefer establishing a PT PMA in Solo over other entity options.

1. Import Duties are Lower

Commonly, a lot of foreign businesses need to import products or raw materials from overseas, and thus import tax incurs.

So, if you run a PT PMA in Indonesia, you can enjoy lower import duties by making use of their eligible tax benefits. Lower tax duties mean that a PT PMA can save a great deal of money and thus increase their profits.

2. Obtain Permits and Licenses More Easily

For every business in Indonesia, it is mandatory to have certain business and operational licenses, depending on the business classification and type of legal entity.

A great benefit that comes with PT PMA is the ease of acquiring licenses and permits as compared to other business structures. You will spend less time and resources when obtaining licenses and permits as a PT PMA.

3. Foreign Employment Sponsorship

Foreign businesses will need to hire foreign employees that have certain specialised skills or fit particular positions.

You can sponsor any number of foreign employees as necessary without limitation when you set up a PT PMA in Solo.

Of course, a foreign employee must fulfill certain criteria to qualify for a foreign employment sponsorship.

For example, a foreign employee must have already been working and living in Indonesia for three consecutive years and must be the PT PMA’s shareholder, director, president director, or commissioner.

How Cekindo can Assist with PT PMA Setup in Solo

Cekindo exists with the entrepreneurs and businesses in Solo in mind. We are a bespoke business setup consultant in Indonesia ranging from general business solutions to incorporation services and legal assistance.

With our comprehensive services, competitive pricing, and simplicity in business solutions, Cekindo is relentlessly helping clients to set up companies in Solo and provide necessary services at their startup.

Let one of our professional business consultants manage your business setup in Solo for you by simply sending us an inquiry via the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.