Foreign Investment in Indonesia

Are you foreign investors having all these questions for establishing company in Indonesia?

Which one of legal entity will be the most suitable for my business? A foreign direct investment company or a representative office? What are the requirements of each type of legal entity?

Below we have the answers for your whole questions.

FOREIGN DIRECT INVESTMENT COMPANY (PT. PMA)

Foreign Direct Investment Company which also called as PT. PMA (PerseroanTerbatas – Penanaman Modal Asing). Meanwhile you need to verify the business field on the Negative Investment List (DNI) to ensure that as the foreigner you may for the sector of you company.

The laws governing PT. PMA establishment are UU No. 25 / 2007 of Capital Investment as well as UU No. 40 / 2007 of Limited Liability Company. The characteristics of PT. PMA are as follows:

• Foreign ownership up to 100% (according to business field)

• Should have Minimum of two shareholders

• Minimum one director and one commissioner

• Minimum investment plan is US$1.2 million, with minimum paid-up capital of 25%, which is equal to US#300,000

• Requires a business license and other licenses according to specific business activities

The process of PT. PMA registration takes around 2.5 months, however a PT. PMA enables the company to perform business activities in Indonesia.

REPRESENTATIVE OFFICE

If you want to explore first whether your business could grow well in Indonesia, establish representative office can be the best way. Meanwhile, you must have an existing parent company overseas in order you can manage the representative office in Indonesia. Having representative office means that you may to do many business activities such as conducting market research activities as well as market and promotion though selling or buying agent. If you get satisfy result of representative office, then you can begin to establish PT.PMA.

Advantages of a representative office:

• Can be owned 100% by foreign investors

• There is no minimum capital requirement

• No shareholder, director, commissioner requirement

• Set up process is relatively easy and quick, requiring about 1.5 months

 

Disadvantages of a representative office:

• Limited role as supervisor, coordinator, and representative of parent  company in Indonesia

• Not allowed to conduct direct sales and generate revenue in Indonesia, thus all financial transactions shall be conducted through the parent company overseas

HOW CAN I GET GUIDANCE FOR SET UP MY BUSINESS IN INDONESIA?

Cekindo – Your Business Partner in Indonesia is a market entry consulting firm providing one-stop services for foreign companies and entrepreneurs from various industries to enter Indonesian market. Our dynamic multinational team based in Jakarta understands the local market and uses its extensive network to support your business and operation in Indonesia. Cekindo will assist you in setting up your business in Indonesia, supporting your daily operations and administration, and representing your company in Indonesia. It is important to start your business with the right partner so that you can focus on growing your business in Indonesia.

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