The Requirements for Establishing PT PMA in Indonesia

Everything You Need: Documents for Setting Up a PT PMA in Indonesia

  • InCorp Editorial Team
  • 21 October 2024
  • 5 reading time

Setting up a PT PMA (Penanaman Modal Asing) in Indonesia offers exciting opportunities for foreign investors who want to tap into the country’s diversity. However, the legal and regulatory landscape can sometimes seem daunting. This is why comprehending the requirements for establishing a PT PMA is important.

What is a PT PMA?

A PMA company in Indonesia refers to a Foreign-Owned Company, also known as PT PMA (Perseroan Terbatas Penanaman Modal Asing). This term encapsulates the PMA meaning as a company that operates under Indonesian law and is legally established for foreign investment.

With the establishment of a PMA company, foreign investors can earn profits or revenue directly from the PMA entity rather than through local subsidiaries in Indonesia.

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PMA Regulation in Indonesia

Article 1, Number 3 of Law No. 25 of 2007 on Investment (Investment Law) defines foreign investment (PMA) as the capital investment by foreign investors to operate a business within the territory of the Republic of Indonesia.

This can be done entirely with foreign capital or in partnership with domestic investors.

The legal framework of PMA Indonesia includes:

  • Law No. 25 of 2007 on Investment
  • Law No. 40 of 2007 regarding Limited Liability Companies
  • Government Regulation instead of Law No. 2 of 2022 on Job Creation, which was enacted into Law No. 6 of 2023
  • Government Regulation No. 5 of 2021 regarding Risk-Based Business Licensing
  • Presidential Regulation No. 10 of 2021 regarding Investment Business Fields, amended by Presidential Regulation No. 49 of 2021
  • Minister of Law and Human Rights Regulation No. 21 of 2021 on the Terms and Procedures for Registering, Amending, and Dissolving Limited Liability Company Legal Entities
  • Investment Coordinating Board Regulation No. 4 of 2021 regarding Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities

Document Requirements for PMA Establishment

The Requirements for Establishing PT PMA in Indonesia

To set up a PT PMA (Foreign-Owned Company) in Indonesia, you will generally need the following documents to meet the PMA requirements:

Company Documents

  • Power of Attorney signed by each shareholder for document submission.
  • Rental agreement between the company and building management.
  • An original statement or domicile letter from the building management.
  • Building and land tax receipt (PBB) with payment approval for the current year.
  • IMB (Building Permit) or certificate of ownership if the building is owned.
  • Lease statement, if applicable.
  • Please include at least three photos of the office, including the reception area, company signage, and office space used for business activities.
  • The building management verified a domicile statement from the company.
  • Company letterhead and a sample design of the company stamp.

Shareholder Documents

  • Copy of the Articles of Association and any amendments (in English or Bahasa Indonesia).
  • Business registration certificate.
  • Board of Directors structure.

Personal Documents – Directors & Commissioners

  • Foreigners: Colored passport copies with at least 18 months validity and four blank pages.
  • Locals:
    • ID card (KTP) and Taxpayer Identification Number
    • Family card (KK)
    • Indonesian visa stamp
    • Residence letter for hotel or apartment for the director
    • Recent passport-sized photo with a red background for each Board of Director member

Guidelines for Establishing a PT PMA in Indonesia

Before investing in Indonesia, foreign investors must consider several key factors to ensure compliance with local regulations and maximize the success of their ventures.

Company Structure

Under Indonesian law, foreign investment companies (PMAs) must be set up as Limited Liability Companies (PTs).

Business Scope

Foreign investors can only engage in large-scale businesses and are restricted from operating in micro, small, or medium enterprises.

  • Closed Sectors: Certain industries, like narcotics, gambling, coral extraction, and chemical weapons manufacturing, are closed to foreign investment.
  • Conditionally Open Sectors: Some industries are open to foreign investment but have restrictions, such as partnering with Indonesian cooperatives or MSMEs, such as equipment rental.
  • Exemptions: Foreign investments approved before Presidential Regulation 10/2021 are exempt from new restrictions unless more favorable, and international agreements may offer notable exceptions.

Investment Value

The minimum investment required is IDR 10 billion. Special Economic Zones (SEZs) for tech-based start-ups are exempt from this limit.

Minimum Capital Requirement

Unless otherwise specified by regulations, PMA companies must have at least IDR 10 billion in capital.

Board of Directors

While the board of directors doesn’t need to include Indonesian citizens, it is recommended. Foreign directors should hold a Permanent Stay Permit (KITAP) to prove long-term residency in Indonesia.

Business License for PT PMA

Business licensing in Indonesia falls into two main categories:

  • Risk-Based Licensing: Based on the risk level of business activities, evaluating potential hazards and their impacts.
  • Licensing to Support Business Activities: Legal permits that enable businesses to operate smoothly.

To start a business, entrepreneurs must meet these requirements:

  • Basic Requirements: Compliance with spatial planning, environmental approval, and building permits.
  • Risk-Based Licensing:
    • Low Risk: Requires a Business Identification Number (NIB).
    • Medium Risk: NIB and a standard certificate.
    • High Risk: NIB and a license.

Foreign-owned companies’ (PMA) licenses are issued via the Online Single Submission (OSS) system.

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Simplify Your PT PMA Setup with InCorp

Starting a business in Indonesia can be complex and time-consuming, with various regulations and procedures. InCorp is here to simplify the process for you. Our expert services include:

  • Company Registration: We ensure your business is registered correctly and meets all legal requirements.
  • Business Licensing: We navigate the licensing landscape to secure the necessary permits for your operations.

Fill out the form below to avoid delays and complications. We will manage the intricacies of setting up your business so you can focus on your core business operations.

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.

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Frequent Asked Questions

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.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.