Quick Guide to Establishing a Foreign Owned Company (PT PMA)
What kind of legal entity must be established by a foreigner who wants to invest in Indonesia?
A foreign investor who wants to own a business in Indonesia must establish a foreign investment limited liability company. This is referred to as a PT PMA (Perseroan Terbatas Penanaman Modal Asing).
How is a PT PMA different to a limited liability company that is owned by an Indonesian investor?
If a limited liability company is wholly owned by Indonesian shareholders, then it is referred to as a local PT (Perseroan Terbatas). Under the foreign investment laws of Indonesia, a limited liability company may be partly or wholly owned by foreign shareholders, provided that the targeted business sector is not restricted by the government’s Negative Investment List. If a local PT is subsequently acquired by foreign shareholders, it will also be referred to as a PT PMA (Perseroan Terbatas Penanaman Modal Asing).
What is the Negative Investment List in Indonesia?
The Negative Investment List is the list specifies business sectors or industries that are closed to foreign investors. As the list changes from time to time, you need to check first if a targeted business sector is open for foreign investment.
It changes from time to Current examples of closed sectors include:
The current law requires a minimum authorized capital of more than IDR 10 billion. However, an investor is not required to pay this whole amount upfront. Currently, a minimum of 25% must be paid up at the time of establishment.
Assuming the foreign investor is not restricted by the Negative Investment List and they have the required capital, they will also need to acquire the relevant business permits and licenses for their business sector. Examples include, a Business Permit (Izin Usaha/Izin Industri), a construction license (SIUJK), and a shipping license (SIUPAL/SIUPKK).
What are the corporate roles for owning and operating the PT PMA?
There are 3 roles for people involved in owning and operating a PT PMA: (i) the shareholders; (ii) the board of commissioners; and (iii) the board of directors. The only real difference from most overseas countries is that the board of commissioners takes up the role that is normally occupied by the shareholders (sometimes called members). In Indonesia, commissioners are appointed by the shareholders, but are not required to be shareholders.
How many shareholders are needed to establish a PT PMA?
To establish a PT PMA, there must be a minimum of 2 shareholders.
How many commissioners and directors are needed to establish a PT PMA?
To establish a PT PMA, there must be at least 1 commissioner and 1 director. The commissioners and directors can be either foreign or Indonesian citizens.
How long does it take to establish a PT PMA?
Assuming there is no delay in acquiring or creating all the relevant documents, then under the new online system (OSS), the normal estimated time for establishing a PT PMA is 2 months. For some sectors such as real estate, banking or mining, it still takes about 3 months to acquire the Business Permit (Izin Usaha) as the application process is not fully available in online.
What are the actual deliverables that a client receives when establishing a PT PMA?
In the process of providing guidance on the Negative Investment List, establishing a PT PMA, and obtaining relevant permits and licenses, the typical deliverables for a client include:
What documents are required to start the process of establishing a PT PMA?
The following documents are required:
This Quick Guide is provided for general information purposes only and should not be considered as legal advice for your specific situation. Should you require legal advice, contact an attorney.
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