Foreign Direct Investment Company
In Indonesia a Foreign Direct Investment Company is called a Penanaman Modal Asing (PMA).
Foreign Direct Investment Company
- Full foreign ownership for 100% of the shares allowed for most business sectors.
- Foreign-Indonesian joint venture possible.
- Partly foreign ownership allowed for business sectors on the Negative Investment List.
- Foreign directorship permitted.
- Lenient work permit application process re hiring foreign employees.
- Able to sponsor business visa for foreign business partners, customers or suppliers.
- Lower import duties imposed for a range of products and materials imported from abroad.
- A few business sectors are completely prohibited for foreign investors.
- Raised minimum investment requirements.
- Extended set up process.
As a foreigner, choosing a PT. PMA to conduct your business activities in Indonesia will provide you with the best possible legal protection and financial security.
AdvintA is able to keep the establishment costs at a very competitive level, baring in mind the essential requirements to get your business going.
The Indonesian authorities have made significant progress over the years to make the PMA set up process considerably quicker to complete.
Company establishment
If a foreign entrepreneur wants to set up a company in Indonesia, the business incorporation can be done in 3 ways, depending on your business requirements.
When setting up your business in Indonesia, AdvintA can establish the following legal entities for you:
- Local Limited Liability Company (Ltd. Company – PT.)
- Foreign Direct Investment Company (FDI Ltd. Company – PT. PMA)
- Foreign Common Representative Office (FCR Office – KPPA)
Establishment process
After you have decided on which company type best suits your business plans in Indonesia, AdvintA can complete your company registration as detailed in the schedule below.
This table provides a quick overview of the company establishment registration process for each legal entity:
Company establishment process by legal entity type
| Entity | Description | Involved authority | Notes |
| PT & PMA | Legal entity & company name registration | Ministry of law & human rights | Name consisting of 3 approved Indonesian words |
| PT & PMA | Deed of incorporation & article of association (Akta) | Local notary office | In the presence of the notary |
| PT & PMA | Company establishment ratification (SK) | Ministry of law & human rights | Approval of the Ministry |
| KPPA | Representative office license (Izin) | Indonesian investment coordination board | Rental space in approved location & building |
| PT, PMA & KPPA | Company domicile certificate (SKDU) | Local government agency | Applicable government district |
| PT, PMA & KPPA | Tax identification number registration (NPWP) | Directorate-general of taxation | Re tax reporting & tax return |
| PT & PMA | Business identification number registration (NIB) | Capital investment coordination board | Includes company registration & general business licensing |
| KPPA | Company certificate registration (TDP) | Ministry of trade | Business activities restricted |
| PT & PMA | Business licensing registration (SIUP) | Ministry of trade | If a specific business sector license is required |
| PT & PMA | Opening corporate bank account | Local bank branch | Use of a personal bank account prohibited |
| PT, PMA & KPPA | Visa procurement | Directorate-general of immigration | Required to manage your business on location |
The duration of the establishment process varies from approximately 1 to 3 months:
- PT: 1 – 2 months
- PT PMA: 2 – 3 months
- KPPA: 1 – 1.5 months
Company requirements
After your company registration is completed, AdvintA can assist you with the related business requirements as detailed in the schedule below.
This table provides a quick comparison of the company characteristics and its requirements for each legal entity:
Company requirements by legal entity characteristics
| Characteristics | Ltd. Company (PT) | FDI Ltd. Company (PT PMA) | FCR Office (KPPA) |
| Ownership structure | Minimum of 2 shareholders, 1 director & and 1 commissioner.
Wholly Indonesian ownership & directorship. Beneficiary ownership & indirect directorship for foreigners via nominee ship agreements. |
Minimum of 2 shareholders, 1 director & and 1 commissioner.
Director & commissioner can (also) be shareholders. Wholly foreign or mixed foreign-Indonesian ownership & directorship. |
Chief representative officer, foreign or Indonesian.
Representative of the foreign parent company. |
| Business activity | Business activities in any category are permitted.
Possible to register activities in 3 different business categories. |
All business activities are permitted when not restricted by the Negative Investment List (DNI) | Business activities restricted to market research, marketing & promotion.
Prohibited to sign contracts, issue invoices, or receive payments. |
| Authorized capital | No formal minimum authorized capital.
Prevailing capital per company size: Small: IDR 50 million; Medium: IDR 500 million; Large: IDR 10 billion. |
Minimum investment capital available of IDR 10 billion.
Minimum paid-up capital of IDR 2.5 billion via issue of shares. |
No capital investment requirements. |
| Investment Plan | Not applicable. | Minimum of IDR 10 billion per activity; only applicable for certain business activities which requires a Capital Investment Registration, prior to obtaining the relevant business license. | Not applicable. |
| Tax Obligations | Corporate income tax (PPh 25/29)
Withholding taxes (PPh 23/26). Employee income tax (PPh 21). Value added tax (PPn). |
Corporate income tax (PPh 25/29).
Withholding taxes (PPh 23/26). Employee income tax (PPh 21). Value added tax (PPn). |
Withholding taxes (PPh 23/26).
Employee income tax (PPh 21). |
| Preliminary documentation | Copy of valid Indonesian ID card (KTP).
Copy deed of incorporation (if a shareholder is a legal entity). Company address (and lease agreement or deed of sale & purchase if applicable). |
Copy passport (valid for a minimum of 18 months before the expiry date).
Copy deed of incorporation (if a shareholder is a legal entity). Company address (and lease agreement or deed of sale & purchase if applicable). |
Copy passport (valid for a minimum of 18 months before the expiry date) or copy of valid Indonesian ID card (KTP).
Representative office address and lease agreement office space (or deed of sale & purchase if applicable). Notarized article of association from the (foreign) parent company & letter of reference (legalized by the Indonesian embassy). Letter of appointment from the parent company (legalized by the Indonesian embassy). Letter of intent (legalized by the Indonesian embassy). Letter of statement, to refrain from prohibited business activities (legalized by the Indonesian embassy). |
AdvintA can advice about preparing for the formal capital requirements.
Furthermore, we will check the relevant documentation, set up the format, and compose the contents where applicable, to fully meet the business requirements for each company type.
We can also inform you in detail about the applicable tax schemes and tax obligations.