Key Highlights:
- Understanding Company Registration in Indonesia
- Know Types of Business Entities in Indonesia
- Why Choose to Register a PT PMA Company as A Foreigner?
- The Shareholder Structure Of A PT PMA
- How to Register a Company (PT PMA) in Indonesia?
- Requirements to Setting Up a PMA Company in Indonesia
Indonesia offers compelling opportunities for foreign investors. The nation boasts a large and youthful population, burgeoning domestic consumption, strategic positioning in Southeast Asia, and abundant natural resources. The government has progressively liberalised investment rules: since the implementation of the Omnibus Law and Positive List, most sectors now permit 100% foreign ownership, including formerly restricted ones like telecoms, transportation, and energy. Investors are especially active in manufacturing and electric vehicle supply chains—Indonesia is now a leading steel, smelting, and nickel hub, pivotal for battery production.
The country’s macroeconomic backdrop remains relatively resilient. In 2024, the country posted a solid GDP growth of around 5.0%, driven by strong domestic demand, tourism, and export recovery. By the second quarter of 2025, growth accelerated further to approximately 5.12%, the fastest pace in two years, reaffirming investor confidence.
Additionally, inflation has stayed well-controlled within the target corridor—averaging around 2.3% in 2024—highlighting effective monetary coordination.
In the first quarter of 2025, foreign direct investment (FDI) inflows soared to about US$13.7 billion, marking a notable 12.7% year-on-year increase, particularly in sectors like mining, smelting, infrastructure, and logistics.
Understanding Company Registration in Indonesia
Registering your company in Indonesia remains the most effective way to gain legitimacy, build trust with local stakeholders, and fully participate in the market. Registered legal entities offer permanence, legal protection, and access to sectors that are otherwise restricted. In short, while the legalities can be a hurdle, they also act as the gateway, and registering a company is the most strategic and secure way for foreign investors to plant their roots in Indonesia.
Although Indonesia recently centralised all the legalities processes through a system called OSS, setting up a company in Indonesia are still openly perceived as a hurdle when entering Indonesia.
The country is known to have a complex regulatory environment, with multiple agencies involved—such as the Ministry of Law and Human Rights, the Investment Coordinating Board (BKPM), Tax Office and local authorities—all of which can introduce additional layers of procedure. Issues like foreign ownership restrictions, sector-specific limitations on investment, and the need for permits or licenses can be time-consuming to navigate.
Note: A professional Business Setup & Legal Consultant will help you keep in track of Indonesia’s regulatory updates, guiding you through, from a correct registration processes to navigate the local tax and permit regulations.
Types of Business Entities in Indonesia
PT Company (Perseroan Terbatas)
A PT, or Perseroan Terbatas, is the most common business entity for Indonesian citizens. It is a limited liability company that requires at least two shareholders, who may be individuals or corporate entities. Shareholders’ liability is limited to the amount of capital they invest, providing a safeguard against personal financial risk. PTs are widely used by local entrepreneurs and small-to-medium enterprises (SMEs) that aim to operate within Indonesia’s domestic market. However, PTs are not open to foreign ownership, making them exclusive to Indonesian nationals.
PT PMA (Foreign-Owned Company)
For foreigners seeking to do business in Indonesia, the PT PMA is the most suitable and legally recognized structure. It allows foreign investors to conduct commercial activities, generate revenue, and participate in Indonesia’s growing economy. PT PMAs are regulated by the Ministry of Investment (BKPM) and must comply with Indonesia’s Positive Investment List, which outlines which sectors are open to foreign investment and to what extent. Setting up a PT PMA requires a minimum investment plan of IDR 10 billion (around USD 650,000), with at least 25% as paid-up capital. Despite higher entry requirements, PT PMAs offer full operational rights and profit-making opportunities, making them the preferred choice for international businesses.
Representative Offices
Although representative offices cannot directly conduct sales or generate revenue, they play an important role for foreign businesses exploring the Indonesian market. These offices are established to test the waters, conduct market research, and build relationships before committing to a full PT PMA. The main types include:
- KPPA (Foreign Company Representative Office): Suitable for companies wishing to establish a presence and oversee business activities without engaging in direct sales.
- KP3A (Foreign Trading Representative Office): For foreign trading firms to represent overseas products or services, focusing on promotion and networking.
- BUJKA / KPJPTLA (Foreign Construction Services Representative Office): For foreign construction companies participating in large projects, usually in collaboration with local firms.
- Electricity Supporting Services Representative Office: For foreign businesses in the energy sector, particularly those offering technical assistance and consultancy in electricity-related projects.
While these offices cannot book profits directly, they are profitable in the long run as strategic stepping stones for future business expansion through a PT PMA.
Start Investing for Business in Indonesia: Why Choose to Register a PT PMA Company as A Foreigner
Indonesia is one of the fastest-growing economies in Southeast Asia, with a large domestic market, abundant natural resources, and a government actively encouraging foreign investment. For foreigners who want to invest and operate in Indonesia, the PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the most secure and recognized legal vehicle.
Business Setup for Full Legal Recognition of Foreign Ownership
Indonesia’s foreign-investment vehicle, the Perseroan Terbatas Penanaman Modal Asing (PT PMA), allows overseas investors to hold a controlling stake in local companies. Unlike standard PT entities, which are generally restricted to Indonesian shareholders, PT PMAs permit majority or even 100% foreign ownership in eligible sectors, offering greater managerial control and flexibility.
Access Indonesian Market Access
PT PMAs can enter a wider range of industries than locally owned firms. Sectors such as telecommunications, transportation, healthcare and e-commerce — often limited for domestic PTs — are open to foreign participation under PT PMA structures, expanding opportunities in one of Southeast Asia’s largest economies.
Legal Protection
As formally registered entities, PT PMAs enjoy protections under Indonesian law, covering property ownership, intellectual property, contractual rights and access to dispute resolution. The framework is designed to provide certainty and safeguard the interests of foreign investors.
International Standing
Operating through a PT PMA can enhance a company’s credibility in Indonesia. The legal recognition of this structure signals compliance with local regulations and can strengthen a firm’s reputation with partners, clients and government authorities.
The Structure Of A PT PMA
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the main legal entity that allows foreign investors to establish and operate a business in Indonesia. Its structure is similar to a limited liability company, but with specific rules regarding foreign ownership.
A PT PMA must have the following structure:
1. Shareholders (Pemegang Saham)
- At least 2 shareholders are required (can be individuals or corporate entities).
- Foreign investors can own up to 100% of shares in many sectors, depending on the Positive Investment List.
- Shareholders’ liability is limited to their investment amount.
2. Board of Commissioners (Dewan Komisaris)
- Acts as the supervisory body.
- At least 1 commissioner is required.
- Commissioners do not handle daily operations but supervise the directors and represent shareholders’ interests.
- Foreigners can be appointed as commissioners.
3. Board of Directors (Direksi)
- Responsible for daily management and legally represents the company.
- At least 1 director is required.
- If foreigners serve as directors, they must obtain a KITAS (work and stay permit).
- Some sectors may require at least one Indonesian director.
Capital Investment Structure
The Indonesian government requires a minimum total investment plan of IDR 10 billion (~USD 650,000) for establishing a PT PMA.
Out of this, at least 25% (IDR 2.5 billion, ~USD 165,000) must be paid-up capital at the time of establishment.
The investment plan should be allocated for working capital, assets, and operational expenses as declared in the company’s business plan.
Safe Positions for Foreign Investors
Foreign investors can safely hold the following roles in a PT PMA:
Shareholder:
- Foreign individuals or companies can legally own shares (up to 100% in open sectors).
- This is the safest position because liability is limited to the value of shares owned.
Commissioner:
- A foreign investor may act as a commissioner.
- Commissioners oversee but do not directly manage daily operations, reducing personal risk.
Director:
- Foreign investors can also serve as directors if they obtain an Investor KITAS (Index 313/314).
- This allows them to manage the company directly.
- However, this role carries greater responsibilities and legal obligations.
How to Register a Company (PT PMA) in Indonesia?
Company Name Search and Reservation
Foreign investors must propose up to three company names to the Ministry of Law and Human Rights. Names should be unique, not already in use, and must comply with Indonesia’s naming regulations.
Drafting the Deed of Establishment
A local notary prepares the Deed of Establishment (Akte Pendirian), which sets out details such as company name, business activities, shareholding structure, and articles of association.
Legalisation by the Ministry of Law and Human Rights (MoHLR)
The notarial deed is submitted online via the Ministry’s system. Once approved, the Ministerial Decree of Legal Entity Status is issued, granting the PT PMA official legal standing.
Obtain a Tax Identification Number (NPWP)
The company must register with the Indonesian Tax Office to obtain a Taxpayer Identification Number (Nomor Pokok Wajib Pajak – NPWP), required for taxation purposes.
Secure a Business Identification Number (Nomor Induk Berusaha – NIB)
Through the Online Single Submission (OSS) system, companies obtain an NIB, which serves as the company’s business license, registration number, import identification number, and customs identification number.
Apply for a Business License
After securing an NIB, companies must apply for a Business License through OSS. The type of license depends on the sector and scale of operations.
Obtain a Commercial or Operational License (if required)
For certain regulated sectors — such as trading, construction, energy, or transportation — an additional Commercial or Operational License may be required before business activities can commence.
Requirements to Setting Up a PMA Company in Indonesia
To register a PT PMA Company(Foreign Investment Limited Liability Company) in Indonesia, a business should provide the following required documents:
- At least two shareholders, one should be a foreigner and one local.
- Identity and contact details of Company Shareholders, with requirements as follows:
- Indonesian Individuals would require KTP (ID Card) and taxpayer identification number (NPWP)
- Foreign individuals will require a valid passport
- In addition, Indonesian Companies will require a copy of the Article of Establishment, the Approval letter from the Ministry of Law and Human Rights, a Domicile Letter, a Tax ID, and other supporting licences. To understand more about the documents you need to register your PT PMA, kindly contact us here for a free consultation.
- Foreign Companies should also provide a copy of the Article of Association in English or its translation in Bahasa Indonesia from a certified translator.
- Identity and Contact details of Company Directors and Commissioners:
- Indonesian Directors and Commissioners must provide KTP, NPWP, email and phone number
- Foreign individuals should provide a valid passport, email and phone number.
- Copy of Lease Agreement between company and building management.
Specific Requirements for Paid-Up Capital required for the establishment of a PT PMA
The following specific provisions apply to Foreign Direct Investment Companies (PT PMA) if they are keen to invest in Indonesia:
- Applicable to large-scale enterprises: Not applicable to micro, small, and medium enterprises.
- Open to foreign ownership: Only applies to business activities that permit foreign ownership.
- Minimum capital ownership: PT PMA entities are classified as large-scale enterprises and must adhere to a minimum investment value of at least IDR 10 billion (unless otherwise stipulated by law) (Article 12 paragraphs (1) and (2) of BKPM Regulation 4/2021).
- Minimum paid-up foreign capital: PT PMA requires a minimum paid-up capital of at least IDR 10 billion (unless otherwise stipulated by law) (Article 12 paragraph (7) of BKPM Regulation 4/2021).
FAQ: Common Questions About Registering A Company in Indonesia
1. What is the difference between a Virtual Office and a Representative Office?
| Aspect | Virtual Office | Representative Office (RO) |
| Purpose | Provides a legal business address and basic office facilities (mail handling, call answering, meeting rooms). | Allows a foreign company to establish a legal presence in Indonesia for non-revenue activities (market research, promotion, liaison). |
| Legal Status | Not a legal entity, only a business domicile service. | A legal entity recognized by the Indonesian government (but limited in activities). |
| Business Activities | Cannot conduct commercial transactions, only administrative functions. | Cannot generate revenue directly, cannot issue invoices, only support the parent company’s interests. |
| Ownership | Typically used by local or foreign companies as a registered address. | Owned and fully controlled by a foreign parent company. |
| Setup Cost & Process | Lower cost, faster setup. | Higher cost, requires approval from the Ministry of Investment/BKPM. |
| Best For | Startups, SMEs, or foreign firms testing the market with minimal costs. | Foreign companies planning to study the Indonesian market, build networks, or prepare for a future PT PMA. |
2. How much does it cost to register business entities in Indonesia?
The cost of registering a business in Indonesia depends on the type of entity, the required capital, and professional service fees. For a local PT (Perseroan Terbatas), the government registration fees are relatively affordable, but legal and notarial services usually add to the total cost, ranging from IDR 10–20 million (approx. USD 650–1,300).
For a PT PMA (Foreign-Owned Company), the government requires a minimum total investment plan of IDR 10 billion (about USD 650,000), with at least 25% (IDR 2.5 billion) paid-up capital. On top of that, professional fees for company establishment, licensing, and legal compliance may add another USD 3,000–8,000, depending on the complexity of the business sector and required permits.
Additional costs can include business licenses, office rental (physical or virtual), and tax registration. Representative Offices generally have lower costs compared to PT PMAs, but they cannot conduct revenue-generating activities.
3. What is the minimum capital investment required for a PT PMA?
To establish a PT PMA (Foreign-Owned Limited Liability Company) in Indonesia, shareholders must present a minimum total investment plan of IDR 10 billion (approximately USD 650,000). At least 25% of this amount (around IDR 2.5 billion) must be paid up as initial equity at the time of incorporation. The capital investment plan should clearly outline how the funds will be used to support the company’s operations in Indonesia.
4. Does Indonesia have a Negative Investment List?
Yes. Indonesia regulates foreign investment through the Positive Investment List (Daftar Prioritas Investasi), which replaced the older Negative Investment List (DNI) in 2021.
- Fully open sectors: Certain industries are 100% open to foreign ownership.
- Restricted sectors: Some industries require local partnerships, licensing, or have limits on foreign shareholding percentages.
- Closed sectors: A small number of sectors remain closed to foreign investment (usually those related to defense, security, or sensitive natural resources).
The list is updated periodically to attract more foreign investors while protecting key national interests. Businesses should always check the latest version of the list or consult with legal advisors before making investment decisions.
5. Does a foreign business need to register a PT PMA to open a Representative Office?
No. A foreign business does not need to establish a PT PMA to set up a Representative Office (RO) in Indonesia. A Representative Office is a simpler legal entity designed for non-commercial purposes, such as conducting market research, promotional activities, and building partnerships on behalf of the parent company.
However, since an RO cannot conduct sales or generate revenue in Indonesia, businesses that plan to engage in commercial transactions must eventually register a PT PMA.
6. Can the ownership in a Foreign Investment Company be represented?
Ownership in a PT PMA must comply with Indonesian regulations, which vary depending on the business sector. While foreign shareholders can be represented, arrangements such as nominee agreements (where a local holds shares on behalf of a foreigner) are generally not recognised under Indonesian law and may be considered legally risky.
For industries listed with foreign ownership restrictions under the Positive Investment List, foreign investors may need to partner with local shareholders. To ensure compliance and avoid legal complications, it is highly recommended to consult with qualified legal and corporate advisors in Indonesia.
7. Which visa is required for investing in Indonesia: a Business Visa or an Investor Visa?
If your goal is to make an investment and manage a business in Indonesia, you will need an Investor Visa (KITAS Investor Visa).
A Business Visa is a permit intended for short-term activities, such as attending meetings, conferences, seminars, or exploring business opportunities. Importantly, a Business Visa does not allow you to work, earn income, or actively run a business in Indonesia.
An Investor Visa (Index 313/314), on the other hand, is specifically designed for foreign investors who establish a PT PMA (Foreign-Owned Limited Liability Company) in Indonesia. This visa allows you to stay long-term, act as a company director or commissioner, and manage daily operations of the business. Additionally, investor visa holders are exempt from the usual work permit (IMTA) requirement.
Why Choose to Navigate Your Company Incorporation in Indonesia with LMI Consultancy
Establishing a business in Indonesia can be complex, involving multiple government bodies, strict regulations, and evolving compliance requirements. LMI Consultancy provides the expertise, local knowledge, and hands-on support needed to streamline the process, guiding through choosing the right legal entity (PT, PT PMA, or Representative Office) to handling company registration, tax setup, and licensing. With a proven track record of assisting both local entrepreneurs and foreign investors, LMI ensures your business complies with Indonesian law while saving you valuable time and resources.
Moreover, LMI Consultancy acts as a strategic partner, guiding you through the Positive Investment List, capital requirements, and immigration regulations such as Investor KITAS. By working with LMI, you gain a trusted advisor who simplifies bureaucracy, mitigates risks, and provides ongoing compliance and operational support, so you can focus on building and growing your business in Indonesia with confidence.
