When it comes to starting a business, there are a variety of options available. Two popular choices in Indonesia are to either establish a PMA (Penanaman Modal Asing) or a PT (Perseroan Terbatas). While these may seem similar at first glance, there are important differences that every business owner should be aware of before making their decision.
What is a PMA?
A PMA is a foreign investment company, meaning it is owned in part by foreign investors. To establish a PMA, the foreign investors must apply for a business license with the Investment Coordinating Board of Indonesia (BKPM). One of the benefits of establishing a PMA is that foreign investors are able to own up to 100% of the company’s shares.
However, there are also some restrictions on the types of businesses that can be established as a PMA. For example, certain industries, such as retail and distribution, require a local partner to hold at least 51% of the shares.
What is a PT?
A PT is a limited liability company, meaning it is owned by shareholders who are only liable for the company’s debts up to the amount of their investment. To establish a PT, the founders must apply for a business license with the Ministry of Law and Human Rights.
One benefit of establishing a PT is that there are no restrictions on the types of businesses that can be established. However, foreign ownership of a PT is limited to 49% of the shares.
Key Differences Between PMA and PT
While both PMAs and PTs are options for starting a business in Indonesia, there are several key differences between the two:
- Foreign ownership: As previously mentioned, foreign investors can own up to 100% of the shares of a PMA, while foreign ownership of a PT is limited to 49%.
- Business restrictions: Certain industries, such as retail and distribution, require a local partner to hold at least 51% of the shares in a PMA. There are no such restrictions for PTs.
- Business scope: A PMA is only allowed to operate in the industries specified in its business license. A PT has no such limitations.
- Investment capital: A PMA is required to have a higher minimum investment capital than a PT.
- Taxation: PMAs are subject to different taxation rules than PTs.
Which One Should You Choose?
Choosing between a PMA and a PT ultimately depends on the specific needs and goals of your business. If you are a foreign investor looking to own a majority stake in your business, a PMA may be the right choice. However, if you are looking to start a business in an industry that requires a local partner, a PT may be the better option.
It is important to carefully consider all of the differences between the two options before making your decision. Consulting with a legal expert can also be helpful in navigating the complexities of starting a business in Indonesia.
Conclusion
Starting a business in Indonesia can be a rewarding endeavor, but it is important to understand the differences between a PMA and a PT before making your decision. While both options have their benefits and drawbacks, choosing the right one for your business can help set you up for success.
