Perseroan Terbatas Penanaman Modal Asing: Understanding the Basics

For international investors looking to establish a presence in Indonesia, one common option is to form a Perseroan Terbatas Penanaman Modal Asing (PT PMA). This type of business entity allows foreign investors to legally invest in Indonesian businesses, with certain limitations and requirements. In this article, we will explore the basics of PT PMA, including its definition, formation process, benefits, and limitations.

What is Perseroan Terbatas Penanaman Modal Asing?

Perseroan Terbatas Penanaman Modal Asing, or PT PMA, is a limited liability company formed by foreign investors in Indonesia. According to the Indonesian Investment Coordinating Board (BKPM), PT PMA is the most common type of business entity for foreign investors in Indonesia. PT PMA allows foreign investors to engage in businesses that are closed to foreign ownership under the Negative Investment List or Daftar Negatif Investasi (DNI).

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How to Form a PT PMA?

Forming a PT PMA in Indonesia requires compliance with various legal requirements and regulations. The process involves several steps, including:

  1. Determine the business activity and legal structure of the company;
  2. Obtain a Deed of Establishment from a notary public;
  3. Obtain a Taxpayer Identification Number (NPWP);
  4. Obtain a Business Registration Number (NIB);
  5. Obtain a Company Registration Certificate (TDP);
  6. Register the company with the Ministry of Law and Human Rights (Kemenkumham);
  7. Obtain a Special Importer Identification Number (API-U) and/or a General Importer Identification Number (API-P);
  8. Register with the Indonesia Investment Coordinating Board (BKPM).

The entire process may take up to several months to complete, depending on the complexity of the business activity and other factors.

What are the Benefits of PT PMA?

PT PMA offers several benefits to foreign investors looking to invest in Indonesia, including:

  • Ability to engage in businesses that are closed to foreign ownership under the DNI;
  • Protection of personal assets through limited liability;
  • Ability to repatriate profits and capital;
  • Access to government incentives and facilities;
  • Ability to hire foreign workers with the necessary work permits.
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What are the Limitations of PT PMA?

PT PMA is subject to several limitations and regulations, including:

  • Foreign ownership restrictions under the DNI;
  • Minimum capital requirement of IDR 10 billion (approximately USD 700,000);
  • Requirement to hire a certain number of Indonesian workers;
  • Requirement to report periodically to the BKPM and other government agencies;
  • Restrictions on certain business activities, such as banking, insurance, and certain professions.

Conclusion

PT PMA is a popular choice for foreign investors looking to establish a presence in Indonesia. While the formation process is complex and time-consuming, the benefits of PT PMA can outweigh the limitations for those willing to comply with the regulations. Understanding the basics of PT PMA is crucial for international investors looking to invest in Indonesia, as it enables them to make informed decisions and avoid potential legal and financial risks.

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