Recently, Indonesia gained a lot of positive attention from foreign investors after The World Bank upgraded its standing in its 2018 ease of doing business report by 19 points [BKPM]. It remains as one of the strongest economies in Southeast Asia and boasts good trade relations with China, the United States of America, and Singapore [World’s Top Exports].
Its government’s focus on improving its business environment further makes it one of the ideal countries to conduct international transactions. As a result, many entrepreneurs are looking to expand their businesses in this country. But, before a business can operate in this jurisdiction, entrepreneurs must first establish a PT PMA.
Discover more on this blog on how to incorporate a company in Indonesia.
How to Incorporate a Foreign Corporate Entity in Indonesia
Entrepreneurs looking to incorporate their businesses in Indonesia must first identify what type of legal entity the company should be. This will help define what type of operations and activities the company will undertake in the country.
Business owners must also identify in which sectors the company will focus on. This will determine if the company needs a verified local partner before it can operate [Indonesia Investments (PDF)].
After outlining the company’s purpose and size the entrepreneur may then proceed to set up the PT PMA.
Step-by-Step Guide to Setup a Foreign Company (PT PMA)
Establishing a PT PMA in Indonesia is the ideal way for foreign business owners to expand their company operations in this country.
Here are the three steps to setup an offshore corporate entity in Indonesia.
Present the Necessary Permits
After identifying the corporate entity’s size and purpose, the entrepreneur can apply for a PT PMA through the Indonesia Investment Coordinating Board (BKPM).
Several files are required before a business owner can establish a PT PMA in Indonesia. Generally, these are the necessary files:
- Principle License and Business License from BKPM
- Deed of Establishment which contains the Articles of Association and is legalized by a Public Notary
- The taxable Entrepreneur’s Taxpayer ID
- Domicile Letter from the local district authority
- Approval of the legal entity status of the PT PMA by the Ministry of Law and Human Rights
Additional files may be required depending on the type of corporate entity being proposed. It would be best to consult an established corporate service provider during this phase. Their corporate experts can guide the business owner regarding the process of correctly fulfilling these documents.
Declare the Shareholders of the PT PMA
Indonesian corporate laws state that there should be at least two shareholders to represent the corporate enterprise. The company director must reside in Indonesia while operating the company. Foreign company directors must also acquire a tax number (NPWP) and a work permit (KITAS).
Meet the Minimum Capital Requirements
Currently, foreign investors are required to have a minimum investment capital of IDR 10 billion. Additionally, the entrepreneur must have an initial paid-up capital of IDR 2.5 billion. The company’s investment capital share should be valued at IDR 10 million per share.
Get a Second Opinion from an Expert Corporate Consultant
Indonesia’s government regularly updates their corporate guidelines to promote the country’s business environment. However, business owners may find it challenging to set up a PT PMA due to these changes. As a result, it is highly recommended that entrepreneurs consult a trusted corporate service agency when establishing a company in the country.
A team of corporate experts understand the latest changes in local corporate guidelines and can guide entrepreneurs on how to properly set up a PT PMA. They are also able to offer corporate service advisory solutions that the business owner might require after the company incorporation process.
Consult an established corporate service agency.
References:
2018 Economic Outlook: It’s Time to Invest, No Need to Wait Any Longer, bkpm.go.id
How to Establish a Foreign Company (PT PMA) in Indonesia?, indonesia-investments.com
Indonesia’s Top Trading Partners, worldstopexports.com
Presidential Regulation of the Republic Of Indonesia Number 44 Year 2016 (PDF), indonesia-investments.com
