The PT PMA requirements state that it is the only form of company authorized for Foreign Direct Investment in Indonesia. In other words, as foreigners, the PT PMA is the only type of company to invest in Bali and Indonesia.
For any foreigners looking to create a business or buying a business in Indonesia, the PT PMA is the only legal way.
Requirements to establish a PT PMA
The PT PMA is regulated by several regulations and decrees. The company law and the recommendations from the BKPM are the 2 main sources of information.
Shareholders
The number of shareholders has to be 2 minimum. They can be individuals or a legal entity. If a company wishes to open a branch in Indonesia, the company can become shareholder of the PT PMA.
Deciding who will become the shareholder can impact the taxation and the tax rate on the dividend. It also impacts the type of visas the investor can obtain and if the investor can apply for an investor KITAS or a working KITAS.
Director
The director of the company of PT PMA has to be a resident director. This director has to have a tax number and has to be the Person in Charge (PIC) toward the tax office (Coretax). In order to be resident the director must apply for a tax card (NPWP). This NPWP can be obtained if the person is a local resident or a foreigner with a stay permit (KITAS or KITAP).
A foreign director who is also a shareholder can get an investor KITAS if they hold at least 10 billion IDR in shares. If the share value is below 10 billion IDR or the director is not a shareholder, they can apply for a working KITAS In other words, the director doesn’t have to be an Indonesian citizen.
The role of the director is to conduct the policy of the company. The director is in charge of the day-to-day operation of the company. The director role is defined in the deed of the company and has a responsibility towards the shareholders to hold a general meeting of shareholders at least once a year.
Commissioner
The commissioner role can be summarised as the representative of the shareholders to control and approve the activities of the director. The commissioner has to approve any asset separation and needs to sign some documents with the director of the company.
The Commissioner supervises the Board of Directors and ensures legal and shareholder compliance. They do not manage daily operations but ensure that directors act responsibly. The Board of Commissioners has the authority to call for General Meetings of Shareholders (GMS) when necessary.
The commissioner cannot be involved in daily operations but can temporarily manage the company in exceptional cases, if all directors are unable to serve.
Changing Director or Commissioner in a PT PMA
According to the PT PMA requirements, both directors and commissioners are appointed by the shareholders and can be dismissed by them. A GMS has to be held to change their positions. The commissioner can temporarily dismiss the director if their actions endanger the company or harm shareholder interests.
Once the director or the commissioner resigns, the board of shareholders has 30 days to appoint a new director or commissioner.
Also Read : Understanding PT PMA And Indonesia Corporate Tax
Paid up Capital versus authorized Capital of a PT PMA
PT PMA requirements mandate a minimum investment of 10 billion IDR, which shareholders must fully deliver. Some consultants provide conflicting information, but the law is clear: 100% of the authorized capital must be invested when establishing a PT PMA.
The misunderstanding usually comes from the company law. The company law states that 25% of the authorized capital must be paid up. However, this contradicts BKPM regulations, which require PT PMA shareholders to pay 100% of the 10 billion IDR capital. Before 2021, businesses could gradually deliver the capital over the years by submitting a business plan to BKPM when establishing a company.
This information is also crucial for people deciding to apply for an investor KITAS. An investor KITAS requires that the 10 billion IDR have to be injected by the applicant. In some circumstances we strongly recommend applying for a working KITAS and not increasing the capital of the company unnecessarily.
Company address
A company must have a commercial address and cannot register in a residence or apartment. At ILA we provide an office address to register your company and ensure your company can be operational. Some activities have address requirements, so contact us first to avoid future restrictions.
The company’s address determines which KPP (tax office) will oversee its taxation. If you do not operate in Jakarta, we recommend not registering a company in Jakarta or in Bali if you operate the company in Lombok, for example.
Registering a company in Indonesia has never been easier
Setting up a business abroad can be challenging with so many documents, laws and regulations to consider. Luckily, the process will be a breeze, and we’ll give you expert advice on which business structure and setup will fit your needs.
Reach out to the ILA team today to set up a free consultation or read more about the company registration process.
Procedure to establish a PT PMA
Steps to registration of a PT PMA
The procedure to establish a PT PMA takes a few days. Once the requirements above are defined, the shareholders have to provide their passports or company documents. Here are the different steps:
- Register the company name in AHU (must be at least 3 words of 3 letters)
- Draft a notarial deed
- Register the company with the Ministry of Law and Human Rights
- Apply for the NPWP with Coretax
- Register the company in OSS and apply for the business license (NIB)
Sertifkat Standard
The sertifikat standard ensures that the company is meeting the minimum requirements related to the activity. Some activities get a Sertifikat Standard after OSS registration. Medium-high risk activities need extra steps. For example some activities such as:
| Risk Level | Business Activity Examples | Licensing Requirements |
| Low Risk (Rendah) | Retail trade (non-hazardous goods), Small-scale food & beverage businesses, Travel agencies, IT services (software development), Photography services | Business Identification Number (NIB) only |
| Medium Risk (Menengah) | Construction (general contractors), Medium-scale manufacturing, Hotels and restaurants, Logistics and warehousing, Healthcare clinics (non-hospitals) | NIB + Standard Certificate (Self-Declared or Verified) |
| High Risk (Tinggi) | Mining and energy, Oil and gas, Large-scale manufacturing (chemicals, pharmaceuticals), Financial services (banks, investment firms), Hospitals and medical research, Infrastructure projects (toll roads, ports, airports) | NIB + Permit (Issued by Relevant Authority) |
The type of activities determines the verifications, so we recommend contacting ILA Global Consulting before starting the process to identify any additional required documents.
Timeline to set up a PT PMA
The process to set up a PT PMA takes a few days to a few weeks, depending on the activity of the company. Since 2021, most activities now comply with PT PMA requirements and are open to foreign investment, but some activities are still on the restricted list.
Can handle procedures online; however, banks still require the director to visit Indonesia to open a bank account, even though some online banks only require online checks and a KITAS.
