Indonesia has several types of legal structure depending on the purpose of the activity, the type of shareholders. The type of company in Indonesia can affect the liability and exposure of the shareholders.
Type of Company in Indonesia
| Type of Company | Description | Foreign Ownership | Hiring Foreigners | Additional Notes |
| PT PMDN (Local Owned Company) | A Limited Liability Company with at least 2 shareholders, where investors are liable for their investment amount. | No | 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. | No | No | |
| CV | A legal entity that can be opened under a personal name, without any capital requirement. | No | 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. | Yes | 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. | Yes | 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.
