Indonesia’s corporate environment has been becoming one of the better ones in the Southeast Asian region with regard to starting a business. Its improving economic status has contributed to its increasingly vibrant corporate scene. This in turn has led many people, both locals and foreigners, to make plans to start a business there because in the current business climate in Indonesia, they would be likely to make a profit.
Many of the people who choose to start a business in Indonesia are foreigners. They believe that starting a business in Indonesia would yield a greater return on investment than doing so in their home countries. There are two methods by which a foreigner may start a business in Indonesia. One of these is by starting a Perseroan Terbatas (PT) and employing a nominee director; the other is by starting a Penanaman Modal Asing (PMA). The details of each method will be discussed in the following paragraphs.
Perseroan Terbatas (PT)
A PT is a business entity based in Indonesia which is formed according to and operates under Indonesia’s business laws. PTs only exist in the Netherlands, Belgium, and former Dutch colonies; as Indonesia was once a Dutch colony, PTs thus exist there. In Indonesia, PTs typically receive investments from abroad. The types of PT which exist in Indonesia are the general public, domestic, individual, closed, foreign, and open PT. Of these, the general public and open PTs are by far the most common.
Anyone who decides to invest in a PT will only be liable for the amount of money spent during their initial investment. Those who seek further clarification on this matter may consult either the PT’s Articles of Association. The Articles of Association also specify the details about the distribution and ownership of the PT’s shares.
The business laws of Indonesia mention which businesses have legal permission to be operated as PTs. The laws and regulations which govern the business activities of PTs differ across the country; this is because each region of Indonesia has its own laws for this purpose. Licensing requirements for each PT also differ; this is due to the fact that the business activities of the PT in question determine the license which is needed and therefore the criteria to be fulfilled in order to receive one.
PTs typically have relatively low paid-up capital requirements. They are also not restricted by the specifications mentioned in the Negative Investment List. PTs may receive additional funds and capital by issuing new shares; this is a rather simple and understandable method. An additional advantage is the fact that it may have as many business licenses as its owner desires without a need to pay any additional paid-up capital.