Indonesian private limited company is the most common type of business entity used by both locals and foreigners to do business in the country. It is a standalone legal entity that is separate from their directors and shareholders and ensures their personal assets are protected. Depending on the ownership, there are two types of private limited company in Indonesia:
Foreign limited liability company of more commonly known as PT Penanaman Modal Asing (PT PMA) is a popular option for foreign investors who want to explore investing in Indonesia. A PT PMA’s structure and function are similar to limited liability company (LLC) known in the West.
PT PMA is a limited liability company which any number of shares owned by a foreign business or individual. It is a legal entity through which foreign investors are allowed to conduct commercial activities in Indonesia. A PT PMA can be either 100% foreign-owned or partially foreign-owned, but there are various sectors in Indonesia are completely off-limits or partially closed to foreigners. Investors from ASEAN member states can enjoy a higher percentage of foreign share ownership in certain business fields.
To know if the desired business is in the sector that is open to foreign investment, you can review the list from the Negative Investment List (Daftar Negatif Investasi). If the sector is partially closed to foreign investment, the list will indicate the maximum percentage of foreign ownership is allowed. This means that you will need to have an Indonesia citizen partner to engage in business that particular sector.
A local Indonesian limited liability company, also known as Perseroan Terbatas (PT), is a limited company with complete Indonesian ownership. Such company does not face any restriction on business activities and in comparison with a foreign-owned limited company, its paid-up capital requirements are much lower.
In general, the required capital range from a minimum of IDR50,000,000 up to more than IDR10,000,000,000. The amount of the capital defines the size of the company, which further determines whether the company is eligible to sponsor a work permit for foreign employees.
A Business Identification Number issued by Online Single Submission and Business License – An annual manpower report and company welfare report from the Ministry of Manpower.
Puji Gulo, Business development executive
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