Different Types of Business Entities in Indonesia

April 19, 2023April 19, 2023 marym

Indonesia has become a hub for international business in recent years. With a rapidly growing economy and favorable government policies, many entrepreneurs want to establish their businesses in the country. However, before jumping into the Indonesian market, it’s important to understand the different types of business entities available for incorporation. In this blog post, we will delve into the various options for setting up your business in Indonesia and guide you through incorporating your own company. So, whether you’re an established entrepreneur or a budding startup founder, keep reading to learn everything you need about different business

entities in Indonesia!

PT PMA, or Perseroan Terbatas Penanaman Modal Asing, is a popular business entity in Indonesia for foreign investors. This type of company requires at least one shareholder and director who are not Indonesian citizens.

To establish a PT PMA entity in Indonesia, several documents are required, including articles of association, deeds of establishment, investment plans, and other supporting documentation. You must also obtain the necessary licenses and permits from relevant government agencies.

It’s important to note that setting up a PT PMA company can be quite complex and time-consuming. Therefore, professional assistance from legal advisors or incorporation services might be helpful.

If you want to establish a fully foreign-owned company in Indonesia with complete control over its management and operations, PT PMA is an ideal option!

What documents are required for Incorporating a local PT/ PT PMA Entity?

Incorporating a local PT or PT PMA entity in Indonesia involves several legal requirements and documentation. These documents are essential to ensure the legitimacy of your business operations in the country.

Firstly, you must prepare your company’s Articles of Association, which outline the company’s objectives, shareholders’ rights, and management structures. At least two shareholders or directors must sign this document.

Next, you must obtain an approval letter from the Ministry of Law and Human Rights for your proposed company name. This process typically takes around three days but can take up to two weeks, depending on your chosen name’s uniqueness.

You will also have to provide photocopies of each shareholder’s passport and Tax ID number (NPWP). If any foreign shareholders are involved in your company formation process, they must also submit additional documents like business licenses or passports with valid visas.

All companies in Indonesia must appoint a director who holds an Indonesian residency ID card (KTP) and Tax ID number (NPWP).

With these necessary documents ready for submission during incorporation procedures for local PT/PT PMA entities within Indonesia’s regulations framework, it becomes easier to run a smooth business operation without any legal issues.

Procedure to Incorporate an Indonesia Company

Incorporating a company in Indonesia involves several steps that may take up to two months or longer. Firstly, the founders must obtain approval for their proposed company name from the Ministry of Law and Human Rights. Once this is done, they must prepare the Articles of Association (AoA) outlining how the company will be run.

Next, they must gather all necessary documents, including passports and tax identification numbers (NPWP) for each shareholder and director. These papers are submitted with the AoA for approval by a public notary who will draft other legal documents like the Deed of Establishment.

After obtaining these documents, shareholders must deposit at least 25% of their capital into an Indonesian bank account before being issued a Certificate of Incorporation (TDP). Business owners can apply for licenses and permit to operate their businesses legally.

It’s important to note that incorporating a PT PMA entity requires additional documentation, such as Investment Approval from the Indonesia Investment Coordinating Board (BKPM). The process might seem daunting, but working with an experienced legal professional can streamline it significantly while ensuring compliance with all regulations.

Conclusion

Indonesia offers various business entities for investors to choose from depending on their needs and goals. Whether it’s a local PT or a foreign-owned PT PMA, incorporating a company in Indonesia requires careful planning, compliance with legal procedures, and submission of necessary documents. It is important to seek the advice of an experienced professional who can guide you through the process and help you make informed decisions.

By understanding the different types of business entities available in Indonesia and considering factors such as ownership structure, tax implications, liability protection, and capital requirements, among others, investors can set up their businesses confidently, knowing that they have made the right choice for them.