When starting a business in Indonesia, Cekindo advises business owners on the 3 types of legal entities in Indonesia: Local Company, Foreign Direct Investment Company and Representative/Branch Office.
A Local Company is structured as an entity that is 100% owned by a local. It requires a smaller capital and has lesser limitations and requirements to fulfill. Foreigners who wish to open a Local Company can start one through a Special Purpose Vehicle (SPV) arrangement.
Learn how to Start a Local PT.
A foreign-owned limited liability company is a legal entity that can be fully owned by foreign companies or investors. However, the maximum foreign ownership is determined by the business sector and business activities. The restrictions are listed in Indonesia’s Positive Investment List.
Learn how to Start A PT PMA.
A Representative Office is also commonly reffered to as a branch office, foreign companies or investors can fully own a Representative Office. This setup works best for non-sales-related business activities (e.g.: setting up call centers, design houses, market research). It is also an interim solution for preparing the establishment of PT PMA.
Learn how to Start A Representative Office.
| Foreign Limited Liability Company (PT PMA) | Local Company (PT) | Representative/Branch Office | |
|---|---|---|---|
| Activity | Any business activities which are not banned by Negative Investment List.
Required to invest with minimum IDR 10 billion after obtaining the Capital Investment Registration or Business License, in the first 5 years. This amount is applied to one business line and will be multiplied in accordance with how many business lines needed. |
Allowed to choose a maximum 3 business category without any investment plan required after obtaining all the licenses required.
All business category is open. |
Limited to the preparation of PT PMA establishment, market research, promotion, etc.
Not allowed to sign any contract, issue invoice, receive payment, or even apply for any other license, such as an import license. Need to have the exact same name as the parent company. |
| Investment Plan | Min. IDR 10 billion (USD 800.000) for each business activity | – | – |
| Stakeholder | Min. 2 shareholders, 1 director, and 1 commissioner
All of the stakeholders can be a foreigner Local representative as the director |
Min. 2 shareholders, 1 director, and 1 commissioner
All of the stakeholders shall be local In the event there is no local shareholder, |
1 Chief of Representative Office
Can be local or foreigner, except for Construction RO which shall have local Chief |
| Authorized Capital | Minimum IDR 10 billion (USD 800 000) as the paid-up capital injected into the company’s bank account once the company is well established | Currently there is no minimum authorized capital in Local PT. To determine the size of the company the paid-up capital shall be 25% of authorized capital as follows:
|
No capital required |
| Additional Requirement | For a business line that shall apply for Investment Capital Registration, it is mandatory to fulfill investment plan before getting Business License and running a business.
For the business line that directly apply for one-year Business License, it is allowed to start running the business or apply any further license required while realizing the investment plan. |
For foreigner: professional shareholder and its special purpose agreement | – |
| Tax Obligations |
|
Same as PT PMA |
|
| Mandatory Tax Report |
|
Same as PT PMA | PPh 21, PPh 23, PPh 26, PPh 4 ayat 2 (Monthly Report) |
| Negative Investment List | Negative Investment List Indonesia | – | – |
| Documentation Needed |
|
|
*Cekindo can help drafting for point 1, 2, 3. |
| Legal Documents Created |
|
Same as PT PMA |
|
| Estimated Time (After Supporting Document Received) | 1 – 1.5 Month | 1 – 1.5 Month | 1 – 1.5 Month |
| Company Secretary | Not Necessary, but it will be better if there is a company secretary | ||
Cekindo registers several companies every month, and our legal team is ready to answer your questions. Fill in the form below and get the latest information on company registration in Indonesia.
Also, we will be happy to meet you in our offices located in Jakarta, Semarang, and Bali.
Can I set up a locally-owned company as a foreigner?
Of course. To do so, you need to engage with a Special Purpose Vehicle service provider.
Can I expand my business to Indonesia without doing company registration in Indonesia?
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.
How long does it take to do company registration Indonesia?
It should take between 1 to 1.5 months. For speedy incorporation, you can choose a shelf company (ready-made company) instead.
Can I set up a joint venture company for my business?
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.
What is Business Registration Number in Indonesia?
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.
Can I set up a company in Indonesia without calling a notary or a lawyer?
Yes. You can do it with the assistance of a professional consultant who usually has in-depth knowledge of company registration process in Indonesia.
Do local and foreign companies pay the same tax?
Yes.
What is the cost for opening a company in Indonesia?
It depends on the company type and area in which you want to open your company. But, the cost starts from USD 1,500 for a local company (PT) in Jakarta area.
