A Penanaman Modal Asing (PMA) is a business entity in Indonesia that allows foreign investment, either wholly or in partnership with domestic investors. Here’s a detailed guide on establishing a PT PMA in Indonesia:

1. Understanding PT PMA:

• PT PMA is a limited liability company established under Indonesian law, involving foreign capital either fully or in collaboration with domestic investors.
• Foreign capital is defined as investment from foreign countries, individuals, business entities, legal entities, or Indonesian legal entities partially or wholly owned by foreign parties.

2. Investment Procedures:

• Foreign investments in Indonesia must follow procedures set by the Investment Coordinating Board (BKPM).

3. Founders of PT PMA:

• As per BKPM Regulation No. 6/2018, investors can be domestic or foreign.
• Domestic investors include Indonesian citizens, businesses, the Indonesian state, or regions investing within the country.
• Foreign investors are foreign citizens, business entities, or governments investing in Indonesia.
• For foreign individuals, a passport is required, and foreign business entities must provide legal documents from their respective countries.

4. Investment and Shareholding Requirements:

• PT PMA must have a minimum investment of Rp 10 billion, with placed and paid-up capital of Rp 2.5 billion.
• Shareholding percentages are based on the nominal value of shares, with each shareholder holding a minimum of Rp 10 million in share value.

5. Notary Involvement:

• Under Law No. 2/2014, a notary is an official who creates authentic deeds, including the establishment deed of PT PMA in Indonesian language.

6. Ministry Approval:

• The Minister of Law and Human Rights issues a Decree approving the legal entity of the corporation.
• The establishment deed of PT PMA is announced in the State Gazette Supplement, as per Law No. 30/2018.

7. Tax Registration Number (NPWP):

• After the Ministerial Decree, NPWP can be requested from the local tax office.

8. Business Identification Number (NIB) & Business License:

• The Online Single Submission (OSS) system provides NIB and business licenses.
• NIB serves as a business identity number, and the license specifies the type of business permitted.

9. State Gazette Publication:

• The establishment of PT PMA is published in the State Gazette for public knowledge.
• The cost for this publication is approximately Rp 580,000.

10. Timeline for Gazette Publication:

• The State Gazette typically publishes within 6-12 months after the Ministerial Decree.

11. Requirements for Establishing PT PMA:

• Copies of the founder’s ID card (KTP)/Passport and Tax ID (NPWP).
• Detailed address of the PT PMA.
• Contact information of the founder.

What you should Know for Establishing a PT PMA (Foreign Investment Company) in Indonesia?

Establishing a PT PMA in Indonesia involves navigating a complex set of regulations and requirements. Here’s an analysis of the key considerations:

1. Legal Requirements: Foreign investors must fulfill legal requirements including business licensing and ownership legality. This encompasses business permits, environmental permits, and other necessary licenses based on the type of business.
2. Capital Requirements: A significant initial capital is required for establishing a PMA, typically around Rp 10 billion, varying with the business sector.
3. Ownership Regulations: Indonesian foreign investment law mandates that at least 51% of shares must be owned by local investors, limiting foreign ownership to a maximum of 49%.
4. Labor Requirements: Foreign investors are required to employ at least 85% local workforce, promoting local employment and skills development.
5. Business Location: The location of the business must comply with regulations, such as proximity to residential areas and environmental protection norms.
6. Taxation and Profits: Foreign investors are subject to Indonesian tax laws and regulations regarding profit repatriation and taxation.
7. Sector-Specific Foreign Investment Regulations: Indonesia has varying foreign investment regulations for different sectors. Investors must be aware of these sector-specific rules before investing.
8. Political and Economic Risks: Investors should consider Indonesia’s political and economic environment, as these factors can impact business success and sustainability.
9. Infrastructure Development: Compared to developed countries, Indonesia’s infrastructure development is relatively lower. Investors need to consider infrastructure constraints in their investment decisions.
10. Market Potential: Indonesia offers a large potential market with over 270 million people and stable economic growth in recent years. Investors should evaluate market opportunities and consumer behavior in Indonesia.

In summary, establishing a PT PMA in Indonesia offers significant opportunities but requires careful consideration of legal, economic, and market factors. Foreign investors must navigate these complexities to ensure compliance and successful business operations in the Indonesian market.

Who Can Establish a PT PMA (Foreign Investment Company) in Indonesia?

Not every foreign national can automatically become an investor and establish a PT PMA in Indonesia. There are specific requirements that a foreign national (WNA) must fulfill to become an investor in Indonesia:

1. Business Sector Compliance:
   • The business must align with the sectors listed in the latest Indonesian Standard Industrial Classification (KBLI).
   • This ensures that the business activities are in line with Indonesia’s economic development plans and regulations.
2. Company Formation and Shareholding:
   • The company must be a limited liability company (PT) with at least two shareholders.
   • This requirement is in place to ensure a balanced ownership structure and to avoid sole proprietorship by foreign entities.
3. Minimum Investment Amount:
   • A minimum foreign investment of Rp 10 billion is required, excluding land and building costs.
   • Of this amount, a minimum of Rp 2.5 billion must be deposited in an Indonesian bank.
   • This substantial investment threshold is set to ensure that the business has adequate financial backing and is serious about its operations in Indonesia.
4. Large-Scale Business Operations:
   • The PT PMA is expected to operate on a large scale.
   • This criterion is likely aimed at attracting substantial foreign investments that can contribute significantly to the Indonesian economy.

Additional Requirements After Meeting Investor Eligibility:

1. Business Field Determination:
   • The investor must identify the business sector as per the guidelines of Presidential Regulation Number 44 of 2016.
   • This involves selecting a business field that is open to foreign investment as per Indonesian law.
2. Investment Value Preparation:
   • The investor must prepare an investment value exceeding Rp 10 billion, with a placed and paid-up capital of at least Rp 10 billion from the total investment.
   • This further emphasizes the financial capability required for foreign investors in Indonesia.
3. Office Location Considerations:
   • The use of a virtual office or virtual office space is not permitted.
   • This requirement is likely in place to ensure a physical presence in Indonesia, which can aid in regulatory compliance and business operations.
4. Presentation to BKPM:
   • The investor must prepare and present their business investment plan to the Indonesian Investment Coordinating Board (BKPM).
   • This presentation is an opportunity to showcase the business plan and how it aligns with Indonesia’s economic goals and regulations.

In summary, establishing a PT PMA in Indonesia requires foreign investors to comply with a set of stringent regulations, including significant financial investment, compliance with specific business sectors, and a commitment to establishing a physical presence in the country. These requirements are designed to ensure that foreign investments align with Indonesia’s economic objectives and regulatory framework.

Need Assistance? Contact Gultom Law Consultants!

• For professional assistance in establishing PT PMA, contact us at WhatsApp: 08118887270, Email: gultomnando@gmail.com or info@gultomlawconsultants.com.

Gultom Law Consultants and Gading and Co are ready to assist you with the process of establishing your PT PMA in Indonesia.