Indonesia is known for its bureaucratic environment, so going through the process of company registration in Indonesia must be done with the utmost compliance. There are a few options for registering your company in the Indonesian market, with each having its own advantages and disadvantages.
Company Registration in Indonesia: PT PMA
As a foreign investor, a PT PMA is one of the main options for company registration in Indonesia. A PT PMA is the equivalent of a Limited Liability Company (LLC) in Indonesia. Before starting the registration process, investors should refer to the Positive Investment List that shows which business fields are open to foreign investment.
It is important to note that foreign investors need to invest above IDR 10 billion in their investment plan, including the minimum paid-up capital. This capital is used to obtain a business license, import license, and other licenses specific to the company’s sector. Companies can mention cash or fixed assets such as machinery in the investment plan, excluding land and buildings.
Company Registration in Indonesia: Local PT
Perseroan Terbatas Penanaman Modal Dalam Negeri (PT PMDN), familiarly known as a Local PT, is another type of business entity in Indonesia. However, as the name suggests, Local PT is not an option that foreign investors can choose, as the regulations are designed strictly for Indonesian citizens.
Indonesian citizens do not need to refer their business activities to the Positive Investment List before going through company registration in Indonesia, which appeals to the foreign investors for establishing the Local PT. To start a Local PT, investors should pay a start-up capital of at least IDR 50,000,000.
Company Registration in Indonesia: Representative Office
A representative office might be the solution for foreign businesses before setting up a company in Indonesia. Choosing a representative for foreign company registration in Indonesia is best suited to test the Indonesian market.
However, a representative office cannot have business transactions or any activities involved in generating income. Also, to operate a representative office in Indonesia, the presence of shareholders or directors are not necessary.
A representative office can be established without capital and sponsor work permits for three expatriate managers and obtain multiple entry visas for its expatriate personnel and exemption from exit tax.