The Foreign Investment Limited Liability Company (PT PMA)

Posted on August 25th, 2023 by Citra Consultant Indonesia

In recent years, Indonesia, particularly Bali, has captured the attention of potential investors. An increasing number of foreigners are flocking to Bali to establish businesses and explore the promising opportunities that Indonesia offers. If you’ve thinking following in their footsteps, we suggest getting a better understanding of Indonesia’s Foreign Investment Limited Liability Company (PT Penanaman Modal Asing), or PT PMA.

As its name suggests PT PMA is a Limited Liability Company, in which you can find shares owned by foreign investors. Even if foreign investors own as little as 1% of shares in a company, it is still considered foreign investment in Indonesia.

Here are five key points you will need take into consideration if you want to set up a PT PMA for business in Indonesia:

  1. Classification of Business Activity
    Chances are you have a good idea of what type of business you would like to conduct, however if you are considering a few different avenues, this is ok and possible as well. The key is identifying the corresponding Standard Classification of Indonesian Business Field (“KBLI”). Accurate classification is critical as this code specifically outlines permissible and restricted business activities.
  2. Foreign Share Ownership in the Business Sector
    After establishing and confirming your Business activity and its corresponding KBLI number, you must confirm that the chosen activity fits with PT PMA regulations. Foreign ownership limitations can be generalized with these three points.
    • Some activities permit 100% foreign investment.
    • Others allow foreign investment but impose foreign ownership percentage or share ratio limits.
    • Certain activities are entirely off-limits to foreign investment.
  3. Investment Plan and Capital Requirements
    The Capital Requirements can be confusing and complicated but can be summarized with these two points,
    Authorized Capital: This amount of capital stipulated in the articles of association. All authorized capital must be divided into shares and issued by company and this amount must exceed IDR 10 billion (approximately USD 660.000), however this amount excluding land and building.
    However certain scope of business require higher amount of capital.
    Paid Up Capital: This is the actual value of foreign investment into a PT PMA. All PT PMA must fulfill a minimum capital requirement of at least IDR 10 billion (approximately USD 660.000) and just as at the authorized capital this amount excluding land and building.
    Here as well, certain scope of business require higher amount of capital.
    While this is substantial, consulting a specialist to confirm investment structure and paid-up capital procedures is advisable.
  4. Company Structure
    Once the business activity, ownership criteria, and investment plan are decided and in place, you can outline the company’s required internal structure with following minimal and standard requirements.
    Registered Address in Indonesia: Thoughtful selection of your company’s address is
    crucial to ensure proper permits for both the address and its premises.
    Shareholder Structure: A minimum of two shareholders is required, this can be individuals, legal entities, or a combination of the two.
    Management: At the management level, the company must appoint at least one director and one commissioner. However, you can opt for multiple directors or commissioners as long as the minimum requirements are met.
  5. Seek Reliable Assistance
    Despite your independent research and preparedness launching your dream venture in Indonesia, navigating the regulations and changes can be confusing. To avoid future complications engaging a dependable agent is recommended. Look for an agent with extensive experience who understand and are used to operating inside the regulatory framework set by Indonesian authorities.

With a 26-year track record, CCI possess the expertise, knowledge and experience. You can count on us to be trusted partner in establishing business and ensuring a smooth journey towards realizing your business aspirations on the enchanting Island of the Gods.

Posted in: Business Company & Trade

2 thoughts on “The Foreign Investment Limited Liability Company (PT PMA)

    1. Thank you for contacting us.

      It is true that a new regulation on Visa and KITAS has been issued by MINISTER OF LAW AND HUMAN RIGHTS OF REPUBLIC OF INDONESIA, NUMBER 22 OF 2023 REGARDING VISA AND STAY PERMIT.
      It was issued on 24 August 2023 and it should be implemented within maximum 60 days, which means can be any day from today until 23 October 2023.
      Meaning, as of today, some of the new regulations have been implemented, while some haven’t.

      We are continuously in contact with the relevant authorities, namely the Indonesian General Directorate of Immigration and the Capital Investment Coordinating Board (BKPM), however the regulations not yet harmonized.

      We at the CCI are always working with facts and law and never speculate when providing information, therefore it is important for us to cross check with the relevant institution.
      We always strive to maintain our qualities for being diligent, trustworthy, efficient, responsive, and knowledgeable and consistently deliver the highest level of service.

      It may take a few more days to get better clarification on certain details related to the new regulation, so that we can provide you with an accurate information.
      We appreciate your kind understanding and patience.

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