Establishing a Foreign Investment Company (PT PMA) in Indonesia: A Comprehensive Guide

If you’re considering investing in Indonesia, understanding the process of setting up a Foreign Investment Company, known as a PT PMA (Penanaman Modal Asing), is essential. Indonesia offers vast opportunities for foreign investors, but navigating the regulatory landscape can be complex. In this comprehensive guide, we’ll walk you through the steps of establishing a PT PMA in Indonesia, while also providing insights on SEO optimization to ensure your content ranks for PT PMA-related queries.

What is PT PMA?

Under Law No. 25/2007 regarding Investment, a PT PMA is a legal entity through which foreign investors can conduct business activities within Indonesia, including generating revenue and profit. This structure allows for either full or partial foreign ownership, subject to certain restrictions outlined in the Negative Investment List compiled by the Indonesia Investment Coordinating Board (BKPM).

Step-by-Step Guide to Establishing a PT PMA:

1. Determine Legal Entity and Sector Openness: Before establishing a PT PMA, assess whether your business activities require a PT PMA or if a representative office (KPPA) suffices. Additionally, consult the Negative Investment List to ascertain if your chosen sector allows for foreign investment and the maximum percentage of foreign ownership permitted.
2. Engage with BKPM: The Indonesia Investment Coordinating Board (BKPM) is the primary authority for foreign investment. Engage with BKPM to navigate the establishment process and obtain necessary licenses and permits.
3. Legal Documentation: Prepare essential legal documents, including the Principle License and Business License from BKPM, Deed of Establishment, legalized by a Public Notary, and Domicile Letter from the local district authority.
4. Tax Registration and Compliance: Register your PT PMA for tax purposes with the Indonesian Tax Office. Obtain a Tax Identification Number (NPWP) and taxable entrepreneur confirmation (PKP) to ensure compliance with tax regulations.
5. Company Registration and Manpower Report: Complete company registration processes, including obtaining a Company Registration Certificate (TDP) from the agency for integrated licensing services (BPPT) and submitting a Manpower Report and Company Welfare Report to the Ministry of Manpower.
6. Minimum Capital Requirements: Comply with minimum capital requirements for foreign investment, which currently stand at IDR 10 billion or the equivalent in US dollars. Ensure the paid-up capital meets regulatory standards, typically set at 25 percent of the minimum requirement.
7. Shareholder Requirements: Assemble at least two shareholders, with at least one being a foreign individual or entity. The Director must reside in Indonesia and obtain a tax number (NPWP) and work permit (KITAS).