How Foreigners can Run a Business in Aceh from Abroad

Frequently Asked Questions

How long does it take to set up a PMA company, and how soon can it begin commercial operations?

Establishing a PMA Company in Indonesia typically takes around two weeks after completing document requirements. Following establishment, additional steps such as obtaining licenses and registering for Tax ID vary based on business type. Last, some licensing processes may take time, necessitating thorough planning and preliminary assessments of the business plan for a smoother process.

How many incorporation types exist in Indonesia?

In Indonesia, there are three company types that you can establish based on your business nature, requirements, and preferences.

• Local Company (PT): 100% local ownership.
• Foreign Company (PT PMA): can be entirely owned by foreigners; however, restrictions in business sectors apply
• Representative Office: a branch of the parent company overseas whose purpose is to conduct marketing-related activities without generating income or profits
If investors intend to conduct business in Indonesia, what kind of organization must they establish?

Within the scope of foreign direct investment in Indonesia, foreign investors can typically do business in two ways:

• Set up a PMA (Perusahaan Modal Asing)

PMA is a local subsidiary in the form of a limited liability corporation for foreign investment reasons

• Set up a RO (Representative Office)

According to Law No. 25/2007 on Investment, foreign investors are required to establish a PMA company in order to make direct investments and conduct commercial and business activities in Indonesia. A PMA firm in Indonesia is a legally recognized business entity that can engage in various commercial and business operations as long as it complies with the current laws and regulations. As for RO, its purposes include conducting market feasibility studies and liaison activities.

What other things should be considered when hiring local and foreign employees in Indonesia?

There are a few things to consider, such as:

• Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
• Increase the competence of workers by giving or encouraging job training.
• Follow the termination procedures (Terminating an employee in Indonesia can be long, tedious, and expensive.
• Observe working hours, holidays, and overtime regulations
• Give mandatory employee benefits, including social security and health insurance
• Withhold only the right amount of income tax on behalf of the employees
• Follow the wages and other benefits outlined by the law
• Process work permits for foreign employees