To establish a PT PMA (Perseroan Terbatas Penanaman Modal Asing) in Indonesia

To establish a PT PMA (Perseroan Terbatas Penanaman Modal Asing) in Indonesia, which is a limited liability company with foreign investment, you will need to navigate through several legal and administrative processes. Here's a general guide on what you'll typically require:

• Business Plan: Draft a comprehensive business plan outlining your company's objectives, target market, products or services, marketing strategies, and financial projections.
• Legal Requirements:
• Obtain a deed of establishment (akta pendirian) drafted by a public notary.
• Obtain approval from the Indonesia Investment Coordinating Board (BKPM) for foreign investment.
• Verify if there are specific industry regulations or permits required for your business sector.
• Company Registration:
• Register your company with the Ministry of Law and Human Rights through the Online Single Submission (OSS) system.
• Obtain a taxpayer identification number (NPWP) from the tax office.
• Register with the Ministry of Manpower for employee recruitment.
• Register with the Social Security Agency (BPJS) for health insurance and pension programs for your employees.
• Capital Requirements: Ensure you have the minimum required capital as per Indonesian regulations, which may vary depending on your business sector.
• Local Partner: If your business requires it, partner with an Indonesian individual or entity as per the "Negative Investment List" regulations, which outline sectors that have restrictions on foreign ownership.

The Negative Investment List (Daftar Negatif Investasi) in Indonesia outlines the sectors and business activities that are either fully closed or restricted for foreign investment. It is periodically updated by the Indonesian government to reflect changes in economic policies and priorities. The list is governed by Presidential Regulation No. 44 of 2016 concerning the List of Business Fields that are Closed or Conditionally Open to Investment (Peraturan Presiden No. 44 Tahun 2016 tentang Daftar Bidang Usaha yang Tertutup dan Bidang Usaha yang Terbuka dengan Persyaratan di Bidang Penanaman Modal).

The Negative Investment List typically categorizes business activities into three main groups:

• Open Sector: Business sectors where foreign investment is allowed without restrictions or with certain conditions.
• Conditional Sector: Business sectors where foreign investment is allowed subject to specific conditions, such as the maximum percentage of foreign ownership, requirements for local partnerships, or technology transfer.
• Closed Sector: Business sectors where foreign investment is prohibited due to strategic or national security reasons, or where the sector is reserved for Indonesian citizens.

The Negative Investment List aims to regulate foreign investment to ensure that it aligns with Indonesia's economic development goals, protects domestic industries, and preserves national interests. It's essential for foreign investors to review the latest version of the Negative Investment List to determine the feasibility of their investment plans and comply with relevant regulations.

• Business License: Obtain necessary business licenses and permits from relevant government agencies depending on your industry and location.
• Bank Account: Open a corporate bank account in Indonesia.
• Tax Compliance: Understand and comply with Indonesian tax regulations, including corporate income tax, value-added tax (VAT), and other applicable taxes.
• Employment Regulations: Ensure compliance with Indonesian labor laws regarding employment contracts, wages, working hours, and employee benefits.
• Office Space: Secure a physical office space for your business operations, which may be a requirement for registration.
• Translations: Translate all necessary documents into Bahasa Indonesia if they are originally in another language.

Establishing a PT PMA (Perseroan Terbatas Penanaman Modal Asing) in Indonesia involves fulfilling certain personal requirements as well. Here's a list of personal requirements typically needed:

• Nationality: As a foreign investor, you must be a citizen of a country other than Indonesia.
• Passport: A valid passport is required for identification purposes.
• Residency: While you don't need to be a resident of Indonesia to establish a PT PMA, you may need to visit Indonesia during the registration process and for other administrative matters.
• Legal Capacity: You must be legally capable of entering into contracts and conducting business activities according to the laws of your home country and Indonesia.
• Financial Resources: You should have the financial resources to invest in the company and meet the minimum capital requirements specified by Indonesian regulations.
• Background Checks: In some cases, particularly for certain sensitive industries, you may be subject to background checks or clearance from relevant authorities.
• No Criminal Record: You should not have a criminal record that would disqualify you from conducting business in Indonesia.
• Authorized Representative: If you won't be personally managing the company in Indonesia, you may need to appoint an authorized representative who meets the above requirements to act on your behalf.

After establishing a PT PMA (Perseroan Terbatas Penanaman Modal Asing) in Indonesia, you'll gain several benefits and rights as a legal entity operating in the country. Here's what you can expect to get after establishing a PT PMA:

• Legal Entity: Your PT PMA becomes a legal entity separate from its owners, which means it can enter into contracts, own assets, incur liabilities, and conduct business activities in its own name.
• Limited Liability: Shareholders' liability is limited to the amount of their investment in the company. Personal assets of shareholders are generally protected from the company's debts and liabilities.
• Access to Indonesian Market: You'll gain access to Indonesia's large and growing market, which offers opportunities across various industries and sectors.
• Foreign Investment Protection: As a foreign investor, your investment in Indonesia is protected by the country's investment laws and regulations.
• Tax Benefits: Depending on your business activities and investment structure, you may be eligible for tax incentives and exemptions provided by the Indonesian government to attract foreign investment.
• Employment Opportunities: By establishing a PT PMA, you can create employment opportunities for Indonesian citizens, contributing to economic growth and development in the country.
• Business Expansion: Once established, your PT PMA can expand its operations, open branches or subsidiaries, and engage in mergers or acquisitions within the regulatory framework of Indonesia.
• Brand Recognition: Building your brand presence in Indonesia can lead to increased brand recognition and market share in the region.
• Networking Opportunities: Establishing a PT PMA allows you to network with other businesses, industry associations, and government agencies in Indonesia, facilitating collaboration and business development.
• Contribution to Local Economy: Your PT PMA can contribute to the local economy through taxes, job creation, technology transfer, and corporate social responsibility initiatives.

Overall, establishing a PT PMA in Indonesia provides you with a platform to participate in the country's dynamic business environment, capitalize on market opportunities, and contribute to its economic growth.