Setting up a company in Indonesia successfully can be difficult for many foreigners. Precautionary steps required to be taken by foreign investors before setting up a company in Indonesia.

 

Indonesian economy as is a booming and it accounts for over 50% of the population in the ASEAN region. With Indonesia being the fourth most populous country in the world, it had attracted many foreigners that seek to expand their business activities in Indonesia. Many foreign investors had successfully set up a company in Indonesia but there were many that failed as they had failed to satisfy some basic requirements to set up a company as a foreigner.

This article will give you a better understanding of the precautions foreign investors should take into consideration and satisfy prior to the incorporation of a company here in Indonesia.

Available Business Activities Subject to the Negative Investment List

First, you have to check whether your business activity is open in Indonesia in accordance to the Negative Investment List or DNI (Indonesia investment guidance) under the Presidential Decree No. 39 of 2014 that stipulates sectors which are closed and open with conditions to investment.

Want to Start business in Singapore
Want to Start business in Singapore

Knowing the Paid-up capital prior to Incorporation of a Company

To plan out the suitable paid-up capital of a company, foreigners should think of the size of the team that is going to be working in that company. Foreign investors should also figure out what kind of company they want to set up, be it a Local Company, PT or a Foreign Owned Company, PT PMA or even a Representative office prior to incorporation of a company in Indonesia.

For Local PT Company,the Indonesian Company Law (Regulation 40 of year 2007) defines the business size based on their capital:

  • Micro: Not more than IDR 50 million (~USD 3,400.00)
  • Small: Between IDR 50 to 500 million (up to ~USD 35,000.00)
  • Medium: Between IDR 500 million to 10 billion (up to ~USD 700,000.00)
  • Large: More than IDR 10 billion (>USD 700,000.00)

However, as for Foreign Owned Company, PT PMA, foreigners are only allowed to start a PT PMA with a minimum paid-up capital of IDR 2.5 billion (USD 180,000.00)

Tax and Investment Reports

It is compulsory that any company in Indonesia has to pay taxes and report the company’s