FOREIGN OWNERSHIP LIMITATION IN FOREIGN COMPANY ESTABLISHED IN INDONESIA

CUSTOMS-REGISTRATION-NUMBER
GETTING YOUR CUSTOMS REGISTRATION NUMBER (NOMOR INDUK KEPABEANAN)
February 3, 2017
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MINIMUM PAID-UP CAPITAL TO ESTABLISH PMA COMPANY (PT PMA) IN INDONESIA
February 7, 2017

Foreign investors are allowed to set up their company in Indonesia in the form of PMA Company. Learn more regarding how much ownership foreign investors are allowed to have in the PMA Company, and the requirements for such ownership.


FOREIGN INVESTMENT IN INDONESIA

Pursuant to the Article 1 Paragraph 3 of Law No. 25 of 2007 on Investment (“Investment Law”), Foreign Investment is defined as an investing activity conducted by a foreign investor for the purpose of running business in Indonesia. Foreign Investment can be done either by full foreign investment or joint venture with domestic investors.

Article 5 paragraph 2 further regulates that Foreign Investment must be in the form of a Limited Liability Company (Perseroan Terbatas or PT or “Company”). The following are the ways foreign investors can invest in a Company:

  1. Subscribed to the issued shares at the establishment of Company;
  2. Buy shares issued by the Company;
  3. Other ways in accordance to applicable laws and regulations.

FOREIGN OWNERSHIP OF PMA COMPANY IN INDONESIA

A Company with shares owned by foreign investors is known as a Foreign Direct Investment Limited Liability Company or Perseroan Terbatas Penanaman Modal Asing, commonly known as “PMA Company” in Indonesia. Once there is a single share that is owned by a foreign investor in a Company, it is deemed a PMA Company and must comply with the requirements applicable to PMA Company, including limitations on foreign ownership.

Before establishing a PMA Company, it is important to determine the field of business, because it may affect the amount of foreign ownership applicable for the PMA Company.

 

LIMITATION ON FOREIGN OWNERSHIP IN A PMA COMPANY

Foreign Capital is defined as capital owned by Foreign Country, Foreign Citizen, Foreign Business Entity, Foreign Legal Entity, and/or Indonesian Legal Entity which is owned whether in part or fully by Foreign Parties.

How does the limitation of foreign ownership in PMA Company work? Before you establish PT PMA in Indonesia, in regards to determining the composition of shareholders, you should first verify the Presidential Regulation of Republic of Indonesia Number 44 of 2016 (“Negative Investment List”) regarding List of Closed Business Field and Opened Business Field with requirements in Capital Investment Field.

The following is a Table of Limitation of Foreign Ownership on Foreign Capital Investment based on specific business sectors:

 

No.

Sector

Business Field

KBLI

Max. Foreign Ownership

1.

Agriculture

Agricultural with area of or more than 25 Ha

01121

Maximum 49%

Plantation with area of or more than 25 Ha

01299

Maximum 95%

Agriculture Manufacturing

10411

Maximum 95%

2.

Forestry Captive Breeding of Animals and Plants and Conservation Institutions

01720

Maximum 49%

3.

Energy, Mineral Resources Oil and Gas Construction Services: Platform

09100

Maximum 75%

Oil and Gas Construction Services: Spherical Tank

09100

Maximum 49%

Oil and Gas, Geologic, dan Geophysical Surveying Services

71102

Maximum 49%

Geothermal Surveying Services

71102

Maximum 95%

Offshore Oil and Gas Drilling Services

09100

Maximum 75%

Geothermal Drilling Services

06202

Maximum 95%

4.

Industrial Maintenance and Reparation of Cars

45201

Maximum 49%

5.

Defense and Security Manufacture of Raw Materials for Explosives

20114

Maximum 49%

6.

Public Works Drinking Water Services (Collection, Purification/ Treatment, Supply)

36001

Maximum 95%

7.

Trade Warehousing

52101

Maximum 67%

8.

Tourism and  dan Creative Economy Museum Management

91022

Maximum 67%
ASEAN 70%

Catering

56210

Maximum 67%
ASEAN 70%

Two Stars-Hotel, One Star-Hotel, Non-Star Hotel

55114
55115
55120

Maximum 67%

Motel

93111

Maximum 67%
ASEAN 70%

Impressario Service

90004

Maximum 67%
ASEAN 70%

Karaoke

93293

Maximum 67%

SPA (Sante Par Aqua) Services

96122

Maximum 51%

9.

Transport Land General Freight Transport

49431

Maximum 49%

10.

Communication and Information Wired Telecommunications Services

61100

Maximum 67%

Wireless/Satellite Telecommunications Services

61200
61300

Maximum 67%

Internet Service Providers

61921

Maximum 67%

Data Communication Services

61922

Maximum 67%

Postal / Courier Services

53101
53102
53202

Maximum 49%

Electronic Trade Transaction Providers

00000

Maximum 49%

11.

Finance Investment Finance Company

64929

Maximum 85%

Life Insurance Company

65111

Maximum 80%

Guarantees Company

64993

Maximum 30%

12.

Manpower Domestic Employment Services for Indonesian Personnel (Registration, Recruitment, Formalities, Lodging for Pre-Departure Orientation, Departure, Placement and Repatriation)

78101

Maximum 49%

Supply of Workers (Process of Registration, Recruitment, Formalities (inter alia, employment agreements), negotiation with providers, to employ workers, such as: cleaning services, security services, catering services, and other support services)

78200

Maximum 49%

Job Training

85499
85492
85493
85494

Maximum 67%

13.

Health Manufacture of Patent Medicines, Medical Devices

21012

Maximum 85%

Medical Devices Testing Institutions

71205

Maximum 67%

Hospital

86103

Maximum 67%,
ASEAN 70%

Wholesale of Medical Devices

21012

Maximum 49%

Referring to the above table, there is limitation of foreign ownership in a certain business sectors. In such situations, the remaining shares of the PMA Company must be owned by Indonesian Citizen, or Indonesian Legal Entities.

 

HOW CAN SMART CONSULTING HELP YOU?

To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations.

SMART Consulting is an Indonesian Corporate Legal Services firm. We have assisted foreign investors in establishing PMA Companies in Indonesia with 100% success rate, including assisting them in preparing for BKPM Presentations, and we also assist in providing advisory services for the investors in regards to their business sectors from a legal perspective.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.

E:  info@smartcolaw.com

H: +62821-1234-1235

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