How to Setup PMA in Indonesia?

How to Setup PMA in Indonesia? – Moving overseas can be an exciting opportunity for business people. There are many opportunities to start a new business there. Being abroad can make it better for entrepreneurs, both new entrepreneurs and experienced entrepreneurs trying to do business outside the country.

Keep in mind, not all countries offer the same opportunities and benefits. Before you move, try to do some research before deciding to move and start a new business overseas. So you know what to expect.

In the following, we provide relevant information for setting up PMA in Indonesia.

Definition of PMA

Foreign Investment (PMA) is an activity of investing to do business in the territory of Indonesia by foreign investors, either using fully foreign capital or joint ventures with domestic/local investors.

What is the first step in setting up a PMA in Indonesia?

1. Check the applicable regulations

In some countries, it may be very easy for business people to start a new business there. Before you decide, it’s a good idea to at least know about the local regulations or laws that apply. Indonesia itself provides convenience for business people who will invest in Indonesia.

2. Determine what legal entity you need?

In Indonesia, there are several types of legal entities. Following:

Company (PT PMA) or representative office (KPPA)

If you plan to earn income, profits, or make direct sales in the territory of Indonesia, then you need a PT PMA. If you want to explore business opportunities in Indonesia for your foreign company (through market research, networking, opinion polls etc.) without engaging in commercial transactions, then it is better to set up a representative office (KPPA).

3. Determine what type of business you will run

In Indonesia, there are many types of business fields. Some are open and some are closed.

4. Capital for PMA

The minimum paid-in capital requirements for foreign companies (PMA) have now changed and are regulated in the Regulation of the Investment Coordinating Board (BKPM) No. 4 of 2021 concerning guidelines and procedures for risk-based business licensing services and investment facilities.

Based on Article 12 of the Regulation of the Perka BKPM No. 4 of 2021, explains the minimum investment value provisions for foreign companies (PMA).

On Paragraph 1

The business entity as referred to in Article 9 paragraph (1) letter b which is classified as PMA is categorized as a large business and must comply with the minimum investment value provisions unless stipulated otherwise by the laws and regulations.

On Paragraph 2

The provisions for the minimum investment value for PMA as referred to in paragraph (1), namely the total investment is greater than Rp. 10,000,000.00 (ten billion rupiahs), excluding land and buildings per KBLI business field, 5 (five) digits per project location.

On Paragraph 3

The provisions on total investment as referred to in paragraph (2) are excluded for several business activities. Conditions that are excluded for some activities are as follows:

For wholesale trading business activities, greater than Rp. 10,000,000,000 (ten billion rupiahs) excluding land and buildings, are the initial 4 (four) digits of the KBLI;

For Food and Beverage Services business activities, greater than Rp. 10,000,000,000 (ten billion rupiah) excluding land and buildings in one activity, is per 2 (two) initial digits of KBLI per 1 (one) location point;

Specifically for Construction Services business activities, greater than Rp. 10,000,000,000 (ten billion rupiahs) excluding land and buildings in one activity, per 4 (four) initial digits of the KBLI;

Specifically for Industrial business activities that produce different types of products with 5 (five) digits KBLI in 1 (one) production line, greater than 10,000,000,000 (ten billion rupiah) including land and buildings.

Specifically for property development and business activities, the following provisions apply:

in the form of property in the form of a building as a whole or an integrated housing complex provided that the investment value is greater than Rp. 10,000,000,000.00 (ten billion rupiah) including land and buildings; or

in the form of a property unit not in 1 (one) building as a whole or 1 (one) housing complex in an integrated manner, the investment value is greater than Rp. 10,000,000.00 (ten billion rupiah) excluding land and buildings;

5. Facilities provided to foreign companies (PMA)

Many countries provide special facilities to attract foreign business people who will do business and invest in a country. In Indonesia, the government provides many facilities and incentives for business people who will do business in Indonesia.

6. Understand Tax compliance and reporting

Each state handles taxable business income differently. It is helpful to do some research beforehand, so you know exactly what the tax rate will be and the filing limits and penalties that apply.

7. Check immigration and visa requirements for legal work

Each country has different requirements for foreign residents who wish to live and work in their country. Working in a country is different from just living in a country. Foreign nationals who are going to work are required to have a work-related/appropriate visa, not just a tourist visa.

The Procedure for setting up PMA Company in Indonesia

• Approval of Company Name
• Deed of Incorporation
• Decree from the Ministry of Law and Human Rights
• Registration of Tax ID (NPWP)
• Domicile Letter of company
• Registration Business Identification Number (NIB)
• Registration Other Business Licenses (IU)

Requirements needed to set up PMA in Indonesia?

• Copy of KTP or passport of company founder
• Copy NPWP
• Articles of association, if the share ownership is in the name of the legal entity of the original company
• Email address
• Telp. number
• Pass photo with red background
• Information on management structure and share ownership or capital for PMA founders
• PMA address information
• Copy of IMB or building permit for PMA
• Copy of proof of use of the place of business