If you are a company or an individual you may have some questions before to create a company in Indonesia. Here are the most frequent questions companies or individuals have before starting a company in Indonesia.

1. ARE ALL SECTORS OPEN TO INVESTMENT IN INDONESIA?

In 2021, Indonesia opened most of its sectors to foreign investment. Sectors such as e-commerce or clinics are now eligible for foreign investment. Foreigners can open companies in Indonesia without partnering with Indonesians.

2. DO I NEED AN INDONESIAN PARTNER TO INVEST IN INDONESIA?

For most business activities, you do not need an Indonesian partner. PT PMA allows 100% foreign shareholding. However, in some sectors, such architecture may require an Indonesian partner. It is important to consult and determine exactly your activity before starting to create your business in Indonesia.

3. HOW MANY SHAREHOLDERS DO WE NEED TO HAVE TO CREATE A COMPANY, PT PMA?

PT PMA is a form of LLC (limited liability company) that requires a minimum of two shareholders. Shareholders can be individuals or entities. If you have a company outside Indonesia and want to open a branch, your company can be the main shareholder. The second shareholder can be another entity you own or you as an individual.

4. HOW LONG DOES IT TAKE TO OPEN A COMPANY?

The process to open a PT PMA in Indonesia takes 3 days to 1 week. Once the company is open and you have your tax card, you may need some additional approval (example: alcohol licence, import licence, education, etc.)

5. CAN WE OPEN A REPRESENTATIVE OFFICE IN INDONESIA?

As an entity, you can open a representative office in Indonesia. The representative office (RO) is not allowed to generate income in Indonesia. The RO cannot issue invoices. However, you can hire foreigners and local staff through your representative office. There are several types of representative offices, such as KPPA, KP3A, and BUJKA. The form of the representative office depends on the activity of the parent company and the activity you want to conduct. In some circumstances, it might be better to open a representative office than a PT PMA.

6. WHAT IS THE PROCEDURE FOR OPENING A COMPANY IN INDONESIA?

To establish a PT PMA in Indonesia, you must follow specific procedures to create a business company in the country, including obtaining necessary permits and fulfilling regulatory requirementsz:

  • Sign a deed of establishment with a notary. You can use a company to assist you, and you do not need to come to Indonesia.
  • Get ministry approval from the notary or the person assisting you
  • Get the tax card of the company (NPWP)
  • Obtain the business licenses (NIB and PKKPR)

7. DO I NEED TO BE IN INDONESIA TO CREATE A COMPANY?

It is not necessary to be in Indonesia to open a company. However, we recommend determining the correct structure based on your activity and tax exposure

8. DO WE NEED A RESIDENT DIRECTOR?

You do not need to live in Indonesia to open a company. However, the company requires a resident director. You can be considered a resident director if you proceed with your KITAS (limited stay permit) after opening the company. The director of the company will get a personal tax number to be able to declare the tax in Indonesia

9. WHAT IS THE TAX RATE FOR COMPANIES IN INDONESIA?

Indonesia has a low tax rate for new companies. Companies are taxed at 0.5% on their revenue for the first 3 years if they do not exceed a certain amount of income. However, there are other taxes to take into consideration in your tax planning. You can consult the article here. As an entity or foreign investor, we do recommend having proper tax planning for your company and planning in advance how your company will be taxed.

10. CAN A COMPANY OWN ASSETS IN INDONESIA?

Owning a manufacturer or a property in Indonesia is possible under a company. Your company will own the asset, and it will be integrated into your balance sheet. Certain assets in the mining industry will be concessions or a long term lease investments. Foreigners can own a villa, a manufacturer, a boat, a restaurant, or any other asset under a company. The set up of a company allows you to own assets that you would be able to only lease as an individual.

11. CAN WE BUY AN EXISTING COMPANY IN INDONESIA?

Yes, you can buy a company in Indonesia. You can change the ownership of the shares. The process takes more time than creating a new one. There will be a publication in the newspaper if the shareholder gives a certain amount of its shares.

12. WHAT IS THE CAPITAL REQUIREMENT TO CREATE A COMPANY IN INDONESIA?

The minimum capital required to open a company in Indonesia differs depending on the type of company. A PT PMDN requires 1 billion IDR if you have a foreign director or employee, while a PT PMA requires 10 billion IDR. A representative office such as KPPA doesn’t require a capital investment.