In recent years, Indonesia has had one of the world’s best-performing economies. Today, Indonesia has the largest economy in Southeast Asia with a 2019 GDP per capita of US$3,846.86.
Those planning to invest in Indonesia should first examine the Indonesia Stock Exchange (IDX). This stock exchange includes many companies which are among the country’s best-known and most reputed. Thus, they are ripe for investment. This naturally leads many investors to consider investing in an Indonesian company.
It must first be understood that there are several types of business entities which investors may choose from. Any of these business entities may be opened by a person who intends to invest in Indonesia. Of these business entities, the most common in Indonesia are the Local PT Company (PT) and the Foreign Owned Company (PT PMA).
Local PT Company (PT)
A Local PT company is also known as a Perseroan Terbatas or PT. A majority of the companies in Indonesia are PTs. A PT is a limited liability company which is fully owned by one or more citizens of Indonesia. Only Indonesian individuals or legal entities can be shareholders of a PT. However, foreigners who intend to acquire control over PT can do so by purchasing an Indonesian shareholder’s shares. The foreigner may choose to either purchase part or all of the Indonesian shareholder’s shares in the PT. Foreigners who do so will affect a change in the legal entity of the company; the company which was once a PT would have now become a foreign-owned company (PT PMA).
PTs are valid and viable options for foreign investors who have planned to expand their business in Indonesia but are constrained by ownership limits in certain business areas.
Facts About PTs
Directors, Commissioners, and Shareholders
Every PT in Indonesia is required to have at least one director, one commissioner, and two shareholders. PTs differ from PT PMAs in this regard in one important way: a PT only allows Indonesian citizens and Indonesian legal entities to hold shares as registered shareholders of the PT. The director of the PT has the duty of representing the company in the performance of all transactions and activities. The director’s actions are supervised by the commissioner. If there is more than one director or commissioner of the PT, the directors or commissioners will form a Board of Directors or Board of Commissioners. One director or commissioner will serve as the President Director or President Commissioner.
There are four types of trading licenses which exist in Indonesia. Every PT is required to own one of these licenses. The license which is to be selected will depend on the net value of the PT. These trading licenses are as follows:
A Micro SUIP is a license for micro-sized businesses with a net worth of less than 50 million rupiah, excluding land and buildings. It must also be a sole proprietorship or partnership and have its business activities managed and maintained by its owners or family members or close relatives.
A Small SUIP is a license for small businesses with a net worth of more than 50 million rupiah but not more than 500 million rupiah, excluding land and buildings.
A Medium SUIP is a license for medium-sized businesses with a net worth of more than 500 million rupiah but not more than 10 billion rupiah, excluding buildings and land.
A Large SUIP is a license for large businesses with a net worth of more than 10 billion rupiah, excluding land and buildings.
These licenses are relevant with regard to the hiring of foreigners to work in a PT. Only PTs with a Medium or Large SUIP and a net worth of at least 1.1 billion rupiah may hire foreigners.