How to Set Up a PT PMA in Indonesia: A Comprehensive Guide by The Bali Lawyer

Setting up a foreign-owned company in Indonesia, known as a PT PMA (Perseroan Terbatas Penanaman Modal Asing), is an essential step for foreign investors looking to establish a legal presence in the country. Indonesia offers significant opportunities for businesses across a wide range of sectors, and establishing a PT PMA allows foreign investors to legally operate in the country, either independently or in partnership with local entities.

At The Bali Lawyer, we provide expert legal assistance to guide you through every step of setting up a PT PMA in Indonesia. Our team of experienced professionals ensures that your company is established in compliance with Indonesian law, helping you avoid common pitfalls and simplifying the process. In this comprehensive guide, we’ll walk you through the key steps and requirements for setting up a PT PMA, ensuring that your business is well-prepared to succeed in Indonesia.

What is a PT PMA?

A PT PMA is a limited liability company in Indonesia that allows foreign investors to own part or all of the shares. Unlike a local company, a PT PMA grants foreign investors the legal right to establish and run businesses in sectors open to foreign investment under Indonesian law. It is the most common and suitable structure for foreigners planning to do business in Indonesia.

Having a PT PMA provides several advantages, including:

  • Legal ownership and control over business operations in Indonesia.
  • The ability to hire foreign employees and obtain work permits (KITAS).
  • Eligibility to engage in various business activities under the Indonesian Negative Investment List.
  • The potential to receive legal protection and incentives from the Indonesian government for foreign investments.

Key Requirements for Setting Up a PT PMA in Indonesia

Before setting up a PT PMA in Indonesia, there are several key requirements you need to meet. These include legal requirements, financial commitments, and adherence to sector-specific regulations.

1. Foreign Ownership Restrictions

Indonesia’s foreign investment laws are governed by the Negative Investment List (Daftar Negatif Investasi or DNI), which outlines sectors open and closed to foreign investment and specifies ownership limitations. Some sectors allow 100% foreign ownership, while others require partnerships with local Indonesian companies or limit the percentage of foreign ownership.

It is important to consult the latest version of the Negative Investment List to determine whether your business sector is open to foreign investment and whether any restrictions apply to foreign ownership.

2. Minimum Capital Requirement

A PT PMA is required to have a minimum capital investment of IDR 10 billion (approximately USD 700,000), although this amount may vary depending on the business sector. This capital is divided into shares and is contributed by the foreign investors. The capital requirement must be documented during the company’s incorporation process.

Additionally, the minimum paid-up capital requirement for a PT PMA is IDR 2.5 billion (approximately USD 175,000). This amount must be deposited into the company’s bank account at the time of incorporation.

3. Company Structure

A PT PMA must have a formal corporate structure, which includes:

  • Shareholders: A minimum of two shareholders is required. Shareholders can be individuals or legal entities (companies).
  • Directors: A minimum of one director is required. The director is responsible for managing the company’s day-to-day operations.
  • Commissioners: A minimum of one commissioner is required. The commissioner’s role is to oversee the company’s operations and ensure that the directors are acting in the best interests of the company.

At The Bali Lawyer, we help you establish the appropriate company structure for your PT PMA, ensuring compliance with Indonesian legal requirements.

Step-by-Step Process to Set Up a PT PMA in Indonesia

Setting up a PT PMA involves several stages, including securing the necessary permits, registering the company, and obtaining relevant licenses. Here’s a step-by-step guide to the process:

Step 1: Preparation and Feasibility Study

Before beginning the legal process of setting up your PT PMA, it’s essential to conduct thorough research and planning. This includes:

  • Identifying the business activities you intend to engage in.
  • Determining the sector’s foreign ownership restrictions, if any.
  • Assessing the required capital investment and operational costs.
  • Conducting a feasibility study to ensure that your business model aligns with Indonesia’s market conditions and regulations.

Our legal team at The Bali Lawyer can help you assess the feasibility of your business in Indonesia, ensuring that your investment is strategically sound and compliant with local laws.

Step 2: Name Reservation

The next step is to reserve a unique name for your company. The company name must comply with the Indonesian Company Law, which requires that the name be written in Roman letters and contain at least three words. The name must also be unique and not conflict with any existing company names.

Our team will assist you in checking the availability of your chosen company name and reserving it with the Ministry of Law and Human Rights.

Step 3: Deed of Establishment

To legally establish your PT PMA, you will need to create a Deed of Establishment, which must be signed before a notary public in Indonesia. The deed must include the company’s articles of association, details about the shareholders, the company’s capital structure, and other essential information about the business.

Once the deed is signed, it will be submitted to the Ministry of Law and Human Rights for approval. At The Bali Lawyer, we handle the drafting and submission of the Deed of Establishment, ensuring that all legal requirements are met.

Step 4: Obtain a Business Identification Number (NIB)

After the Deed of Establishment is approved, the next step is to register the company with the Indonesian Online Single Submission (OSS) system to obtain a Business Identification Number (NIB). The NIB serves as the company’s official registration number and is required to operate legally in Indonesia.

In addition to the NIB, the OSS system also provides the following essential documents:

  • Company Registration Certificate (TDP): Official proof that the company is registered with the Indonesian government.
  • Import Identification Number (if applicable): For companies involved in importing goods, this identification number is required.
  • Business Licenses: Specific licenses for the company’s business activities.

We handle the entire registration process through the OSS system, ensuring that your PT PMA obtains its NIB and other necessary documentation promptly.

Step 5: Capital Deposit and Bank Account Setup

Once the company is officially registered, the next step is to open a corporate bank account in Indonesia. You will need to deposit the required paid-up capital into this account as proof that the company meets the minimum capital requirement.

Our legal team can assist you in setting up a corporate bank account with a reputable Indonesian bank and ensure that the capital is deposited in accordance with Indonesian regulations.

Step 6: Apply for Business Licenses

Depending on the nature of your business activities, you may need to obtain additional business licenses or sector-specific permits. For example, businesses in industries such as tourism, manufacturing, or finance may require special permits to operate legally.

The Bali Lawyer provides assistance with applying for all necessary business licenses and permits, ensuring that your PT PMA is fully compliant with industry regulations.

Step 7: Obtain a Domicile Letter

Every business in Indonesia must have a registered office address. To verify this, you must obtain a Domicile Letter (Surat Keterangan Domisili Perusahaan) from the local government in the district where your company is located. This letter serves as proof that your company has a physical presence in Indonesia.

We assist you in securing the Domicile Letter, ensuring that your company has the appropriate legal address for its operations.

Step 8: Register for Tax (NPWP)

Once your PT PMA is officially established, it must be registered with the tax authorities to obtain a Tax Identification Number (NPWP). The NPWP is required for paying corporate taxes and complying with Indonesian tax regulations.

At The Bali Lawyer, we handle the tax registration process on your behalf, ensuring that your company is compliant with Indonesia’s tax laws from the outset.

Step 9: Employment and Work Permits

If your PT PMA intends to hire foreign employees, you will need to obtain work permits (KITAS) for them. This involves securing approval from the Ministry of Manpower and submitting the necessary documents for each foreign employee.

Our legal team provides full assistance with work permits and visas, ensuring that your foreign employees are legally permitted to work in Indonesia.

Ongoing Compliance and Legal Support

Once your PT PMA is established, ongoing compliance with Indonesian regulations is essential to maintain your company’s legal standing. This includes filing annual reports, paying taxes, and renewing business licenses as needed.

At The Bali Lawyer, we offer ongoing legal support to ensure that your PT PMA remains fully compliant with Indonesian laws. Our services include:

  • Annual corporate filings: We assist with submitting annual financial statements and other required filings to the Ministry of Law and Human Rights.
  • Tax compliance: Our team ensures that your company meets its tax obligations, including corporate income tax, VAT, and payroll taxes.
  • Permit renewals: We handle the renewal of business licenses and permits to ensure that your company continues operating legally.

Why Choose The Bali Lawyer for PT PMA Setup?

Setting up a PT PMA in Indonesia involves navigating complex legal requirements and administrative processes. At The Bali Lawyer, we simplify this process by providing expert guidance at every stage, from initial planning to company registration and ongoing compliance.

Here’s why clients trust The Bali Lawyer for their PT PMA setup needs:

  • Expert legal knowledge: Our team has extensive experience in Indonesian corporate law and foreign investment regulations.
  • Personalized service: We provide tailored solutions that meet the specific needs of your business.
  • Efficient process: We handle all the paperwork and legal procedures, ensuring a fast and hassle-free setup.

Contact The Bali Lawyer for PT PMA Setup in Indonesia

If you’re ready to set up a PT PMA in Indonesia, contact The Bali Lawyer today. Our team of legal experts is here to help you navigate the complexities of Indonesian business law and ensure a smooth and successful company setup. Let us handle the legal details while you focus on building your business in Indonesia.