Foreigners who plan to start a company in Indonesia may choose to set up a Perseroan Terbatas Penanaman Modal Asing (PT PMA). A PT PMA is a limited liability which is completely foreign-owned; its shares may be owned by foreign individuals, foreign legal entities, or a combination thereof.
Definition of a PT PMA
A Perseroan Terbatas Penanaman Modal Asing (PT PMA) is a limited liability company established according to the laws of Indonesia. The shares of a PT PMA may be held by any foreign entity. These foreign entities include foreign individuals and foreign legal entities. However, before certain business activities may be conducted by a PT PMA, there is a requirement for Indonesian citizens or legal entities to hold some of the PT PMA’s shares alongside foreigners.
How a Foreigner Can Start a PT PMA in Indonesia
The first required step for every foreigner who plans to start a PT PMA is that of consulting the Indonesia Investment Coordinating Board (BKPM). The BKPM is the investment service agency of the Indonesian government. It manages all foreign investment in Indonesia. It is important that the services of the BKPM be used so that all permits and licenses may be arranged in the proper manner. However, foreigners who are new to Indonesia and do not speak Indonesian may sometimes find it difficult to handle everything which the BKPM requires. For this reason, foreigners who are interested in starting a PT PMA may opt to use the services of a local company which will assist in the setup of the PT PMA. This local company will deal with all procedures at the BKPM and other institutions. The foreign owner of the PT PMA is only required to send all necessary documents to the local company providing the services.
It is also possible to own a PT PMA without establishing one from its very beginning. This is because there is also an option to acquire an existing PT PMA or Perseroan Terbatas (PT). However, due to the fact that a PT is a local limited liability company which is not to be owned by foreigners, it needs to be converted into a PT PMA once it has been acquired.
Should you be interested in starting a PT PMA or any other company in Indonesia, contact us at Paul Hype Page & Co. We are able to cater to all of your incorporation-related needs. We will enable you to begin running your own Indonesia-based business with as few problems and issues as possible.
Licenses and Documents Required for PT PMA Establishment in Indonesia
There are certain licenses and documents are required before a PT PMA can be established in Indonesia. These include a Deed of Establishment, a document confirming legalization of the PT PMA’s legal entity status, a Tax Identification Number (NPWP), a Company Registration Certificate (TDP), a Principle License, a Manpower Report, a Business License, a Company Welfare Report, a Domicile Letter, and a taxable entrepreneur confirmation (PKP). It will usually take around 45 working days for all these licenses and documents to be obtained and processed by relevant authorities.
Shareholders of a PT PMA
Before a PT PMA can be established, there must be at least two shareholders, of which one must be the president director while another must be the president commissioner. for the establishment of a PT PMA. At least one of the shareholders must either be a foreign individual or foreign legal entity. The president director must be someone who resides in Indonesia so that all daily activities can be managed.
Deed of Establishment
Before a PT PMA may be set up in Indonesia, there must be a deed of establishment which is to be legalized by a public notary. The deed of establishment contains the PT PMA’s Articles of Association, the personal details of each individual shareholder, information about each shareholder which is a legal entity, the personal details of each member of the Board of Directors and Board of Commissioners, and the number and nominal value of the shares held by shareholders.
Minimum Capital Requirements
Prior to the establishment of a PT PMA, a foreign company owner must comply with the existing minimum capital requirement. The current minimum requirement is 10 billion rupiah or an equivalent amount in foreign currency. The Indonesian government believes that this requirement is suitable for attracting major international companies while at the same time protecting local small and medium-sized enterprises (SMEs). The paid-up capital requirement is normally at 25% of the minimum capital requirement.
PT PMAs may sometimes be established without the need to transfer the paid-up capital to an Indonesian bank account. The shareholders of the PT PMA may choose to sign a Capital Statement Letter for such a purpose. However, this is not possible for PT PMAs in the financial services sector.
Advantages of a PT PMA When Compared to Other Business Entities
Foreign companies in Indonesia which are PT PMAs receive many benefits. PT PMAs are allowed to become a completely foreign-owned limited liability company. They may also be established as limited liability companies through joint ventures with Indonesian partners. Those who own a PT PMA will have complete control of all business activities. The amount of tax to be paid as well as import duties are lower for PT PMAs when compared to those of other business entities. PT PMAs are also allowed to sponsor many foreign employees.
Rights of a PT PMA Owner
The owner of a PT PMA may at any time begin conducting business activities with the same rights and responsibilities as those of any local company. The owner may also apply for business licenses in order to conduct business activities in Indonesia, join and participate in any tender in Indonesia, and secure a business entity in Indonesia which may either hold foreign capital directly or have foreign entities as some of its shareholders.
Dissolution of a PT PMA
In certain situations, a PT PMA will have to be dissolved. There is a specific process which must be followed for the proper dissolution of a PT PMA. This process includes several important steps. The first of these is the submission of a notification to a creditor as well as the Minister of Law and Human Rights. Within 30 days of the date of the dissolution of the PT PMA, the liquidators must notify all creditors of the PT PMA’s dissolution by announcing the matter in newspapers as well as the State Gazette of the Republic of Indonesia. They must also inform the Minister of this matter so that the dissolution of the PT PMA will be recorded and registered, thus putting it in the official state of liquidation. The date of the dissolution of the PT PMA is either the date of dissolution through a general shareholders’ meeting (GMS) or a legally binding court decision, depending on which method is used to dissolve the PT PMA. Liquidators who do not comply with this step will cause the dissolution to become non-binding on third parties. It will also cause the liquidator to become jointly and severally liable with the PT PMA for losses incurred by any third parties.
Once this step has been completed, creditors are to file their claims. Creditors may file their claims within the 60-day period which starts from the date of the announcement regarding the dissolution of the PT PMA in newspapers as well as the State Gazette of the Republic of Indonesia. Liquidators are then to report the liquidation results to either the GMS or the court; however, should the liquidation process be conducted by a receiver, the receiver is to report the liquidation results to a supervisory judge. Once the GMS, court, or supervisory judge has ratified the results of the liquidation results, a notification of the liquidation results is to be sent to the Ministry of Law and Human Rights. These results are to be announced in a newspaper within 30 days from the date of the ratification of the liquidation results.
Once all ratifications, announcements, and notifications have been completed, the Minister is to record the expiration of the PT PMA’s legal entity status and remove its name from the Companies Registry. The process of dissolution ends when the Minister announces the expiration of the legal entity status of the PT PMA in the State Gazette of the Republic of Indonesia.
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PT PMAs in Indonesia FAQs
PT PMAs may be started by any foreigner. No restrictions with regard to nationality apply.
Those who are allowed to start a PT PMA in Indonesia include foreign individuals and foreign legal entities. Indonesian citizens are not mentioned in this group. However, Indonesian citizens and Indonesian legal entities may hold shares of a PT PMA.
All PT PMAs are to be established under Indonesian laws, of which the most important is Law No. 40 of 2007 regarding Limited Liability Company. Law Number 25 of 2007 regarding Capital Investment is also relevant to PT PMAs in Indonesia because it is related to foreign investment.