Establishing a PT PMA (Foreign Direct Investment Company)

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WHAT IS PT PMA?
PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a limited liability company established under the laws of Indonesia. In a PT PMA, Foreigners in the form of individuals and legal entities can be registered as shareholders. However some business activities requires Indonesian Citizens or legal entities to hold shares alongside Foreigners.

WHO CAN ESTABLISH PT PMA?
Minimum 2 (two) or more Foreign Individuals, Foreign Entities, Indonesian Citizens, and Indonesian Legal Entities are allowed to hold shares in PT PMA. PT PMA is the only allowed form of foreign direct investment in Indonesia by foreign investors.

WHY SHOULD YOU ESTABLISH PT PMA?
PT PMA is established by Entrepreneurs so they can conduct the following activities in Indonesia:

  1. Start doing business in Indonesia as a legal entity with the same rights and responsibilities as any other local company or PT (Perseroan Terbatas).
  2. Apply for business licenses in order to conduct their business directly in Indonesia, such as import, construction, manufacture and industry, consultancy, and other services.
  3. Join and participate in all tenders in Indonesia.
  4. Secure a business entity in Indonesia that is allowed to hold foreign capital directly, or have foreign entities as their shareholders, ensuring a professional and bonafide stakeholding structure for financial backers of entrepreneurs.
  5. Provide direct sponsorship for Business Visa, Expatriate Work Permit (IMTA) and Stay Permit (KITAS) in Indonesia for foreign Executives and Employees assigned in Indonesia.

WHERE TO ESTABLISH PT PMA?
PT PMA can have its office in all over Indonesia. Keep in mind that most administration and license applications for PT PMA are conducted in BKPM (Badan Koordinasi Penanaman Modal) Head Office, which is located in Jakarta.

In practice, many PT PMA own an Office in Jakarta for correspondence and administrative purposes, and also Branch Offices in areas of interest for their business operation.

THINGS YOU NEED TO KNOW ABOUT PT PMA
PT PMA have several characteristics that separates it from Local Company such as PT, which are:

1. ORGANIZATIONAL STRUCTURE
PT PMA must be composed of minimum (2) Shareholders, which can be individuals or companies, foreign or Indonesian. To represent the company in performing all corporate legal actions, there must be at least (1) Director in PT PMA, whose actions are supervised by at least (1) Commissioner.

2. FOREIGN SHARES OWNERSHIP
Shares of PT PMA can be owned up to 100% by foreign investors, pursuant to the Negative Investment List, currently Presidential Decree No. 39 of 2014. Ownership of PT PMA shares are classified based on the company’s business activities, and varies from 0% to 100%.

3. INVESTMENT PLANS
Investors are required to submit an Investment Plan to BKPM before they can incorporate a PT PMA in Indonesia. The Investment Plan is the PT PMA business plan once they are granted approval and are allowed to establish in Indonesia. Once the Investment Plan is realized, then PT PMA is allowed to apply for Permanent Business License (Izin Usaha Tetap) to operate in Indonesia permanently. Before then, PT PMA uses its Investment Plan approval otherwise known as Izin Prinsip as their principle business license in Indonesia, which has the validity period of 1-5 years, depending on the business sectors.

BKPM requires the Investment Plan to be above IDR 10,000,000,000 which is roughly the equal to USD 750,000 to USD 1,000,000 depending on exchange rates.

4. CAPITAL REQUIREMENT
The minimum Capital Requirement for PT PMA is IDR 10,000,000,000, 25% of which must be deposited as Paid-Up capital, which is IDR 2,500,000,000 or equal to USD 200,000 to USD 250,000 depending on exchange rates. Learn more about PT PMA Capital Requirement by contacting SMART for any questions regarding the capital amount and deposit procedure.

5. LICENSE REQUIREMENT
License Requirement is specific for each selected industry. Some business activities require special licenses or technical recommendations before the PT PMA can commence operations. Others may commence select operational activities immediately after incorporation.

HOW CAN SMART LEGAL CONSULTING HELP YOU?

SMART Legal Consulting is an Indonesian Corporate Legal Services firm. We assist investors in establishing their business in Indonesia through various forms of investment, including setting up Perseroan Terbatas (PT), both local PT and PT PMA. Our knowledge, experience, and connections makes us the law firm to be your legal partner in Jakarta, managing your investments in Indonesia.

If you have any questions about PT PMA and its requirements, or want to book a consultation for assistance, you can arrange a meeting with SMART Legal  Consulting at:
E: info@smartcolaw.com
H:+62821-1234-1235

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