Options for Fully Foreign Owned Indonesian Companies
A company is considered a foreign company if there is a foreign investor or shareholder in the company. Such companies must get approval from the board coordinating 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 permits. Indonesia allows total foreign ownership in industries that are 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:
You can register your business company as PT (Perseroan Terbatas)
PT is a local term referring to a limited liability company, and it is the most common foreign company option that incorporated in Indonesia.
It exists in three categories:
Large-sized PT Company
The paid-up capitals vary depending on the category, and they are established upon the 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 entities and local entities as it supports work visas. PT companies require:
You can 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 Foreign Capital Investment Law and approved by the Capital Coordinating Board of Indonesia. PMA companies can be converted into public companies later.
You can register your company as KPPA
This is a foreign representative office, and it takes 3-4 working weeks of the registration process. This company registration type is suitable for investors who want to study the Indonesia 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
There are 2 other company types you can register in Indonesia, aside from the above mentioned.
1. Nominee Limited Liability Company
When you want to begin operations immediately, you can register a company in Indonesia using an Indonesian nominee. 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 is required 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 be listed under the stock exchange.
What is the Process of Registering a Company in Indonesia
Business registration and incorporation depend on your company type, and this also determines the registration duration. The following are the procedures for one to register a company in Indonesia:
Choose Your Business Structure
Decide which business structure is suitable for you. After which, you will have to assign or engage professional services such as corporate secretary, human resource, accounting, etc. To take care of your employees’ requirements, ongoing filings, and bookkeeping.
Choose a unique company name
The company name contains at least three different words. You are required to provide three options for your company name in English, Indonesia or both. These three name options save you the trouble of having to go back and think of a name if the first option has been already in use.
After deciding, you will need to register the company’s name at the Ministry of Law and Human Rights. Be sure to have your company name approved from the Notary Public as it is a sign that your business is a legal entity.