(Foreign Investment Company in Indonesia for Your Business in Yogyakarta? Here’s Why

Why Should You Establish a PT PMA for Your Business in Yogyakarta?

  • InCorp Editorial Team
  • 6 July 2020
  • 4 reading time

Being one of the best business locations for entrepreneurs to set up a foreign investment company in Indonesia, Yogyakarta has got it right in many areas in attracting foreign capital.

Generally, Yogyakarta enjoys a strong competitive edge over many cities in Southeast Asia especially in its rapid development of digital ecosystems and high-tech startups.

The improving infrastructure, attractive tax regime, abundant young workforce, and stable socio-political environment also put Yogyakarta on top of the list as a destination to start a business in Indonesia.

Below are the reasons in detail for starting a business in Yogyakarta.

Why Start a Business in Yogyakarta

1. High-Quality Education, Workforce, and Talent

There is a huge young population in Yogyakarta especially in Kota Pelajar, hosting a lot of students from Universitas Gadjah Mada (UGM). Approximately 37.5% of Yogyakarta’s population is below 24 years old; 49.1% of its population is between 25 and 59 years old.

Therefore, as the hub of education with so many young and highly-educated talent and workforce, it is no wonder that a substantial number of entrepreneurs start their businesses in Yogyakarta in a heartbeat.

2. Booming Digital and Creative Startups

A lot of digital and creative startups have blossomed and some even gained significant success recently.

The prospering digital ecosystems are also supported and improved by digital incubators, coworking spaces, seminars and conferences, creative centers, and governmental policies.

Some popular digital startups in Yogyakarta include Fitinline, Sale Stock Indonesia, Culinary, and Kulina.

3. Government Support and Little Cost

The low expenses and Indonesian government support initiatives are some of the key reasons so many foreign entrepreneurs base their startups in the city.

Salaries, rents, and utility fees are much lower in Yogyakarta as compared to some major cities in Indonesia.

Also, the best part is the Investment Coordinating Board in Indonesia assists Yogyakarta’s startups, especially in the field of Information Technology (IT) to acquire outstanding talents.

4. Bettered Transport Infrastructure

To keep up with the increasing arrivals of foreign visitors, the transport infrastructure in the region has improved at a rapid pace. In 2019, about 7.2 million visitors arrived at Yogyakarta’s Adisutjipto International Airport, Slemen Regency. Another new airport in the city will commence its operation in 2020 as well.

Why Should You Establish a Foreign-Owned Company over Other Entity Options

There are several types of business entities you can establish in Indonesia. They are the local company (PT), representative office (RO), sole proprietorship, branch office, and foreign-owned company (PT PMA).

For foreign investment in Yogyakarta, PT PMA is the most suitable business structure for foreign investors over the others due to the many benefits it presents.

  1. A PT PMA can sponsor foreign employees provided that it fulfills certain criteria. These foreign employees may include directors, commissioners, and other foreign shareholders.
  2. Your PT PMA can obtain licenses and permits more easily. The license and permit issuance will take less time and hassle to complete.
  3. You can enjoy lower import duties as PT PMA is eligible for certain financial and tax benefits under Indonesian Law.

How Cekindo can Assist with Foreign Investment Company Setup in Indonesia

The promising market outlooks and impressive workforce make Indonesia and its many cities that include Yogyakarta, an ideal location for you to set up a foreign investment company.

Each year, thousands and thousands of business owners register their foreign companies in Indonesia to capitalize on the easy access to capital and corporate tax benefits.

Cekindo has been consistently recognized by our clients and experts as one of the leading consulting firms in Indonesia. We can help you set up a foreign investment company in Indonesia that is compliant with all labor laws and bureaucratic regulations.

Get started with Cekindo so you can incorporate your foreign investment company in Indonesia with ease. Fill in the form below.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.