The Foreign Investment Limited Liability Company (PT PMA)

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.
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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.
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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.
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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.
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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.