Guide to Establishing a Foreign-Owned Company (PMA) in Indonesia
WHAT PMA ?
PMA, or Foreign Direct Investment (FDI), is a unique form of company where the ownership of shares is held by foreign individuals or entities, even if the foreign ownership is as low as 1 percent. To gain a deeper understanding of the process of establishing a PMA company in Indonesia, we extend this guide as follows:
The Process of Setting Up a Company in Indonesia
Why PMA
Why PMA Matters: Establishing a PMA company in Indonesia is a highly significant and strategic initial move for foreign investors. It provides a robust legal foundation for them to operate and invest in Indonesia's rapidly growing market.
Share Ownership
Share Ownership: PMA allows foreign individuals or legal entities to own shares in a company, even if their ownership is as low as 1 percent. Consequently, the company is still referred to as PT PMA, adhering to the strict regulations in place.
Ownership Requirements:
Ownership Requirements: The ownership requirements for a PMA company dictate that a minimum of two individuals must be shareholders. They can consist entirely of foreign individuals or legal entities, or in some cases, Indonesian citizens may have partial ownership.
Open Business Sectors:
One of the advantages of establishing a PMA in Indonesia is that nearly all business sectors are open to foreign ownership. However, some sectors are restricted from foreign ownership, such as transportation services companies, construction companies, firms that provide traditional products, and those related to defense or the military.
PMA Company Structure:
A PMA company must have a structure that includes a Director and Commissioner. The Director is responsible for the day-to-day operations of the company, including tasks like borrowing money and selling company assets.
Role of the Director:
The Director plays a key role in running the company. They are responsible for the day-to-day operations and decision-making regarding the business.
Role of the Commissioner:
On the other hand, the Commissioner has a supervisory role over the Director's performance. However, it should be noted that not all of the Director's activities are overseen by the Commissioner, as outlined in the company's founding document. Particularly in the case of companies established as Joint Operations (JO), the role of the Commissioner may be limited.
Company's Articles of Association:
The company's Articles of Association is a crucial document that must be well understood. Although certain parts of the articles are editable, there are also certain sections that cannot be altered, such as the extent of the Director's authority.
Term of Office:
The term of office for Directors and Commissioners typically lasts for 5 years unless specific provisions in the articles of association allow for a longer term.
Contents of the Articles of Association:
The Articles of Association contain important information about the business sector that the company will engage in. There are many choices among the 1,790 business sector codes available in Indonesia, and the choice must align with the company's business plan.
Company Address:
The address of a PMA company must be clear and located in an area designated for business and trade activities. This ensures that the company has a physical presence accessible to customers, business partners, and relevant government agencies.
Minimum Capital:
One of the primary requirements is that the minimum capital needed to establish a PT PMA is Rp 10 billion (IDR) or approximately $630,000 (USD). This capital must be available at the time of company establishment.
Document Requirements:
 The process of establishing a PMA company involves various documents, including shareholders' passports and other supporting documents.
Signing of the Articles:
The signing of the company's articles of association can take place at a location specified in the regulations, involving the participation of shareholders.
Power of Attorney:
There is the possibility to delegate the process of signing the articles to a trusted legal representative.
Language of the Articles:
In the process of establishing the company, the articles of association are only available in the Indonesian language. Therefore, it is important to have resources to assist in translating and understanding the content.
Decree:
Once the articles of association are finalized, the Ministry of Law and Human Rights will issue a Decree confirming the company's establishment.
NPWP:
The company is also required to register for a Taxpayer Identification Number (NPWP) once the establishment process is completed. The NPWP is an essential tax identification for business activities and tax reporting.
Visas
: Shareholders of the company must obtain Visa 313, while the Director's position requires Visa 312. These visas are crucial for opening a local bank account and facilitating financial transactions for the company.
Processing Permits:
After the company has a bank account, the process of obtaining business permits, such as environmental permits, import and export permits, and other operational permits, can commence. This preparation period is a crucial initial step that sets the stage for the successful operation of the company.
Are you ready to take the first step towards establishing your foreign-owned company (PMA) in Indonesia? We’re here to guide you through the entire process with expertise and professionalism. Let us help you turn your business dreams into reality. Contact us today to get started on your journey to success!”
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