Local Company (PT) is the most common legal entity in Indonesia. Even though a local company is intended for Indonesian citizens only, there are some circumstances under which a foreign investor can incorporate a local company in Indonesia as well.
Benefits of a Local PT Company in Indonesia for Foreigners
Even though there are other legal entities particularly designed for foreigners — a limited liability foreign-owned company and representative office — starting a local company might bring more benefits to some foreign entrepreneurs.
Not Restricted from Some Business Fields
The Negative Investment List is a document that regulates foreign ownership of businesses based on business sectors they operate in. Thus, some business activities are fully closed to non-domestic investors, and some are partially limited. On the other hand, a local company is not a subject to this regulation, and it might be the only choice how to start a business in Indonesia in your field.
Lower Incorporation Costs
In comparison with a foreign-owned company, the paid-in capital of a local company is much lower. In general, it ranges from IDR 50,000,000 up to more than IDR 10,000,000,000. The amount of the capital defines the size of the company, which further determines whether a company is eligible to sponsor a work permit for a foreign worker (and how many).
- Small : IDR 50,000,000 – 500,000,000
- Medium : IDR 500,000,001 – 10,000,000,000
- Large : above IDR 10,000,000,001
Registration Process of a Local PT
STEP 1: COMPANY NAME APPLICATION
Submit your company name to Ministry of Law & Human Rights
STEP 2: ARTICLE OF ASSOCIATION PREPARATION
This requires presence of a notary
STEP 3: DEED OF ESTABLISHMENT APPROVAL
Deed of Establishment is approved by Ministry of Law & Human Rights
STEP 4: CERTIFICATE OF DOMICILE ACQUISITION
Obtained from local government to show business location
STEP 5: TAXPAYER REGISTRATION NUMBER (NPWP) APPLICATION
To secure other licenses, fulfill tax obligations and open a bank account
STEP 6: BUSINESS IDENTIFICATION NUMBER (NIB) APPLICATION
Application is done via Online Single Submission (OSS) system
STEP 7: COMPANY REGISTRATION CERTIFICATE (TDP) ACQUISITION
After, you can apply for additional licenses (if required)
Starting a Local Company with Cekindo
Special Purpose Vehicle Services
Foreigners can register a local company through a Special Purpose Agreement. This means signing a contract with a local shareholder — Cekindo — who will represent partial ownership of your business. However, it will always be you, a foreign entrepreneur, who in fact gets full ownership of your business and Cekindo will not intervene in your business by any means.
A shelf company, known as a ready-made company, is another smart market entry solution. Cekindo registers several local companies every year, keeps their records clean, and offers them to our clients. Thus, entrepreneurs who do not want to form a business entity from scratch, can use this option instead.
If you are not sure what type of company which is suitable for your business, contact us via the form below or visit us in one of our offices located in Jakarta, Semarang and Bali. Cekindo will assist you to establish your local company in Indonesia based on your needs.