To encourage business growth within Indonesia, the government is actively creating 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 processed 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 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 visas. 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:
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:
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:
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.
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 types of business entities 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 are the Requirements to Set Up an Indonesian Company
For each type of business entity, there are certain set of requirements that the company has to fulfil before incorporation.
Documents Required to Indonesia Company Incorporation
The documents required for PT and PT PMA are the same, although for KPPA, there have a set of different documents that you will have to provide.
|PT & PT PMA
(Foreign & Local Legal Body and Personal Foreigner)
Personal Documents – Directors & Commissioners
NOTE: Edited photos are not accepted.
Chief Representative Officer Documents
NOTE: Edited photos are not accepted.
The shareholder documents vary for each type of PT PMA company, whether foreign legal body, local legal body, or a personal foreigner. These documents are listed 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 an 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 Deed of Establishment
The Deed of Establishment is to be applied online, together with the submission of the certificate of the bank account and 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 notorised before submission.
Step 3: Apply for the Certificate of Company Domicile
The next step is to apply for the Certificate of Company Domicile where 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
- Identity card of the director
- Statement letter to confirm place of business
You may also be issued 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) collector number will also be given.
Step 5: Get your business identification number (NIB)
The NIB is 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 you are allowed to start 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 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 is considered registered, and you may operate as a registered business. However, you must still do the following as part of the process:
- You are required to submit the labor report and other required documents at 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)
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.