PMA Establishment Indonesia


Understanding Foreign Owned Company in Indonesia

Establishing a PMA (Penanaman Modal Asing) in Indonesia is a pivotal step for businesses aiming to operate within the Indonesian market. As a legally recognized entity, a PMA offers numerous advantages, including limited liability for its shareholders, adherence to corporate governance standards, and enhanced credibility in the local business environment.

What is PMA?

PMA, or Penanaman Modal Asing, is a foreign investment company established under Indonesian law. It is specifically designated for businesses initiated by foreign investors in accordance with prevailing regulations. Here are some fundamental characteristics of a PMA:

  1. A PMA must have at least two shareholders, who can be individuals, legal entities, or a combination of both. One of the shareholders should be a local individual or entity.
  2. Minimum capital requirements apply to establishing a PMA, with capital contributions accepted in the form of cash, assets, or a combination of both. The official capital requirement for a PMA in Indonesia is 10 billion Indonesian Rupiah.
  3. Up to 100% foreign ownership is allowed for most business classifications

Legal Basis of establishing a PT PMA:

  • UU No. 40/2007 – Perseroan Terbatas / UUPT
  • UU No. 1/1995 – Pasar Modal
  • UU No. 25/2007 – Penanaman Modal
  • Perpres 10/2021 – Pengaturan tentang DNI

Key Benefits of Establishing a PMA in Indonesia

The establishment of a PMA in Indonesia offers various benefits for businesses seeking expansion in the region:

  • Operating as a PMA ensures compliance with Indonesian corporate laws and regulations, fostering credibility and trust among stakeholders and customers.
  • In certain sectors, establishing companies as PMAs may be mandatory to access specific markets or government contracts, providing strategic advantages in key industries.
  • Setting up a PMA is generally faster and involves less bureaucratic complexity compared to other legal structures. This expedites the commencement of operations and reduces administrative burdens.

Important Points to Remember

The establishment of a PMA (Foreign Investment) in Indonesia involves several matters related to regulations and requirements that must be fulfilled by foreign investors, including:

  • It is mandatory for the foreign investors to obtain a valid Investor KITAS to accommodate their stay for the investment process.
  • Indonesian foreign investment laws require that at least 51% of shares be held by local investors and a maximum of 49% by foreign investors.
  • Foreign investors are required to employ local workers comprising at least 85% of the total workforce employed.
  • Foreign investors must meet legality requirements such as permits and business ownership legality. This includes Investor KITAS, business permits, environmental permits, and other necessary permits according to the type of business to be conducted.

Application Process of PMA Establishment

Establishing a Limited Liability Company (PT) for Foreign Investment (PMA) in Indonesia involves several stages and procedures. Below are the steps to be taken in the establishment process of a PMA PT in Indonesia:

Internal Process:

  1. Talk to our experts about your expansion objectives and how to do company registration 
  2. Provide all the documents required for company establishment in the company registration Indonesia process.
  3. Review your submitted documents and ensure are aligned with the latest company registration Indonesia regulations.
  4. Drafting an application letter addressed to related government bodies for the company registration Indonesia process.
  5. File all your documents to the related government bodies on your behalf for your company registration Indonesia.

External Process

  1. Registration of Indonesian Tax ID (NPWP): An NPWP is required to secure other business licenses, open a bank account, and fulfilling tax obligations.
  2. Obtain Indonesian Business Identification Number (NIB): A NIB is required for a company registration Indonesia to conduct immediate business operations.
  3. After the entire registration and licensing process is completed, the PT may commence its business operations in Indonesia.

Additional Process For PT PMA

  1. The Articles of Association for your company shall be drafted and notarized by a Notary Public duly licensed and registered in the Republic of Indonesia.
  2. Upon submission of the Deed of Incorporation, the Ministry of Law and Human Rights of the Republic of Indonesia shall conduct a review and, if satisfied, provide formal approval for the establishment of your company.
  3. Certain sectors and specific business activities within the Republic of Indonesia require the acquisition of additional licenses and permits, in addition to company registration.This process can from 7 to 20 days, depending on your business sector.

Document Requirements for PMA Establishment

When applying for the establishment of a PMA, applicants must provide various documents, including:

  1. Identification documents for shareholders and directors.
  2. Proof of the company’s registered address.
  3. Bank statements demonstrating the fulfillment of minimum capital requirements.
  4. Relevant licenses and permits for specific industries.

Frequently Asked Questions about Company Formation in Indonesia

What types of business entities can you register in Indonesia?

Essentially, there are three types of business entities: a local company (PT), a foreign company (PT PMA), and a representative office.

What is the minimum initial capital for PT and PT PMA?

Based on the company’s size, the initial capital for PT ranges from IDR 50 million to more than IDR 10 billion.

How long does it take to establish a company in Indonesia?

PT and PMA can be established in as little as 30 days, while representative offices require 6 to 8 weeks, subject to regional variations and document completeness.

Which business entity is suitable for your business in Indonesia?

It depends on requirements and status. For Indonesian citizens, establishing a PT is recommended. A representative office is suitable for market research, while PT PMA is ideal for substantial investments.

Can PMA  have more than one foreign ownership?

In general, a PT requires a minimum of two shareholders for establishment, and having more than one owner is a standard practice. However, it is important to include one local shareholder to ensure your PT PMA complies to the legal requirements.

Let Come Visit Indonesia be your reliable partner in Indonesia.

Whether you’re planning a short visit or a long-term stay, starting a business venture, or seeking legal clarity, we’re here to help you every step of the way.

Contact us today to explore how we can empower your Indonesian journey.


Popular Services


Latest News