This document provides a guide to starting a foreign investment company (PT PMA) in Indonesia. It outlines the key steps which include obtaining necessary approvals and licenses from the Investment Coordinating Board (BKPM) and other relevant departments, establishing the company with a notary, and registering the company on the Online Single Submission (OSS) system. The guide also discusses ongoing post-establishment requirements for PT PMAs such as employment and tax reporting, investment activity reports, and ensuring compliance with Indonesian law.

1. YOUR GUIDE
TO STARTING A COMPANY
IN INDONESIA
2020
• CorporateStructuresAvailable
toForeignersinIndonesia
• RelevantDepartments
CONTENTS
• TheGoverningRegulations
• APTPMADefined
• RequirementsforaPTPMA
• EstablishmentoftheCompany
• RegisteringyourCompanyinOSS
• PositiveImprovementsforForeignInvestmentCompanies
• Whatyoucanexpectpostcompanyestablishment
by InvestIslands
andendorsedby

2. Introduction
PMA GUIDE
Our investors typically take an active interest in thoroughly researching what it entails to make an
investment in a developing country like Indonesia.
We encourage our clients to do their own due diligence. However, we pride ourselves in explaining the
ins and out of Indonesian law and property ownership, so you are fully engaged in the process from
the outset.
With our professional advice and personalized service, the details of Indonesia’s foreign ownership
laws and regulations are easy to navigate and understand, making investment in one of the world’s
most idyllic locations clear and painless.
This guide is the first release of our legal guide to investing in Indonesia. It will include an introduction
to corporate structures and a guide to starting a foreign investment company in Indonesia.
Corporate Structures Available to Foreigners in Indonesia
There are a number of common business entities in Indonesia. The organizational structures available
to enable foreign investment include Limited Liability Companies, Representative Offices, Joint
Ventures and Foreign Branches. These can be established as separate legal entities, as a branch of a
foreign company or as a subsidiary of an existing foreign company.
Company incorporations in Indonesia are subject to ‘The Negative List.’¹ The Negative List sets out the
areas of Indonesian business in which foreigners are and are not allowed to invest. It also sets out the
areas in which foreigners can invest as a joint venture with domestic investors.
The list is published in the Indonesia Standard Business Classification (Klasifikasi Baku Lapangan
Usaha Indonesia - “KBLI”).²
Below, we focus on how to start a Limited Liability Company for foreigners in Indonesia.
1ThelatestDNIissetforthinPresidentialRegulationNo.44of2016regardingtheListofBusinessFields
thatareClosedandBusinessFieldsthatareConditionallyOpenforInvestment(the2016DNI)
2ThelatestKBLIwasissuedin2017
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3. • Capital Investment Coordinating Board (BKPM);³
• Coordinating Ministry of Economic Affairs (Kemenko);4
• The OSS Institution Group;5
• The Financial Services Authority (OJK);6
• The Ministry of Law and Human Rights (MOLHR)7
The Governing Regulations
Capital Investment is governed by the Regulation of the Head of the Capital Investment Coordination
Board Number 5 of 2013 concerning Guidelines and Procedures for Capital Investment Licenses and
Non Licences (“Perka No. 5/2013”).8
The definition of foreign investors and foreign investment is contained in the regulation as follows:
• A foreign investor is defined as a foreign citizen, a foreign business entity or a foreign government
conducting capital investment within the territory of the Republic of Indonesia.9
• Foreign capital investment is defined as any capital investment activity to conduct business
within the territory of the Republic of Indonesia by a foreign capital investor, whether using all
foreign capital or in partnership with a domestic capital investor. ¹0
The main regulation governing the incorporation of business activities in Indonesia is Corporate Law
No 40 Year 2007.¹¹
PMA GUIDE
3BKPMWebsite
4EkonWebsite
5ItiscurrentlyagroupwithintheofficeoftheDeputyofCommerceandIndustryofKemenko,whichisundertheauspicesof
Kemenko.However,article105ofGR24/2018providesthatKemenko’sdutytoimplementtheOSSSystemisonlytoprovidea
graceperiodfortheBKPMtooperatetheOSSSystem.
6SupervisionfallsunderOJKforfinancialservices
7https://www.molhr.gov.bt/molhr/
8GBGIndonesia
9Article1(6)oftheCapitalInvestmentLaw
10Article1(3)oftheCapitalInvestmentLaw
11IndonesiaInvestments:CompanyLawNo40of2007onLimitedLiabilityCompanies
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Relevant Departments

4. Capital Investment Law and Company Law govern both the formation of new companies in Indonesia
by foreign shareholders and the acquisition of existing companies by foreign entities or individuals.
The Unfair Competition Law may be applicable if the acquisition of a domestic company results in
unfair conditions for competition in the market.
For educational purposes, the below is a summary from BDO¹² of the various regulations enacted as
the laws around foreign investment were amended.
• Law No. 25 of 2007 regarding Capital Investment (the Capital Investment Law);
• Law No. 40 of 2007 regarding Limited Liability Company (the Company Law);
• Law No. 5 of 1999 regarding Prohibition on Monopoly Practices and Unfair Business Competition
(the Unfair Competition Law);
• the 2016 DNI;
• Government Regulation No. 27 of 1998 regarding Merger, Consolidation and Acquisition of
Limited Liability Company (GR 27/1998);
• GovernmentRegulationNo.57of2010regardingMergerorConsolidationandShareAcquisitionof
Corporation that May Cause Monopoly Practices and Unfair Business Competition (GR 57/2010);
• Chairman of Central Statistics Body Regulation No. 95 of 2015 regarding Indonesian Business
Fields Classification (the 2015 KBLI) as amended by Central Statistics Body Regulation No. 19
of 2017 regarding Indonesian Business Fields Classification (the 2017 KBLI) (the 2015 and 2017
KBLI are together referred to as the KBLI);
• Government Regulation No. 24 of 2018 regarding Online Integrated Business Licensing Services
(GR 24/2018);
• Chairman of BKPM Regulation No. 6 of 2018 Regarding Guidelines and Procedures for Capital
Investment Licensing and Facilities (BKPM Regulation 6/2018); and
• Chairman of BKPM Regulation 7 of 2018 Regarding Guidelines and Procedures for the Controlling
of Capital Investment Implementation (BKPM Regulation 7/2018).
12BDOisoneoftheworld’slargestnetworksofpublicaccounting,tax,andadvisoryfirms
PMA GUIDE
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5. BKPM Regulation 6/2018 and BKPM Regulation 7/2018 were promulgated and consequently came
into effect on 20 July 2018. They repealed the following regulations:
• Chairman of BKPM Regulation No. 13 of 2017 Regarding Guidelines and Procedures for Capital
Investment Licensing and Facilities (BKPM Regulation 13/2017); and
• Chairman of BKPM Regulation No. 14 of 2017 Regarding Guidelines and Procedures for the
Controlling of Capital Investment Implementation (BKPM Regulation 14/2017).
A PT PMA Defined
Limited Liability Companies (Perseroan Terbatas - PT) may be private or public companies.¹³
When there is foriegn investment, it is referred to as PT PMA.
A PMA, which stands for Penanaman Modal Asing, is a foreign investment limited liability company, a
highly regulated entity in Indonesia. It is a legal business entity for foreigners recognized by Indonesian
law and governed by the Investment Coordinating Board (Badan Koordinasi Penanaman Modal), better
known as BKPM.
100% foreign ownership is allowed, unless the area of business is on the Negative Investment List,
which means a foreign investor can have direct legal control over the company and its business
activities.
This entity provides you with a Foreign Direct Investment (FDI) license which is granted by BKPM.
Acquisition of the license requires full background checks on the company and its directors, an
investmentplan, averifiabletaxnumber(NPWP)plussatisfactionoftheminimumcapitalrequirements.
¹4
All foreign capital investment in Indonesia must be implemented through an Indonesian limited liability
company (PT). A PT with a foreign investor is often referred to as a PMA company.
The term PMA is a reference to the PT’s licence permitting it to have a foreign shareholder.
13Theyaregovernedbythe1996CorporationLawandmanagedbyaBoardofDirectors
14IndonesiaInvestments:EstablishaForeignPTPMA
PMA GUIDE
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6. INVEST ISLANDS | Copyright All Rights Reserved © 2020
Requirements for a PT PMA¹5
1 A minimum total investment of IDR 10 Billion;¹6
Note that unless the business sector is in Real Estate, this investment amount excludes investments in land
and buildings.
2 A minimum in paid up capital of IDR 2.5 Billion, 25% of the IDR 10 Billion projected in
the Investment Plan. This amount is included in the amount of working capital (e.g.
salaries and utilities), machines, and others (such as rental of office, renovation, buying
of transportation assets);
Note that the business sector determines the capital requirement amount, hence the amount could be higher
for certain sectors.
3 The minimum value of equity per shareholder is IDR 10 million;
Note that there are certain exceptions to this rule for certain types of industries and businesses.
4 The percentage of ownership must be calculated based on the nominal value of shares;
5 A minimum of two shareholders are required in any limited liability company;
6 The shareholders can be two individuals, two companies or a mixture of both;
7 A minimum of one director plus one independent commissioner;
8 The director must reside in Indonesia as they are the person authorized to run the day-to-
day business activities; and
9 The commissioner is responsible for seeking accountability reports from the director at
least once a year.
PMA GUIDE
15HeadoftheInvestmentCoordinatingBoardRegulationno5year2013;TheCorporateLawNo40year2007
16TheminimumpaidupcapitalusedtobeIDR10Billion,butthe2017BKPMRegulationseasedthecapitalrequirement

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PMA GUIDE
Establishment of the Company
It will take approximately 30 - 90 days to set up. Here are the required steps:
1 Complete a consultation with a legal professional to ensure the company will comply with
regulations;¹7
2 Conduct an Investment Roadmap exercise to complete the Investment Plan;¹8
3 Complete a Client Intake Form to provide the following:
• Full name
• Copy of passport
• Company name
• The business field classification
• The director/s
• The shareholders
• Local manager as sponsor
• Office address
4 Deed of Establishment
a) Apply for Investment Approval from BKPM;
b) Obtain the standard form of the company deed;
c) Legal proof of payment of the minimum capital and shares issued must be 100% paid up prior to
obtaining Ministry of Law and Human Rights approval;
d) Obtain clearance for the Indonesian company’s name at the Ministry of Law and Human Rights;
e) Notarize company documents before a notary public (PNBP).
5 Deed of Articles of Association to be drawn up by a notary public (PNBP), including:
a) the company’s name and domicile
b) the purposes and objectives and field of business
c) the company’s period of incorporation
d) the amount of authorized capital, subscribed capital and paid up capital
e) the number of shares, classifications of shares if any, including the number of shares for each
classification, the rights attaching to each share and the nominal value of each share
f) the name, position and number of members of the Board of Directors and Board of Commissioners
g) the determination of the place and procedures for holding a General Meeting of Shareholders
h) the procedures for the appointment, replacement, and dismissal of members of the Board of Directors
and Board of Commissioners, and
i) the procedures for the use of profits and allocation of dividends.
17SeeSevenStonesLegalConsultingwebsite 18InvestmentRoadmapsWork–Here’sWhybySevenStones

8. INVEST ISLANDS | Copyright All Rights Reserved © 2020
6 Apply to the Ministry of Law and Human Rights for approval of the deed of establishment;
7 Announcement of the Deed of Establishment in the State Gazette;
8 Obtain Company’s Domicile Letter from the district government (“SKDP”);
9 Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP);
10 Apply for Investment Registration (PI) from Online Single Submission System (OSS)
system;¹9
Note that the PT cannot legally engage in business until the license becomes effective.
11 Obtain a Business Identification Number, or Nomor Induk Berusaha (NIB);²0
12 Apply for relevant operational / commercial licenses;²1
Note that you may require post-licensing commitments.
13 Register with the Ministry of Manpower;
14 Apply for the Workers Social Security Program and Health Insurance Program (BPJS
Ketenagakerjaan dan BPJS Kesehatan);
15 Apply for relevant visa(s);
16 Set up a bank account;
17 Commence business activities.
PMA GUIDE
1⁹ Upon registration, the system will automatically refer to the General Law Online Administration (AHU), a public service platform
thatrecordsallnotarialdeedscontainingtheinformationontheestablishmentofcompaniesandanyrelatedchanges
20PursuanttoGR24/2018
21Abusinesslicence,orIzinUsaha(IU),acommerciallicence,orIzinKomersialOperasional(IKO),dependingonthelineofbusiness;
BusinessentitiesneedtodeterminewhatlicencesarerequiredtobeobtainedbycheckingtheattachmenttoGR24/2018
7

9. INVEST ISLANDS | Copyright All Rights Reserved © 2020 8
Recent legislative changes have further improved the business registration process by virtue of the
Online Single Submission (OSS) system.²³
OSS facilitates business licensing, which includes the activities of the registration and issuance of
permits, information on the compliance with permits, (ie, post-audit requirements), the provision of
information on the obligation to pay certain fees to the relevant technical ministries, and the facilitation
and supervision of licensing administration.
As implementation rolls out, the various departments involved in the process work towards the
integration with OSS.
You will require the following information to register with OSS:
• name and identity number (ID card or passport) of the company’s representative;
• residential address;
• business field, identified by a five-digit KBLI Code;
• location of the capital investment;
• amount of planned capital investment;
• plan of the use of workers;
• business or activity contact number, or both;
• any request for fiscal, customs facilities, and/or other facilities; and
• the tax identification registration number (NPWP) of an individual business executive.
You may also obtain the registration documents for the Employment Social Security (BPJS) and the
Health BPJS certificate of membership, the approval letter of foreign employee utilisation plan and
fiscal incentives.
22 Government Regulation No. 24 of 2018 (GR24/2018) - a non-ministerial institution that implements government affairs in the
sectorofcapitalinvestmentcoordination
23OSSWebsite
PMA GUIDE
Registering your Company in OSS²2

10. INVEST ISLANDS | Copyright All Rights Reserved © 20209
Positive Improvements for Foreign Investment Companies
What differentiates OSS from the previous BKPM process is that all licences are issued
immediately upon application as long as all information is submitted. A key objective of
OSS is to minimise the number of licences to be obtained and it successfully achieves this
objective.
OSS accelerates the business licensing process speeding up the commencement of
business for investors.
BKPM is there to assist investors in compliance with Indonesian Law. Investors should
take the initiative and actively participate in the application process to obtain clearances
from BKPM.
What you can expect post company establishment
• Mandatory Employment Report;²4
• Tax Reporting;
• Working Permits;
• Investment Activity Report (LKPM);²5
• Annual Financial Report (LKTP);²6
• Social security and medical program enrollment for employees (BPJS)
• HR Compliance (such as: payroll, BPJS payment management, recruitment)
PMA GUIDE
24LawNumber7of1981
25LawNumber25Year2007
26 Law Number 03 Year 1992 Concerning Company’s Registration Liability; Government Regulation Number 24 Year 1998
ConcerningCompany’sFinancialInformationasamendedbyGovernmentRegulationNumber64Year1999

11. INVEST ISLANDS | Copyright All Rights Reserved © 2020 1
PMA GUIDE
Conclusion
The investment climate in Indonesia is improving each year. Setting up a foreign investment company
can seem daunting, however with the right professionals in your corner it needn’t be. Investing in
Indonesia through a company is one of the safest options available, allowing you to remove risk and
comply with Indonesian law.
For foreign investors, the best solution in terms of legality, cost and peace of mind is to consult with
experienced professionals to guide you through the motions and ensure your investment roadmap is
clear, long-term and structured.
If you’d like to discuss it further with one of our advisers, please contact us via our website by filling
in an inquiry form and one of our brokers will contact you. Alternatively, you can use our website’s ‘live
chat’ facility.
PMA GUIDE
REFERENCES:
• DoingBusinessinIndonesia
• IndonesiaInvestments
• GuidelinesandproceduresforcapitalInvestmentLicensinginIndonesia
• ForiegnInvestmentReviewIndonesia
• InvestmentRoadmapExplained
PARTNER:

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