COMPANY FORMATION IN INDONESIA

Company formation in Indonesia varies for foreign and domestic investors, with foreigners most commonly establishing a Foreign Investment Limited Liability Company (PT PMA). The process has been streamlined via the Online Single Submission (OSS) system, but requires navigating specific regulations, including minimum capital requirements. Business entities in Indonesia Entity Type Best For Key Details Foreign Investment Limited Liability Company (PT PMA) Foreign nationals or entities seeking full operational capabilities in Indonesia. Must have a minimum of two shareholders (foreign or local). Allows for full foreign ownership in many sectors, but restrictions can apply depending on the business field. Local Limited Liability Company (PT PMDN) Fully owned by Indonesian citizens. No foreign ownership is allowed. Generally has lower capital requirements than a PT PMA. Representative Office (KPPA) Foreign companies wanting to conduct market research or promotional activities without generating revenue in Indonesia. Not a legal entity and has no minimum capital requirement. Partnership (Firma/CV) Indonesian citizens engaged in joint business activities. Foreign individuals cannot be full partners. A CV (limited partnership) does not have legal entity status. Requirements for foreign investors (PT PMA) Minimum investment: A total investment plan of at least IDR 10 billion (approximately USD $650,000) is required per business line, with a minimum of IDR 2.5 billion paid-up capital. This amount must be deposited into an Indonesian bank account. Shareholders and management: A PT PMA must have at least two shareholders, one Director, and one Commissioner. The Director must be domiciled in Indonesia. Permitted business activities: Investors must consult the Positive Investment List to confirm if their chosen business sector is open to foreign investment. Registered address: A local office address is required for registration. Step-by-step process for PT PMA formation Select a company name: The name must be unique, consist of at least three words, and be approved by the Ministry of Law and Human Rights (MOLHR). Draft and notarize the Deed of Establishment: An Indonesian public notary must prepare this document, which outlines the company's articles of association, shareholders, and directors. Obtain MOLHR approval: The notary submits the deed to the Ministry of Law and Human Rights for ratification. Register with the OSS system: The government's Online Single Submission (OSS) system is used to obtain a Business Identification Number (NIB), which is required for all other licenses and permits. Get a Tax Identification Number (NPWP): This is required for tax purposes and can be registered with the Directorate General of Taxes after obtaining your NIB. Open a corporate bank account: A local account must be opened to receive the paid-up capital. Obtain specific licenses: Depending on your business activities, you may need additional licenses or certifications, which are also processed through the OSS system. Why choose Indonesia? Large market: With over 270 million people, Indonesia is Southeast Asia's largest economy and offers a vast consumer market. Improved regulations: Recent changes, including the move to a Positive Investment List, have eased foreign ownership restrictions in many sectors. Free trade agreements: Indonesia's participation in ASEAN and other agreements simplifies cross-border trade. Foreign ownership options: The PT PMA structure offers investors a clear path to 100% ownership in many industries.