To encourage business growth within Indonesia, the government actively creates a conducive environment for foreign investors through initiatives that reduce barriers. Today, the company registration process is simple and partly digitalised for ease of Indonesian company incorporation
Besides the first two steps that cannot be done online, the rest of the processes can be done online through the online system known as Online Single Submission (OSS).
Approval of incorporation documents takes about 10 working days, after which you draft your articles of Association and apply for business licenses. The overall incorporation/registration period is between two and three months, however, this is on a case-by-case basis.
Options for Fully Foreign-Owned Indonesian Companies
A company is considered a foreign company if there is a foreign investor or shareholder. Such companies must get approval from the board to coordinate capital investment before engaging in Indonesia’s business activity.
The amount of capital invested in a particular business will define the business company’s size and the eligibility to sponsor foreign employees’ work visas. Indonesia allows total foreign ownership in industries not categorised under the Positive Investment List.
If you are a foreign business owner who wants to register your company for full ownership, you have the following options:
Register your business company as PT (Perseroan Terbatas)
PT is a local term for a limited liability company, which is the most common foreign company option incorporated in Indonesia.
It exists in three categories:
- Small-sized
- Medium-sized
- Large-sized PT Company
The paid-up capitals vary depending on the category and are subject to approval from the Capital Investment Coordinating Board. Most local and foreign investors with permanent residency employ this option.
This type of Business Company is easy to set up, and it offers limited liability for most foreign and local entities as it supports work visas. PT companies require:
- One local director
- Two local shareholders
- A foreign or local commissioner
Register your company as PMA (Penanaman Modal Asing)
PMA companies can be fully or partially foreign-owned. Such a company is established under the stipulated regulations of the Foreign Capital Investment Law and approved by the Capital Coordinating Board of Indonesia. PMA companies can be converted into public companies later.
Register your company as a KPPA
This is a foreign representative office, and the registration process takes 3-4 working weeks. This company registration type is suitable for investors who want to study the Indonesian market for research and business-related development purposes. They serve as the parent company’s buying and selling agent. However, it is restricted to certain business regions such as services, banking, trading, mining, gas, and oil.
You can register your company as KP3A
This is a foreign trade representative office.
Alternative Company Types to Consider
Aside from those mentioned above, you can register 2 other types of business entities you can register in Indonesia.
1. Nominee Limited Liability Company
You can register a company in Indonesia using an Indonesian nominee when you want to begin operations immediately. Registering this type of company enables you to bypass some foreign investment restrictions, close deals fast, and obtain contracts.
2. Public Company
This type of company needs to adhere to stringent company registration regulations. It has at least 300 shareholders and a paid-up capital of IDR billion. It is a requirement to list on the stock exchange.
What are the Requirements to Set Up an Indonesian Company
For each type of business entity, there is a certain set of requirements that the company has to fulfil before incorporation.
Business Entities | Requirements |
---|---|
PT |
|
PT PMA |
|
KPPA |
|
Documents Required for Indonesia Company Incorporation
The documents required for PT and PT PMA are the same, although for KPPA, there is a set of different documents that you will have to provide.
Business Entities | Documents |
---|---|
PT & PT PMA
(Foreign & Local Legal Body and Personal Foreigner) |
Company Documents
Shareholder Documents
Personal Documents-Directors & Commissioners
NOTE: Edited photos are not accepted. |
KPPA |
Company Documents
Chief Representative Officer Documents
NOTE: Edited photos are not accepted. |
The shareholder documents vary for each type of PT PMA company, whether a foreign legal body, a local legal body, or a personal foreigner. These documents are below:
Business Entities | Shareholder Documents |
---|---|
PT PMA-Foreign Legal Body |
|
PT & PT PMA-Local Legal Body |
|
PT & PT PMA-Personal Foreigner |
|
Procedure to Register a Company in Indonesia
There are 8 steps for company registration in Indonesia, which will take approximately 1-2 months for a complete setup.
Step 1: Apply for a company name
Check your desired company name is available – you can use our free company name checker to do so here! If the name is available, you may proceed to apply and register for your desired company name with the Ministry of Law and Human Rights.
Here are some tips when choosing a company name. Do not select names that:
- Are similar to existing companies
- Are identical or similar to any name of a state, government, or international agency without official approval
- Does not conform to the purposes/ objectives/ activities of the company
- Consist of a set of numbers, letters, or figures that do not form any words
Step 2: Apply for a Deed of Establishment
The Deed of Establishment needs to apply online, together with the submission of the certificate of the bank account and an official copy of the bank transfer advice. If the application is successful, you will receive a legalisation on the establishment of the company and can announce the establishment within the following 14 days from the Ministry of Law and Human Rights. All documents are required to be notarised before submission.
Step 3: Apply for the Certificate of Company Domicile
The next step is to apply for the Certificate of Company Domicile which all Indonesian limited liability companies are required to hold.
Step 4: Obtain a tax registration number (NPWP)
After getting your Certificate of Company Domicile, you will need to obtain a valid tax ID for financial purposes with the local tax authority. The documents required for this application include:
- Deed of Establishment
- The identity card of the director
- Statement letter to confirm the place of business
You may also issues with a domicile certification for corporate taxation, but the domicile is not mandatory.
The domicile certificate is issued by the municipality or the building management in the office’s locality. A registration number Value Added Tax (VAT) will also give the collector number.
Step 5: Get your business identification number (NIB)
The NIB need to be obtained from the Online Single Submission. This is a unique number that is assigned to your company as a form of identification (like an identification card!). You will also get registered by the Badan Penyelenggara Jaminan Sosial (BPJS) Ketenagakerjaan and BPJS Kesehantan as part of the package.
Step 6: Apply for other relevant documents and licenses
Different types of businesses require various business licenses. Depending on the nature of your business, you will need to apply for licenses before starting your operations.
Step 7: Obtain work visas
Both the local and foreign employees in your company will require work visas (KITAS) before working in your company. These visas come in the form of single-entry and multiple-entry business visas.
Step 8: Set up a corporate bank account
The other activity you should consider when setting up an Indonesian company is opening a corporate bank account. This is where you deposit your paid-up capital after incorporating your company.
At this point, your company needs to register, and you may operate as a registered business. However, you must still do the following as part of the process:
- You need to submit the labour report and other documents to the Ministry of Labor within 30 days.
- Apply social security programs for workers. This program sensitises employees on workplace accidents, security after retirement, security for pension, and death.
- Next, be insured for healthcare and employee welfare from the Badan Penyelenggara Jaminan Sosial (BPJS)
FAQs
The application and approvals for the various documents take around 1-2 months, sometimes up to 3 months. However, this is a rough estimation as every incorporation have different timeframes depending on the business.
As of 4 March 2021, the Positive Investment List was introduced to significantly reduce the number of restricted sectors that prevents foreigners to enter from 350 to 46.
The Negative Investment List was replaced by the Positive Investment List in 2021. The list details the restricted sectors that the government prohibits investors and entrepreneurs to invest in.
Yes, foreigners can incorporate a local PT company through a local nominee arrangement. To control the company as a foreigner, you can manage all the financials of the company by holding the company bank account.