There are several different business entities which exist in Indonesia today. Anyone who chooses to start a business in Indonesia may utilize any of these business entities for that purpose. These business entities include the sole proprietorship (UD), the partnership, the local company (PT), the representative office, and the foreign-owned company (PT PMA). The PT PMA is the option typically selected by foreigners who have chosen to start a business in Indonesia. The acronym PT PMA stands for Perseroan Terbatas Penanaman Modal Asing. A PT PMA is established by a foreigner through the use of foreign capital which is to be contributed by a local figure. There are several advantages and privileges granted to those who own a PT PMA which may not be claimed by owners of other business entities in Indonesia. Such privileges will be detailed in the following paragraphs.

Ease of Obtaining Licenses and Permits

Just as is the case in any other country, certain business activities which are undertaken in Indonesia require one or more licenses or permits to be obtained before such activities may commence. One of the privileges in this regard which is experienced by those who own a PT PMA lies in the fact that it is much easier to obtain a particular license or permit for a PT PMA than is it for any other business entity in Indonesia. This is because the nature of a PT PMA allows for the authorities which are issuing the license to complete all necessary checks in less time than they would need if they were to do so for a different business entity. Regardless of the primary reason behind the obtaining of the license or the permit, PT PMA owners will benefit from the large amount of time saved during the application process and will thus be able to place more emphasis on the actual running of the business.

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

Sponsorship of Foreign Employees

Those who own a PT PMA are also allowed to sponsor as many foreign employees as desired. Foreign employees of the PT PMA who fulfill specific criteria are eligible for a company-sponsored permit. The criteria to be fulfilled which will allow a foreign worker in a PT PMA to be sponsored by the company owner are that the foreign worker must have been living and working in Indonesia for an ongoing and continuous period of at least three years and that the foreign worker must be a president director, director, commissioner, or shareholder of the company. Should the foreign worker be a director or commissioner, the foreigner must have invested a minimum of one billion rupiah in the PT PMA’s share capital before being sponsored. Any foreign shareholder of the PT PMA who is to be sponsored by the company must have invested a minimum of 10 billion rupiah in the PT PMA’s share capital before being sponsored.

Lower Import Duties

Businesses often have to import products from abroad for the conducting of their business activities. When they do so, import duties must be paid before the products can be brought into the country. PT PMAs, however, can reduce the amount of money they spend on import duties by utilizing tax benefits and other financial advantages for which they are eligible. This in turn would lead to the PT PMA being able to save significant amounts of money, thus making it more profitable.

Now that you have seen some of the privileges from which owners of a PT PMA benefit, you might be thinking of starting one yourself. If this is true, we at Paul Hype Page & Co are willing to be of service to you. Our incorporation specialists will work with you so that your new PT PMA, or any other desired business entity, to be established in Indonesia will be set up in the proper manner. We will ensure that you do not encounter any unnecessary difficulties during the incorporation process.