This article provides a general overview of 4 (four ) stages that must be completed by foreign investor to establish a PMA company in Indonesia.
Stage 1 : Make a Business Plan
Before setting up a PMA Company, it is important for Foreign Investor to make a business plan by determining business activity and make a reference to Negative Investment List 2016 (NIL 2016) as well as related laws and regulations.
NIL 2016 will guide Foreign Investor to know the shares limitation of the Foreign Investor in a PMA Company. Meanwhile, related law and regulations determine the scope of business allowed to be carried by the PMA Company.
Stage 2: Signing of Articles of Association (AoA) of PMA Company and Obtaining Approval from Minisry of Law and Human Righs
- Foreign investor is only allowed to have business in Indonesia in form of Limited Liability Company (“LLC) established under Indonesian law. PMA Company establishment in Indonesia is marked by the signing of Articles of Association of the PMA Company by the initial shareholders (Founders) and the issuance of Ministry of Law and Human Rights Approval.
The AoA of PMA Company shall be in form of notarial deed and contains at least the following matters:
- Name, Domicile, Business Line and Purpose of the PMA Company;
Name of the company must consist of three words. Example: PT Personal Collection Indonesia
- Provision regarding General Meeting of Shareholders, Directors and Commissioners;
A PMA Company shall have at least 2 (two) shareholders, 1 (one) Directors and 1 (one) Commissioners.
- Capital Injection
Minimum capital that should be fulfilled by the PMA Company is as follows:
| Authorized Capital | >IDR 10,000,000,000 | |
| Issued and Paid Up Capital | IDR 2,500,000,00 | Within a year since the PMA Company obtained its Business License, it must must increase the Issued and Paid Up Capital to be more than IDR 10,000,000,000 |
| Note: Total nominal of shares of Foreign Investor shall not below IDR10,000,000 (ten billion Rupiah). | ||
- Any other matters agreed by the founder of the PMA Company.
- Notary then will then assist the AoA of PMA company to the Ministry of Trade (MoT) for obtaining MoHLR Approval.
- Once the MoLHR Approval is obtained, PMA Company should then proceed to:
- obtain a Letter of Domicile (SKDP) from the relevant regional government; and
- open bank account in Indonesia.
- All inflows of funds from offshore for the foreign investment should be remitted PMA’s bank account, as this will provide a clear record that the foreign funds have in fact entered Indonesia.
- The evidence of capital remittance should then be submitted to the Notary, so that the notary can proceed to obtain approval from the Minister of Law and Human Rights for the approval from the MoLHR.
Stakeholders in this stage:
MoLHR, Notary, District One Stop Service Office
Stage 3 : Acquiring Single Business Identity Number (NIB)
After the PMA Company is established, the PMA Company then must make an account to the One Single Submission (OSS) portal for acquiring Single Business Identity Number (Nomor Induk Berusaha). The NIB is an important documents as it serves as Investment Registration Certificate and Company Registration Certificate which two of important documents to apply for Business and Operational License.
To register on OSS and obtaining NIB, the PMA Company shall fill some information, for example:
- Investment Value
Investment Value of PMA Company shall be more >10,000,000,000 that may be sourced from capital of the Company and/or retainer earning. Apart from that, the PMA Company also must give a detail the amount of Fixed and Quarterly Working Capital.
2. Sales Plan
3. Etc
Stakeholders in this stage : OSS Body
Stage 4 : Acquiring Business and Operational License
After obtaining NIB and the PMA Company ready to carry out its business, the PMA Company may apply for Business License to the related government institutions . According to the current situation in Indonesia, the business license for PMA Company can be applied to 3 (three) institutions, namely :
- OSS Body (OSS Portal)
Since the issuance of Government Regulation No.20 on Electronic Integrated Business Licensing Services (GR No. 24/2018), all Business License listed on the Annexure of GR No.24/2018 shall be applied to the OSS Body. License may be issued less than 1 (one) day as long as the PMA Company fill in the data correctly and make some statements of his obligations as set out by the laws and regulations. However, the license will only come into effect if the PMA Company fulfils its commitments. GR No. 24/2018 reflects the Government’s objective to shift from its pre-commencing supervision system to post-commencing supervision.
Trading License for Export-Import and Distributor are included on the scope of GR No.24/2018.
- Indonesia Investment Coordinating Board (BKPM)
Business licenses that can be submitted to the BKPM is limited to the license to open a Representative Office of Foreign Company (KPPA), other than in the oil and gas, trade and construction sectors; License to open a Branch Office, other than in the trade and transportation (transportation arrangement services) sectors and housing sector business license.
- Directly Submit the Application to Specific Ministry Supervising the Business Activity
Business license that has not included on the scope of GR No.24/2018 and BKPM shall be submitted to the relevant ministry. For example, based on Ministry of Trade Regulaton No. 13/M-DAG/PER/3/2006 on General Provision and Procedures of Direct Selling Activity License (Permendag No.13/2006), SIUPL shall be submitted to Directorate General of Trading Ministry of Trade Republic of Indonesia.
