Registering a company in Indonesia can be complex or confusing without any help. Some business activities (KBLI) are open to 100% investment, and others require local partnership or are close to foreigners. Wherever you want to register a company in Jakarta, Bali, or Lombok, here is your ultimate guide for Indonesia.
Types of Companies in Indonesia
Overview
| Type of Company | Description | Ownership Restrictions | Hiring Foreigners | Additional Notes |
| PT PMDN (Local Owned Company) | A Limited Liability Company with at least 2 shareholder, where investors are liable for their investment amount. | Indonesian citizens only | Yes, as employees or directors | Must sponsor a working permit (IMTA) for foreigners. |
| PT Perorangan | A Limited Liability Company owned by a single investor. Suitable for individual ownership. | Indonesian citizens only | No | |
| CV | A legal entity that can be opened under a personal name, without any capital requirement. | Indonesian citizens only | No | Personal liability extends to personal assets. |
| PT PMA (Foreign Owned Company) | A Limited Liability Company with at least 2 foreign shareholder. The capital requirement varies by activity. | Foreigners accepted | Yes | Shareholders can apply for investor visas and KITAS. |
| KP3A – KPPA – BUJKA Representative Office | Represents an overseas company in Indonesia to facilitate relationships without generating income locally. | Foreigners accepted | Yes | Established in major cities; suitable for non-income activities. |
Indonesia has different type of legal structure to operate a business activity. Certain type of company structure can only be opened by Indonesian citizens while others accept foreigners as shareholders and investors in the company.
Local owned company (PT PMDN – PT Perorangan)
CV is a legal entity allowing a person to open a company under its personal name. This type of entity doesn’t require any capital. The risk is important as the person is responsible under its personal name and assets for any issues occurring with the activity.
PT PMDN (commonly called Local PT) is a Limited Liability company with 2 shareholder minimum. The investors are liable to the paid up capital of the company. A PT PMDN can hire a foreigner as a director or employee. The company needs at least 1 billion IDR as paid up capital to sponsor a working permit (IMTA) for the foreigner.
Capital requirements for a PT PMDN:
- Small enterprise: IDR 50 million – 500 million.
- Medium enterprise: IDR 501 million – 10 billion.
- Large enterprise: more than IDR 10 billion.
PT Perorangan is a limited liability company under one single ownership. This form of company is suitable for a single investor.
Foreign Owned Company (PT PMA)
A PT PMA is a type of company having at least two foreigner as a shareholder. The PT PMA is a limited liability company (LLC). The capital requirement of the PT PMA differ from one activity to another. The minimum capital of a PT PMA is 10 billion IDR.
The company can hire foreigners and operate activities in Indonesia based on the business activities approved during the company’s establishment.
The shareholders of the PT PMA can apply for an investor visa and obtain a limited stay permit called (KITAS). The director of the company needs to get a KITAS in order to obtain a tax number, namely NPWP.
Also read: 12 things to know to create a company in Indonesia
Representative Office
A representative office is a legal entity representing another company in Indonesia in order to facilitate the relationship between the company overseas and its interests in Indonesia. A company having providers or some projects in Indonesia can choose to open a representative office for its short-term interests or if the mother company doesn’t plan to generate income on the Indonesian territory.
A representative office can hire foreigners and Indonesian citizens. The foreign director (CRO) of the representative office has to apply for a working permit. The entity can be established in capital regions such as Denpasar, Surabaya, Jakarta, Batam, etc.
A Step-by-Step of Company Registration in Indonesia
The establishment of a company in Indonesia (including Bali, Batam, Lombok, etc) has to follow different steps.
Pre Registration
Before starting the registration process, the applicants need to define the following.
Company Name
The Indonesian ministry requires the name of the company to be written in three words. The name is applied to the Directorate General of Legal Administration Affairs. The words can be in English and the company name has to be unique with no other company using this name. A locally owned company cannot use English words to register its name.
The company name is not a brand name and the trademark of the logo or company name has to be registered separately.
- Some words, such as OF, are not eligible.
- Combinations of symbols, letters and numbers are not eligible for registration
- Terms that are against the Indonesian government, religion or morality are not allowed
- Has to be in line with the business activity or not misleading
- Cannot represent a government institution
To register a company in Indonesia, it is essential to adhere to these naming conventions to ensure compliance with legal requirements.
Company shareholders and board of directors
To register a company in Indonesia, the company needs at least 1 director and 1 commissioner. The director of the company is in charge of conducting policy and ensuring its management. The shareholders have to reappoint the director every 5 years.
The commissioner of the company has the role of supervising the director and reporting to the shareholders. The commissioner can suspend the director at any time if the director is conducting activities that are not in accordance with the interests of the company. The main role of the commissioner is:
- Oversight and Supervision
- Advisory Role to the board of directors
- Annual report approval
- Compliance with the Indonesian law
The shareholders of a PT PMA can be:
- Another legal entity (Indonesian or oversea)
- A foreigner
- A local person
It is crucial to analyse and define an optimal structure for the company. Indeed the structure impacts the tax structure and dividend and the capital injection into the PT PMA. We recommend discussing this with a professional before defining the shareholders structure to ensure a smooth process when you register a company in Indonesia.
Registration
After defining the name, board of directors and optimal structure of the company, the registration process takes 3 days to 2 weeks for activities requiring no additional approval.
The registration can be done with a representative or in person. The deed of establishment of the PT PMA has to be notarized.
Articles of Association (AKTA)
The articles of association are governed by the corporate law and terms are standardised. The AKTA cannot remove rights to other shareholders to get financial dividends. The AKTA can, however, define a class of shares to limit some voting rights or influence in the company.
- Shareholders name and class of shares
- Rights attached to each share and the nominal value of each share
- Amount of authorised capital, issued capital and paid-up capital and the amount
- Company’s name and location
- Business activity
- Board of Directors and commissioners
- Methods and locations to hold shareholder meetings
- Procedures for using and distributing the company’s profit and dividends
- Period of incorporation of the company (5 years)
The deed of establishment is submitted to the Ministry of Law and Human Rights for Approval. The ministry will issue the ministry approval (Sk) after the registration.
Also read: How to Structure a Holding Company in Bali and Indonesia
Domiciliation
It is mandatory to use the Online Single Submission (OSS) system to administrate the formalities of the company. While companies previously needed to issue a domicile letter, the new procedure involves registering the company through this web portal. The OSS system streamlines the registration process, enhancing corporate compliance in Indonesia.
A company needs to have a domiciliation. The company needs an address with a commercial building permit. In other words, the company cannot register a villa or other building as an address with no legal documents.
Tax identification – NPWP
To register a company in Indonesia, each company must be registered online on the tax authority website (Kantor Pajak). The tax number (NPWP) is issued before the company’s business identification number.
- Create an account using the email address you used for OSS.
- Fill in the registration form.
- Upload the documents through the registration application
- Tax office issues the taxpayer identification card and tax registration certificate one day after the issuance of the receipt. The tax office sends the card to the company address.
Business registration number – NIB
The nomor identification business (13 digits) is available through OSS after the registration process.
The NIB defines the scope of activity or business line of the company. The company can have several business codes (KBLI) appearing on the NIB. However the company needs to indicate in the Akta the classification.
It is necessary to amend the deed of the company to add a new business activity.
Some business classification needs additional verification or inspection on site of the business before getting a final approval depending on the risk level. Activities classified as high risk will need the issuance of a Sertifikat Standard.
Indonesia has hundreds of KBLI, and the violation of the scope of the KBLI can lead to fines or cessation of the business. We recommend consulting us before approving the KBLI indicated on your deed.
