“After completing the required documents, the foreign investor needs about 15-20 working days to establish a PT PMA in Indonesia. The essential things in PT PMA establishment are the foreign investor needs to prepare a minimum 2 (two) shareholders, check the business field’s limitation for the foreign capital own, and determine the business location.”
A Foreign Direct Investment (“PMA”) is an investment activity to conduct business in the territory of Indonesia that foreign investors carry out, either using entirely foreign capital or in joint ventures with domestic investors.
I. How Long Does It Take to Establish a PT PMA in Indonesia?
Establishing a PT PMA in Indonesia takes approximately 15-20 working days after completing the requirements documents and information.
II. Checking Business Fields Are There Foreign Capital Restrictions?
Before establishing a PT PMA, the foreigner should check the limitation of the foreign capital owned in the Presidential Regulation No. 49 of 2021 on Amendment of the Presidential Regulation No. 10 of 2021 on the Investment Business Field.
III. What are the Capital Requirements in PT PMA?
PT PMA requires the Paid-Up and Authorized Capital of a minimum of IDR 10 billion, while the total investment value for one line of business is required to be greater than IDR 10 billion.
IV. Prepare Shareholders of a Minimum 2 (Two) Persons/Legal Entity, Company Organizational Structure (One Director and Commissioner), and Business Locations
A company must have at least 2 (two) shareholders. The shareholders consist of individuals and/or legal entities.
Corporate Law in Indonesia adopts a two-level management structure consisting of the Board of Directors and the Board of Commissioners. Each establishment of PT PMA must have at least 1 (one) Director and 1 (One) Commissioner.
The Limited Liability Company Law does not stipulate an obligation for PT PMA to appoint members of the board of directors who are Indonesian citizens; however, it would be better if the PT PMA has at least one Indonesian Director because the foreign director is prohibited to handle the personnel matters. In addition, it will make some of the procedure and bureaucracy of the company runs smoothly.
Please be noted that in the event of appointing a foreign director, a PT PMA should arrange for the work and stay permits of its director in Indonesia. If the foreign director also acts as an investor of the Company with a minimum of IDR 1 billion of registered shares, he/she is eligible to obtain the investor stay permit.
In preparing a business location, specifically for PT PMA, it is not recommended to use an office address using Virtual Office services. BKPM reasoned that PT PMA with large capital ownership should use a representative office instead of a virtual office (Virtual Office).
V. What Documents Will Be Obtained in Establishing PT PMA?
The following documents will be obtained in the establishment of PT PMA:
- Notary Deed of Establishment;
- SK AHU from the Ministry of Law and Human Rights (Kemenkumham);
- NPWP and Certificate of Registration;
- NIB (Business Registration Number);
- Location Permit; and
- SKDP (Domicile) if needed.
VI. Flow of Establishment of PT PMA in General?
Firstly, determine the line of business based on the Indonesian Standard Classification of Business Fields (KBLI).
Then, prepare the complete document of PT PMA’s deed of establishment and obtain a decree from the Ministry of Law and Human Rights. After obtaining approval from the Ministry of Law and Human Rights and getting a legal entity officially, the PT PMA should obtain the Taxpayer Identification Number (NPWP) of the Company.
Followed by the business licensing registration process through the Online Single Submission (OSS) system. Through the OSS system, Business Identification Numbers (NIB), Standard Certificates, and Permits will be issued according to the category of business field.
Then, adjust the Business Location. For the business location, it is adjusted to the spatial layout of the local location, except if the company’s location is in the SEZ (Special Economic Zone).
Finally, fulfilling Other Special Complements, usually related to requests from ministries or agencies related to the sector of the company being run.
VII. Obligation to report investment realization through An Investment Activity Report (LKPM)
Based on Article 15 in the Regulation of the Investment Coordinating Board (BKPM) Number 5 of 2021 concerning Guidelines and Procedures for Supervision of Risk-Based Business Licensing, it is stated that every investment company is obliged to make a report on investment activities and submit it to the Investment Coordinating Board (BKPM), Provincial Investment and One-Stop Service (DPMPTSP) and Regency/Municipal DPMPTSP.
Medium and large business actors are required to submit LKPM reports every 3 (three) months. LKPM must be submitted online through SPIPISE (http://lkpmonline.bkpm.go.id) using the access rights granted by BKPM-RI or through the Reporting menu in the Online Single Submission system (https://oss.go .id).
If the entrepreneur does not submit the LKPM, the entrepreneur may also be subject to administrative sanctions in the form of written or online warnings, restrictions on business activities, freezing of business activities and/or investment facilities, or revocation of business activities and/or investment licensing and/or investment facilities.
Read More: An Export-Import Licensing for PT PMA
Author: Belle Risca Junia
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