Limited Liability Company Setup in Indonesia: The PT PMA Process

Limited liability company setup in Indonesia for a foreign owner means forming a PT PMA (Penanaman Modal Asing), the only legal vehicle that lets a non-Indonesian hold shares directly. The process runs through a notary, the Ministry of Law, and the OSS online licensing system. Most PT PMA companies need a stated investment plan of IDR 10 billion per business line and at least IDR 2.5 billion in paid-up capital. Straightforward incorporations take two to six weeks once documents are ready. The real cost and timeline depend on your business line (KBLI code), because some sectors need extra permits before the company can legally operate.

Table of Contents

• What a PT PMA Is and Who Actually Needs One
• PT PMA Setup Cost in Indonesia
• Minimum Capital Requirements Explained
• Step by Step Process and Realistic Timeline
• Shareholder, Director and Commissioner Rules
• Which Sectors Allow 100% Foreign Ownership
• Annual Compliance Once the Company Exists
• PT PMA vs Local PT vs Nominee Arrangements
• FAQ

What a PT PMA Is and Who Actually Needs One

A PT PMA is a foreign investment limited liability company. It is the only legal structure that allows a foreign individual or foreign company to own shares in an Indonesian business directly and lawfully. An ordinary PT, the structure used by Indonesian citizens, cannot have foreign shareholders at all, not even a small minority stake, unless the shares are acquired through a public listing.

You need a PT PMA if you plan to run a villa rental operation, a restaurant, a consultancy, an export business, a software company, or almost any other commercial activity in Indonesia and you are not an Indonesian citizen. You do not need a PT PMA if you are simply investing passively through an Indonesian partner's existing company, though that arrangement carries its own risks, which we cover below.

A PT PMA is also the vehicle that sponsors a work KITAS for its foreign director or employee, which is the main reason many foreign owners set one up even before the business itself is fully operational.

PT PMA Setup Cost in Indonesia

Professional fees for setting up a PT PMA typically fall between USD 1,200 and USD 5,000, depending on the complexity of the business line, the number of shareholders, and whether additional sector licenses are needed on top of the basic NIB. This figure covers the notary deed, Ministry of Law registration, tax number, and OSS licensing. It does not include the actual capital you are required to deposit into the company's bank account, which is a separate, much larger sum that belongs to you as a shareholder, not a fee paid to anyone.

Government and notary charges vary by region and by firm, so always ask for an itemised quote rather than a single lump figure. A quote that does not separate professional fees, government charges, and required capital is a quote you should question.

These figures move, and government regulations are updated more often than most people expect. Treat any number here as a planning range and confirm the current fee schedule before you sign anything.

Minimum Capital Requirements Explained

The figure that surprises most first-time founders is the IDR 10 billion investment plan, which applies per five-digit KBLI business classification code, per location. This is not cash you hand over on day one. It is the investment plan you declare to the OSS system, covering projected assets, working capital, and operations over time, excluding the value of land and buildings.

What you do need to actually deposit as paid-up capital is generally 25 percent of that figure, so around IDR 2.5 billion, placed in the company's own bank account after incorporation. Some business lines have different thresholds, and micro and small business categories under certain conditions have lower requirements, so this is a point worth confirming for your specific KBLI code rather than assuming the standard figure applies.

If you plan to operate more than one unrelated business activity under the same PT PMA, each additional KBLI code can trigger its own capital requirement. This is one of the most common underestimates in company planning: an owner assumes one company structure covers a villa rental, a restaurant, and a retail shop under a single capital commitment, when in practice each line of business may need to be justified separately.

Step by Step Process and Realistic Timeline

The process has a fixed order, and skipping ahead on one step usually delays everything downstream. Here is the sequence as it actually runs, not as it is simplified in most overviews.

1. Name reservation and structure planning. Decide on shareholders, the KBLI code(s), and confirm the company name is available. One to three days.
2. Notarial deed of establishment. Shareholders sign the deed in front of an Indonesian notary, either in person or via power of attorney. Two to five days.
3. Ministry of Law approval (SK Kemenkumham). The deed is registered and the company receives legal entity status. Three to seven days.
4. Tax registration (NPWP) and domicile confirmation. The company needs a registered address, which can be a physical office or, for some low-risk KBLI codes, a virtual office. Three to five days.
5. NIB and business licensing through OSS. This is where timelines diverge sharply. Low-risk business lines get an NIB almost immediately. Medium and high-risk lines require additional certifications, inspections, or ministry sign-off that can add several weeks.
6. Bank account opening and capital deposit. The company bank account is opened and the required paid-up capital is deposited and evidenced.
7. BPJS registration and employment setup. If the company will have staff, it registers for health and employment social security before hiring formally.

A low-risk business with no unusual licensing needs can be fully incorporated and licensed in two to four weeks. A restaurant, a tourism operation, or anything touching construction, health, or education should budget six to twelve weeks because of the extra permits layered on top of the basic NIB.

Shareholder, Director and Commissioner Rules

A PT PMA needs a minimum of two shareholders, who can be individuals, companies, or a mix of both. It needs at least one director, who manages daily operations and signs on behalf of the company, and at least one commissioner, whose role is oversight rather than management. A foreigner can hold any or all of these positions, there is no legal requirement for an Indonesian shareholder, director, or commissioner in most sectors.

A foreign director who intends to work for the company and draw a salary in Indonesia needs a work KITAS, which the company itself sponsors once it exists. This is different from simply being listed as a shareholder, which carries no residency or work authorisation on its own. If you plan to relocate to run the business personally, factor the work permit and KITAS timeline in alongside the company setup timeline, because they are two separate approval processes run through different agencies. Our work permit and residence visa page covers that side of it in detail.

Which Sectors Allow 100% Foreign Ownership

Since the Positive Investment List replaced the old negative investment list in 2021, most business sectors in Indonesia are open to 100 percent foreign ownership. This was a genuine shift: sectors that previously required a local partner holding a minimum stake are now, in many cases, fully open. But the list is not universal. A number of sectors remain partially closed, require a local partner above a certain capital threshold, or are reserved for cooperatives and small businesses entirely.

The sectors that most commonly still carry restrictions include certain categories of retail trade below a stated investment threshold, some media and broadcasting activities, and specific strategic sectors tied to natural resources. Because the classification runs on five-digit KBLI codes and the rules attached to each code are updated periodically, the only reliable way to confirm your exact ownership entitlement is to check the current status of your specific KBLI code before you commit to a structure, not to rely on a general statement that "foreigners can own 100 percent now."

Annual Compliance Once the Company Exists

Incorporation is the easy part. A PT PMA has ongoing reporting obligations that, if ignored, create real problems later, including difficulty renewing licenses, trouble sponsoring visas, and in some cases administrative sanctions.

The LKPM is the one most new owners forget about, because it has no equivalent in most home countries. It reports your actual investment realisation against the plan you declared at setup, and it is checked when you renew licenses or apply for additional permits.

The most expensive mistake: using a nominee shareholder to avoid the capital requirement. Indonesian investment law prohibits foreigners from using an Indonesian national as a nominee shareholder to disguise foreign ownership of what is legally supposed to be a local PT. Arrangements like this are unenforceable in Indonesian courts: if the nominee decides to claim the company, sell the assets, or simply disappear, the foreign investor has no reliable legal recourse to recover the business or the capital put into it. This has happened to real investors in Bali, and it is avoidable entirely by setting up a proper PT PMA from the start, even though it takes a bit longer and requires the stated capital commitment.

PT PMA vs Local PT vs Nominee Structure

A local PT is cheaper and faster to set up, but it legally cannot have a foreign shareholder. Any arrangement where a foreigner funds a local PT and controls it through a side agreement with an Indonesian nominee is the nominee structure described above, and it carries the same risk regardless of how the paperwork is dressed up with loan agreements or power of attorney documents. Indonesian courts have consistently declined to enforce these side agreements because they exist specifically to circumvent the law.

A PT PMA costs more upfront and requires a genuine capital commitment, but it gives the foreign owner direct, legally recognised shares, the right to sit as director or commissioner, and the ability to sponsor its own work visas. For anyone planning to stay in Indonesia and actually run the business, rather than treat it as a short-term passive investment through a trusted local partner, the PT PMA is the only structure that holds up if a dispute ever arises.

If you are still deciding between structures, or weighing a PT PMA against staying on a visa that allows limited business activity such as a B211A visit visa, it is worth getting that assessed properly before registering anything, since reversing a structure after the fact costs more than planning it correctly the first time. Our services page outlines how we structure this for clients from the first consultation through to the operating license.

FAQ

How much does it cost to set up a PT PMA in Indonesia?

Professional and government fees typically range from USD 1,200 to USD 5,000 depending on the business line and whether extra sector licenses are needed. This is separate from the required paid-up capital, which is usually around IDR 2.5 billion and belongs to the shareholder, not to any service provider. Always ask for an itemised quote that separates fees from required capital.

Can a foreigner own 100 percent of a company in Indonesia?

In most sectors, yes, since the Positive Investment List opened the majority of business classifications to full foreign ownership. Some sectors, including parts of retail trade, media, and strategic natural resource industries, still require a local partner or carry ownership caps. The exact rule depends on your specific five-digit KBLI code, which should be confirmed before setup.

How long does PT PMA registration take?

A low-risk business with no unusual licensing requirements can be incorporated and licensed in two to four weeks. Businesses in regulated sectors such as tourism, food service, construction, or health typically take six to twelve weeks because of additional permits layered on top of the basic business license.

What is the minimum capital for a PT PMA?

Most business lines require a stated investment plan of IDR 10 billion per KBLI code, with at least IDR 2.5 billion, roughly 25 percent, deposited as paid-up capital into the company's bank account. Some small business categories carry lower thresholds. This figure should be confirmed against the current regulation for your specific business classification.

Do I need to live in Indonesia to own a PT PMA?

No. You can hold shares in a PT PMA as a foreign shareholder without living in Indonesia, and incorporation can often be completed through power of attorney. However, if you intend to work for the company as director and draw a salary, you will need a work KITAS, which requires presence in Indonesia for the application process.

What is the difference between a PT and a PT PMA?

A PT is a standard Indonesian limited liability company that cannot have foreign shareholders. A PT PMA is the foreign investment version of the same structure, legally permitted to have foreign individuals or foreign companies as shareholders. They follow similar governance rules but different capital requirements and licensing pathways.

Can a PT PMA sponsor a work visa or KITAS?

Yes. Once a PT PMA is incorporated and licensed, it can sponsor a work permit and KITAS for its foreign director or foreign employees, subject to the usual requirements around job role, qualifications, and the mandatory Indonesian worker reporting obligations tied to employing foreign staff. Details are covered on our work KITAS visa page.

What happens if a company doesn't file LKPM reports?

Missing LKPM filings typically results in warning letters at first, but repeated non-compliance can affect the renewal of business licenses and create problems when the company applies for additional permits or sponsors visas. It is a recurring obligation, not a one-time setup task, and many foreign owners underestimate how closely it is checked at renewal time.