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Establishing a new PT PMA

Establishing a new PT PMA

The most common option for an overseas company establishing a presence in Indonesia is to set up a Limited Liability Company with foreign ownership (PT. PMA). The first step in establishing a PT.PMA is to determine whether the PT.PMA will be wholyowned or partiallyowned by foreign shareholders.

To establish a PT.PMA, the founding shareholders or their proxies must execute a Deed of Establishment containing the PT.PMA’s Articles of Association (AOA) which must be signed before a Notary and filed for approval to the Ministry of Law and Human Rights (MOLHR). The filing process at the MOLHR will be handled by the Notary.

Once the MOLHR approves the AOA, the PT. PMA must register through the Online Single Submission System (OSS), managed by the Coordinating Ministry for Economic Affairs (CMEA). The OSS System will issue a Business Registration Number (NomorIndukBerusahaor NIB) and Business License.

For some lines of business, company can immediately start its commercial activities after obtaining the Business License. But for company in certain business sector (such as industry, natural resource management, or energy) must secure a Commercial/Operational License before starting commercial activitieseven after obtaining Business License. The Commercial/Operational License will only be issued after a company has met or obtained all the standards, certificates, licenses and/or registrations required for the product and/or service being sold.

The Advantages of Establishing a new PT.PMA are as follows:

The Disadvantages are that establishing a new PT. PMA requires:

• Foreign investors have immediate control over the PT.PMA once it is established.

• Management can be set up to suit the investors’ preferences.

  • Permits, setting up a physical presence (office) and hiring employees which is time-consuming compared to acquiring an existing PT.PMA.
  • Going through an administrative process with government institutions and agencies.

Minimum Capital Requirements

To establish a PT. with foreign ownership (PT.PMA), the minimum investment is IDR 10 billion (about USD 730,000)and the minimum issued share capital is IDR 2.5 billion (about USD 174,000). In each business field, comprising equity capital and indicative loans.

A company is categorized as a PMA as long as any of the shares are held by a foreign citizen or by a foreign company. Therefore, it doesn’t matter if it’s 100%, 51%, or even 1% – as long as it is held  by foreign shareholders or foreign company, it is a foreign-owned company. government institutions and agencies.

Structure

Indonesia recognizes a two-tiered board structure. The Company Law does not regulate the structure of the Board of Directors (BOD) or Board of Commissioners (BOC) in which can be determined by the company’s Articles of Association. However, the laws and regulations relating to specific business sectors may regulate the structure of the BOD and/or BOC (for example: in insurance and banking sectors).

Registration and Establishment Process

Company Set Up Stage 1

1.

Approval of the Company Name at the Ministry of Law and Human Rights.

2.

The Preparation ofthe Company Establishment Deed by the Notary.

3.

Obtaining Letter of Approval of Company Establishment from the Ministry of Law and Human Rights.

4.

Obtaining Letter of Domicile from at the Local Government office.

5.

Obtaining Neighbor’s approval.

6.

Recommendation of Head of Village and District Office.

7.

Obtaining Tax Payer Registration Number (NPWP).

8.

Obtaining Business and or Company License through OSS System.

 

–          NIB (Business Number Identity).

 

–          Operational and Commercial Permit.

 

–          Permanent Business License.

 

Company Set Up Stage 2

1.

Obtaining a Spatial Plan (BKPRD)

2.

Obtaining Environmental Permit (UKL-UPL)

3.

Obtaining Building Permit (IMB)

4.

Obtaining Operational Permit/Business Register of Tourism (TDUP)

5.

Obtaining Alcoholic Beverage Trading Business License (SIUP-MB)

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The Advantages of Establishing a new PT.PMA are as follows:

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