Foreign Direct Investment (PMA-Penanaman Modal Asing) Company is a Limited Liability Company Incorporated in Indonesian territory by a Foreign Investor using Foreign Capital or Joint Venture with Domestic Investor/s. It is the most common presence for a foreign investor who wish to invest and engage in Business Activities in Indonesia. Incorporation of the Foreign Direct Investment (PMA-Penanaman Modal Asing) Company requires to have at least 2 parties holding the shares of the company. These parties can be a legal entity or an individual. The shareholding percentage of the foreign investor/investors must meet requirements listed in Presidential Regulation Number 39 year 2014 on “List of Business Fields Closed to Investment and Business Fields Open with Condition to Investment”. The shareholders must also appoint at least one director and at least one commissioner of the PMA Company. The director serves as management of the PMA Company and has the authority to represent the PMA Company, while the commissioner supervises and provides advice to the director.
How to incorporate a Foreign Direct Investment (PMA-Penanaman Modal Asing) Company in Indonesia? The question is often asked by the potential investors who wish to invest in Indonesia. In accordance with the Regulation of The Chairman of The Investment Coordinating Board No 12 of 2013 Regarding The Amendment of Regulation of The Chairman of The Investment Coordinating Board No 5 of 2013 Regarding Guidelines and Procedures for Licensing and Non-Licensing Investment we present the following summary of procedures and documents required for Incorporation of the PMA in Indonesia:
The first step in incorporation of PMA is to:
- Choose a business field for which the company will be incorporated
- Choose a location for the incorporation of the company
- Check whether the field is open for foreign investment (Presidential Regulation No. 39 of 2014)
- Check what is the maximum shareholding percentage is allowed for foreign investors
- Check how much minimum capital is required
The next step in incorporation of the PMA Company is to prepare the following required documents:
- Copy of passport of all Shareholders, Directors and Commissioners of the company to be incorporated.
- KTP (Indonesian ID Card) and Tax ID (NPWP) in case Shareholders, Directors or commissioners are Indonesian Citizen
- In case of corporate shareholder copy of Article of Association of the company/entity.
- Copy of the Lease Agreement if domicile for company is leased or Copy of Certificate in case domicile is owned by shareholders or company.
- Flow chart ranging from raw materials to finished product (for industry).
- Management flow chart of the company.
After this the investor must pay National Non Tax Revenue for the incorporation of PMA Company, which can be paid though BNI (Bank Negara Indonesia) and the information about the tariff can be found in Government Regulation No. 45 year 2014. After the payment the investor must check and order the name for the company which can be done online at http://ahu.web.id/sabh/perseroan/pesannama. The name of the company can be ordered by investor by himself or he can appoint a registered notary for this purpose. For name of the Company and related information please refer Government Regulation No. 26 year 1998 about Use of Name for PT (Limited Liability Company) and its amendments.
Once the name of the PMA Company is approved, the investor can proceed to obtain following document to complete the registration of the company;
- – Invest Permit (PPM- Pendaftaran Penanaman Modal) form BKPM (Indonesia Investment Coordinating Board)
- – Article of Association (Akta Pendirian Perusahaan) from Notary
- – Tax ID Card (NPWP- Nomor Pokok Wajib Pajak) form Regional Tax Office
- – Domicile Certificate (SKDU- Surat Keterangan Domisili Usaha) from District Office
- – Deed of Establishment (SK Menteri Kehakiman) from Ministry of Law and Human Rights
- – Company Registration Certificate (TDP- Tanda Daftar Perusahaan) from Ministry of Trade
- – Permanent Business License (IUT- Izin Usaha Tetap) from BKPM (Indonesia Investment Coordinating Board)
Detailed information about above documents can be found here.
The company is officially registered if all the above document are obtained. In addition to these documents, some other licenses are also required to do business in Indonesia. These licenses depend upon the Line of Business of Company. For example a trading company will require Import and Export Permits, Customs Registration etc. and a company with line of business as construction will require Contractor Service License, Expert Staff Certificate, KADIN Membership etc. These documents can be accordingly processed.