Types of Legal Entities for Foreign Investors in Indonesia

PT PMA

PT PMA

If you are a foreign investor that wants full control of your business, then establishing a PT PMA is the best option you can opt for. PT PMA is the only legal entity in Indonesia that allows 100% foreign ownership. However, each sector has regulations on their permitted business activities as well as the maximum amount of shares foreigners can own determined by the Positive Investment List.

General Representative Office (KPPA)

A representative office is suitable for foreign investors and business owners that are at the early stage of expanding into Indonesia. RO's allow foreign businesses to test the Indonesian market before establishing any commercial operations. RO's also work best for non-sales activities, such as customer service support, approaching potential clients, as well as conducting marketing and brand awareness initiatives.

General Representative Office (KPPA)
Representative Office for Business Trading (KP3A)

Representative Office for Business Trading (KP3A)

KP3A is a representative office that is established specifically for business trading. Both general and trading RO's are prohibited from conducting business activities that generate financial income. However, a trading RO may be established in any part of Indonesia, whereas a general RO is not able to do so.

Representative Office for Construction Company (BUJKA)

Similar to KP3A's, a BUJKA is a representative office specifically established for foreign construction companies. A BUJKA may engage in large-scale construction projects, but only under a joint operation with a local company known as Local PT. Despite its limitations, a BUJKA is still a good start for foreign construction companies to set their footprint in Indonesia, as they are allowed to collaborate on building projects without obtaining a construction license (SIUJK).

Representative Office for Construction Company (BUJKA)

The Process of Setting Up a Company in Indonesia

Internal Process

  • Consultation

    Talk to our experts about your expansion objectives in Indonesia.

  • Collecting Required Documents

    Provide us with all the documents required for company establishment.

  • Document Review

    We ensure your submitted documents are aligned with the latest regulations.

  • Drafting

    We will draft your application letter addressed to related government bodies.

  • Documents Submission

    We file all your documents to the related government bodies on your behalf.

External Process

  • Registration of Indonesian Tax ID (NPWP)

    An NPWP is required to secure other business licenses, open a bank account, and fulfilling tax obligations.

  • Obtain Indonesian Business Identification Number (NIB)

    A NIB is required for a company to conduct immediate business operations.

  • Deed of Incorporation (For PT PMA)

    A Notary should draft and legalized your Deed of Incorporation.

  • Approval of Legal Entity (For PT PMA)

    After submission of Deed of Incorporation by the notary, the Ministry of Law and Human Rights will give approval.

  • Securing Other Licenses (For PT PMA)

    Some sectors and business activities require more specific business licenses and permits. This process can from 7 to 20 days, depending on your business sector.

*The estimated time after all the required documents are deemed eligible for submission to the related government’s bodies.

Comparisons of Company Establishment Options
for Foreign Investors in Indonesia

PT PMA Representative Office (KPPA) Representative Office for Trading Business (KP3A) Representative Office for Construction Company (BUJKA)
Nature
  • Allows profit-generating business activities
  • Allows up to 100% foreign ownership
  • Ideal for business sectors that are open for foreign investment
  • Not allowed to generate financial income
  • Allows up to 100% foreign ownership
  • Ideal for testing the waters before setting up a fully-fledged company
  • Works best for non-sales activities
  • Not allowed to perform any sales and purchase activities
  • Allows up to 100% foreign ownership
  • Ideal for liaising, promotional, and market survey activities
  • Permitted to engage in large-scale construction projects within a joint operation with a Local PT
  • Best suited for the larger global construction companies
Structure
  • Minimum two shareholders (corporate/individual)
  • Minimum one local director
  • Must have at least one commissioner (can be a foreigner with a valid work permit)
  • No shareholder or director required
  • One chief executive is sufficient
  • No shareholder or director required
  • One chief executive is sufficient
  • No local shareholders are required
Capitalization
  • Minimum IDR 10 billion of investment
  • At least IDR 10 billion should be provided as a paid-up capital
  • No capital is required
  • No capital is required
  • No capital is required
Benefits
  • Full control of business
  • Eligible to sponsor work and stay permit for foreign employee
  • Low incorporation cost
  • Eligible to sponsor work and stay permit for foreign employees
  • Low incorporation cost
  • Eligible to sponsor work and stay permit for foreign employee
  • Can open a branch office in any part of Indonesia
  • Low incorporation cost
  • Allowed to work on a construction project in a joint operation with a Local PT without acquiring a construction license (SIUJK)
  • Eligible to sponsor work and stay permit for foreign employee

What Our Clients Say

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FAQs

Of course. To do so, you need to engage with a local nominee service provider.

Yes, this particularly applies to import and export businesses. Instead of establishing a company, you can use an undername import service, also known as importer of record.

It should take between 1 to 1.5 months. For speedy incorporation, you can choose a shelf company (ready-made company) instead.

Yes. A joint venture company can be in the form of PT PMA (foreign company) or PT (local company). Requirements for each establishment are different.

Business Registration Number is proof that a company, regardless of type, is legally registered in Indonesia. A company that does not have a Business Registration Number may have to face dissolution.

Yes.