Whether you can register a classic Foreign Owned Company in Indonesia (PT PMA) with your 100% ownership of the Indonesian branch, or your Indonesian company needs to be partially, or completely owned by a local entity (Indonesian company, or individual) depends on a document called NEGATIVE INVESTMENT LIST issued by BKPM. The document divides business fields into fully closed to foreign investment, fully open to foreign investment and conditionally open to foreign investment.
How much share you can have for your company in Indonesia? Check your business activity!
Your business activity belongs in the following group:
FOREIGN OWNED COMPANY IN INDONESIA (PT PMA)
Best choice for business activities with:
- Possible foreign ownership of more than 50%.
- If your business activity doesn’t belong in the “fully closed to foreign investment” group, you can set up Foreign Owned Company in Indonesia (PT PMA). Nevertheless, given the high financial demands of the Foreign Owned Company in Indonesia, it is questionable, whether you should set-up PT PMA if you can’t have the majority share in the company.
- You have greater control over the company (especially if you own 51% of shares, or more) than in the case of Local Nominee Company in Indonesia.
- There is no need for locals to own 100% of your company.
- Financially demanding. The investment needs are listed below.
- 2 months.
- The minimum investment plan is 10.000.000.000 IDR (equal to USD 800.000), with minimum paid-up capital 2.500.000.000 IDR (equal to USD 200.000).
- USD 2500 fee (valid for Jakarta area).
- The fee excludes bank account opening and office space
LOCAL NOMINEE COMPANY IN INDONESIA (PT)
Best choice for business activities with:
- Possible foreign ownership of less than 50%.
- Local Nominee Company in Indonesia gives you lower control over your business entity in Indonesia, but it is also less financially demanding
- On the paper, the company needs to be owned and operated by locals. The minimum are 2 Indonesian Shareholders (corporate or individual), 1 Indonesian Director, and 1 Indonesian Commissioner.
- If you don’t have access to any trustworthy Indonesian representatives, Cekindo can provide you Indonesian local shareholder, director, or commissioner nominee, with notarized nominee agreement to protect your ownership in the Local Nominee Company in Indonesia.
- The registration process is easier and faster than in the case of Foreign Ownedned Company in Indonesia
- 2 months.
- No investment needs.
- USD 1500 fee (valid for Jakarta area).
- Excluding the Local nominee service, the nominee agreement, bank account opening, office space and other additional services
Frequently Asked Questions:
Which Indonesian company type is better for you, Local Nominee Company, or Foreign Owned Company?
Local Nominee Company (PT) – Best option for local investors who don’t want to involve any foreign shareholders. This business entity on Indonesian market is also suitable for foreign investors, who have reliable business partners in Indonesia or trust Cekindo to find them trustworthy shareholders, directors, and Commissioners.
Foreign owned Company (PT PMA) – Best option for foreign companies and investors, who want to have a great control (partial or full ownership) over their company operating in Indonesia.
What percentage of the company share can be owned by a foreigner?
Indonesian PT – 0%. PT is an Indonesian local company, therefore it needs to be owned by locals from 100%.
Indonesian PT PMA – The foreign ownership can be anything between 0% and 100%, depending on the Negative Investment List. The business activities, which are not mentioned in Negative Investment List can have 100% foreign ownership in Indonesia.
Main advantages of Local Nominee Company in Indonesia and Foreign Owned Company in Indonesia
Indonesian PT – Smaller capital requirements. Unlike the PT PMA, PT can have up to 3 Business Lines on the business license and it is valid for lifetime.
Indonesian PT PMA – Ability to operate fully as a limited liability company, where all shareholders, directors, and Commissioners can be foreigners.
Main Disadvantages of Local Nominee Company in Indonesia and Foreign Owned Company in Indonesia
ndonesian PT – Foreigners cannot hold any share of the company. Only the PTs with medium, or high capital investments can sponsor Indonesian foreign work permits (KITAS).
Indonesian PT PMA – Large capital requirements, if another business line is added, it will cost double the capital (Example 2 Business line, 20 Billion IDR). Some Industries are affected by the Negative Investment List in Indonesia, issued by BKPM. The Permanent business license is required, to have another license such as Indonesian import license.
How many work permits (KITAS) can the Indonesian company sponsor?
Indonesian PT – Only medium and large PTs can sponsor more than 1 work permit in Indonesia. (Example 1 Billion IDR Capital (Medium size) which stated on the Article of Association can only sponsor 1 foreign work permit in Indonesia, thus if you need to issue 2 KITAS, the capital shall be 2 Billion IDR)
Indonesian PT PMA – There’s no limitation, however, the ratio of the employees should be 3 Local employees to 1 Foreigner.
What’s the document required to set up a Local Nominee Company (PT)/Foreign Owned Company (PT PMA)?
Mostly, the personal data of Shareholder, Director and Commissioner. If the shareholder is an individual: Passport/KTP, if corporate: Article of Incorporation of Mother company.
After the Indonesian company is established what are the mandatory requirements to operate a company in Indonesia?
BPJS Registration / Employment Report / Monthly and Annually Tax Report Submissions /
Since for the Indonesian PT PMA the capital is really large (10 Billion IDR), how can be the initial capital used for company registration in Indonesia?
You have to spend this amount in Indonesia and it can be used for costs such as: renting your office space, inventory, land and, building, work capital, etc. Generally it will take about 1-5 year to fulfill investment realization in Indonesia. The investment realization shall be submitted to Indonesian Investment Coordinating Board (BKPM) by LKPM report quarterly before the permanent business license is obtained. After the business license is obtained, you still have to do the LKPM report bi-annually.
When can I open corporate bank account in Indonesia?
After the company is fully established and you have obtained all the licenses.