WANT TO ESTABLISH PT PMA IN INDONESIA? THIS IS THE REQUIREMENT!

WHAT IS PMA?
PT PMA stands for Perseroan Terbatas Penanaman Modal Asing. PT PMA is a type of business entity established in Indonesia with capital ownership owned by foreign investors. A PT PMA can be established with a maximum foreign shareholding of 100% or with joint ownership between foreign investors and local investors.

PT PMA is regulated under Law Number 25 Year 2007 (https://peraturan.bpk.go.id/Home/Details/39903/uu-no-25-tahun-2007) on Capital Investment and other relevant laws and regulations. As a business entity established by foreign investors, PT PMA has the obligation to fulfill administrative and legal requirements set by the Indonesian government, such as having a business license and other necessary licenses in accordance with the type of business activities carried out. PT PMA must also comply with applicable tax regulations and labor regulations in Indonesia.

Matters related to the establishment of PT PMA:

The establishment of a PMA (Foreign Investment) in Indonesia involves several matters related to regulations and requirements that must be met by foreign investors, including:
1. Legality: Foreign investors must fulfill legality requirements in the form of licensing and business ownership legality. This includes business licenses, environmental permits, and other necessary licenses according to the type of business to be run.

2. Capital: The initial capital required for the establishment of a PMA is quite large. Usually, a minimum capital of IDR 10 billion is required for certain sectors, depending on the type of business to be run.

3. Ownership requirements: Indonesia’s foreign investment law requires that at least 51% of shares must be owned by local investors and a maximum of 49% by foreign investors.

4.. Labor: Foreign investors are required to use local labor at least 85% of the total workforce employed.

5. Business location: Foreign investors are required to pay attention to business location in accordance with applicable regulations, such as distance from residential areas and environmental protection.

6. Profits and taxes: Foreign investors must pay taxes in accordance with the applicable rules in Indonesia, and profits earned must be in accordance with applicable regulations.

7. Foreign investment regulations: Indonesia has several different foreign investment regulations for each business sector. Foreign investors need to pay attention to these regulations before making an investment.

8. Political and economic risks: Foreign investors must take into account the political and economic risks in Indonesia before making an investment. These risks may affect the success and continuity of the business.

9. Infrastructure development: Infrastructure development in Indonesia is still low compared to developed countries. Foreign investors should pay attention to infrastructure conditions before deciding to invest.

10 Market potential: Foreign investors should consider the market potential in Indonesia before making an investment. Indonesia has a huge market with more than 270 million people and steady economic growth in recent years.

Baca juga : Cara Mengurus Kitas Indonesia, Ini Syaratnya (https://www.documenta.id/tips-mengurus-kartu-izin-tinggal-terbatas-kitas-di-indonesia/) 

Who can establish a PT PMA in Indonesia:
Not all foreigners can immediately become investors and invest in Indonesia. To become an investor in Indonesia, a foreigner must meet the following specific requirements:
1. Must establish a company based on a line of business that has been listed in the latest Indonesian Standard Industrial Classification (KBLI).
2. Must have a company in the form of a PT that is owned by at least two or more shareholders
3. Have a minimum amount of foreign investment in Indonesia of IDR 10 billion, excluding land and buildings. The capital must be deposited in a bank in Indonesia with a minimum amount of IDR 2.5 billion.
4. Can only conduct business activities in large-scale businesses.

After a foreigner meets the requirements to become a foreign investor in Indonesia, then he must also fulfill other requirements to be able to invest in Indonesia, including:
1. Determine the business field by identifying the type of business field in accordance with the reference of Presidential Regulation No. 44 of 2016
2. Prepare an investment value of more than IDR 10 billion, with issued capital and paid-up capital of at least IDR 10 billion of the total investment
3. Pay attention to the location of the office used because it cannot use a virtual office or virtual office
4. Prepare and make a presentation in front of BKPM related to business investment in Indonesia

PT PMA Establishment Procedure:
The establishment of a Foreign Investment Limited Liability Company (PT) in Indonesia goes through several stages and procedures. The following are some of the steps that must be taken in the process of establishing a PT PMA in Indonesia:
1. Selecting the type of business to be carried out and ensuring that the business can be carried out by Foreign Investment (PMA).
2. Selecting and determining the place of business in Indonesia, usually in the form of an office or production site.
3. Draft and make the deed of establishment of PT PMA in front of a notary.
4. Apply for a Company Domicile Certificate (SKDP) to the local sub-district office.
5. Apply for a Trade Business License (SIUP) to the local Industry and Trade Office.
6. Register the business entity with the Directorate General of General Legal Administration (Ditjen AHU) and obtain a Business Identification Number (NIB).
7. Register the company with the Tax Office to obtain an NPWP (Taxpayer Identification Number).
8. Apply for a Principle License to BKPM (Investment Coordinating Board) to obtain recommendations and approval to establish a PT PMA.
9. After the Principle License is issued, the company must carry out investment activities within a certain period of time.
10. After the investment activities are carried out, the PT PMA must apply for a Permanent Business License (IUT) to BKPM to obtain an official license and be able to start business operations.
11. After the IUT is issued, the PT PMA must register with the relevant agencies such as the Population and Civil Registry Office to obtain the Director’s or Commissioner’s ID card.
12. Once the entire registration and licensing process is complete, the PT PMA can start its business operations in Indonesia.

Terms of Establishment of PT PMA:
PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a business entity that has foreign capital as part of its capital. The following are the requirements for establishing a PT PMA in Indonesia:
1. Have a business license from the Minister of Law and Human Rights or a designated official.
2. Have a Business Identification Number (NIB) issued by the Investment Coordinating Board (BKPM).
3. The minimum capital required is USD 1 million, except for certain sectors that can be exempted by laws and regulations.
4. Foreign capital must have a license from BKPM and dividends paid must follow applicable laws and regulations.
5. Have clear legality such as deed of establishment, company registration certificate (TDP), trade business license (SIUP), and other permits required according to the type of business being run.
6. In the case of foreign workers, the company must obtain permission from relevant agencies such as the Ministry of Manpower and Transmigration.
7. Have a clear organizational structure with at least one director and one commissioner. Directors and commissioners must have a Taxpayer Identification Number (NPWP) and an Indonesian Identity Card (KTP).
8. Submit financial and tax reports regularly in accordance with applicable regulations.

That’s the discussion about PT PMA that you should know. Still have questions? You can contact us Whatsapp us at +62 821 8413 8864 or visit our Instagram at Documenta. (https://www.instagram.com/documenta.id/)