Every company in Indonesia must fulfill necessary legal obligations. If a company does not do so, it will suffer severe legal consequences. However, a company that makes the effort to fulfill these obligations will reap the benefits in due time, be they financial or otherwise.

Indonesian Company’s Legal Obligations

 

Indonesia is the fourth most populous country in the world. It has become a transit area for traders that could develop Indonesia’s tourism activities and a good location for traders to do export and import as it is strategically located in between two continents (Asia and Australia) and two Oceans (Indian and Pacific).

With it being the growing economy of the South East Asia region, many foreign investors are seeking ways to expand their business activities in Indonesia.

Types of Business Entities in Indonesia

Perseroan Terbatas (PT)

Perseroan Terbatas (PT) or Limited Liability Company is a legal entity to run a business that consists of capital shares, which is a part owner of shares owned. A majority of the companies in Indonesia are Local PT.

Key Benefits:

  • Can carry out many business activities in various business fields
  • Lower minimum paid-up capital than foreign owned company
  • Legal Protection Pursuant to the Laws and Regulations
  • Clear Separation between Personal Asset and Company Asset

Foreign Owned Company (PT PMA)

A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a legal entity which foreigner can use to conduct commercial activities in Indonesia established under the Indonesia law. In a PT PMA, foreigner both individual and legal entities can be registered as shareholder. However, the shares of PT PMA can be owned up to 100% by foreign investors subject to the Negative Investment List.
Key Benefits:

  • Shares of PMA can be owned up to 100% by the foreign investors, but subject to the Negative Investment List
  • On-site tax or import duties are lower
  • Has same rights and responsibilities as local companies