Foreign Investment Company In Indonesia

 

 

 

 FOREIGN INVESTMENT COMPANY IN INDONESIA

 

Foreign Investment Company in Indonesia, or known as PT PMA, is the form of a legal entity through which a foreign investor may carry out commercial activities in Indonesia.

The Indonesian Investment Law (Law No. 25/2007 regarding Investment) defines a foreign investment in Indonesia as an investment activity conducted by a foreign investor with an aim of running a business within the territory of Indonesia. PT PMA is the legal entity through which a foreign person, foreign company, or foreign government body may carry out business in Indonesia (generating streams of income and profit). Setting up a PT PMA is subject to the requirements under the Indonesian Company Law (Law No. 40/2007 regarding Limited Liability Companies).

Some business sectors in Indonesia are closed, or partially closed, to foreign investment. Any foreign investor needs to check the Indonesian Negative Investment List to find out which sectors are open to foreign investment. The Negative List states the maximum allowed percentage of foreign ownership. In case a sector is partially closed to foreign investment, a partnership with a local (Indonesian) partner is required in order to engage in the business.

Paid-up capital

To set up a PT PMA, the foreign investor must meet the minimum capital requirements for foreign investment. The current minimum authorized capital requirement is IDR 10 billion, or the equivalent value in US dollars. The Indonesian government sets a high capital requirement for a PT PMA in order to attract large scale companies and investors, while protecting small local businesses.

Paid-up capital is generally required at 25 percent of the minimum authorized capital (hence IDR 2.5 billion). However, in certain (capital intensive) industries the paid-up capital requirement is higher.

Shareholders

Under the prevailing Indonesian Company Law, a limited liability company must have at least two shareholders. The shareholders can be individuals, corporate shareholders, or both.

Directors and Commissioners

In general, under the prevailing Indonesian Company Law a limited liability company must have at least one director and one commissioner. The commissioner is the supervisor of the director(s). For a PT PMA, the commissioner can be a non-resident of Indonesia.

At least one director must be an Indonesian citizen and must have a tax identification card (NPWP). The resident directors can be Indonesians or foreigners.

Foreign directors can apply for a work permit after the incorporation of PT PMA. While waiting for a work permit, the PT PMA must appoint a local director.

How to set up a PT PMA in Indonesia

The license process for most business lines goes through a centralized system, so called Online Single Submission (OSS). Business licenses will be processed through this OSS except those related to finance and mineral resources. This has made registration easier and faster if the intended business does not need additional licenses.

In short, setting up a PT PMA will involve the preparation of Akta Pendirian (Deed of Establishment), obtaining Nomor Pokok Wajib Pajak (Tax Identification Number) for the PT PMA, registration in Online Single Submission system (OSS), obtaining Nomor Induk Berusaha (Identification Number to Operate) so called NIB after the registration with OSS system, and obtaining the business’ operational license/commercial license.

An NIB is a unique number that identifies a company profile in Indonesia. It also serves as a Company Registration Certificate (so called TDP), Importer Identification Number, and Customs Identification Number (so called NIK).

The NIB should also automatically registers the PT PMA under Health and Social Security System (so called BPJS Kesehatan and BPJS Ketenagakerjaan).

The business’ operational license is usually issued on the same day as NIB. However, this is applicable if there are no other requirements for the intended business of the PT PMA, such as trading and consulting businesses. For other business activities that may involve additional requirements, it can take months for the issuance of a business license.

 

Said, Sudiro & Partners

Indonesian Legal Consultants

Sampoerna Strategic Square

South Tower, Level 18

Jl. Jend. Sudirman Kav. 45 - 46

Jakarta 12930 Indonesia

Phone: (62-21) 575.0983

Fax: (62-21) 575.0803

Website: www.ssplegal.com

Emails: mail@ssplegal.com

           sdsdp@cbn.net.id

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