A PMA (Penanaman Modal Asing) or PT PMA (Perseroan Terbatas Penanaman Modal Asing) is known as a Foreign Owned Company in Indonesia. This is a type of legal entity in which foreigners can choose to conduct commercial activities in Indonesia established under the Indonesia Law.
In PT PMA, foreign investors can be registered as shareholders in the form of legal entities and individuals. Unlike Local Company (Local PT) where the company shareholdings must consist of 100% local citizens only, here in PMA company foreigners can hold up to 100% ownership of the company in Indonesia. However, foreign investors are obliged to the Negative Investment List in Indonesia for certain business classifications where it lists down the maximum percentage a foreigner can hold ownership. The Negative Investment List is regularly updated by the Indonesia Investment Coordinating Board (BKPM).
Characteristics of PMA Company
Directors, Commissioners and Shareholders
By reference to the Indonesian Company Law, every PMA must consist of at least:
- 1 director;
- 1 commissioner; and
- 2 shareholders (they can be either an individual or a legal entity, but at least one of the shareholders must be a foreign individual)
The director(s) are elected by the shareholders in the general meeting of the shareholders. They are in charge of company management in accordance to any policy that is appropriate by the Indonesian Company Law or AoA (Article of Association). Apart from having the right to legally represent the company, the directors are authorized to sign any contracts between the company and third parties such as vendors, suppliers and clients as well as the taxation documents.
The directors can be all foreigners but they are required to have residence permits (KITAS) or personal domicile letters along with work permits. However, if there is a local shareholder in the PT PMA, it is advisable by the BKPM (Indonesia Investment Coordinating Board) that the company should also have at least one local partner or a local director.
The commissioner can be either a local citizen or a foreigner. The main duty of a commissioner is to supervise and monitor the work of the directors in the company and to ensure that every activities commenced by the company are in order and coherence with the objective of the company.
Every PMA companies should have at least 2 shareholders be it individual or a legal entity, but at least one of the shareholders must be a foreign individual. All corporate shareholders must have Articles of Association, which is approved by a public notary.
The percentages of maximum amount of foreign shareholdings are subject to the Negative Investment List.
The minimum investment in Indonesia to start a PMA is IDR 10 billion or equivalent to current exchange rate. This applies to all business sectors and the amount of minimum investment is not including the value of the land and buildings owned by the company.
Minimum capital requirement is 25% from IDR 10 billion.