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Legal entity types in Indonesia

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Legal entity types relevant for foreign investors in Indonesia

Limited liability company where some or all shareholders are foreigners.

General representative office (KPPA)

Represent parent company and conduct market research, without revenue generation in Indonesia.

Foreign Trade Representative Office (KP3A)

Conduct market research and promotion for foreign trading companies, without direct sales in Indonesia.

Foreign Oil and Gas Representative Office (KPPA MIGAS)

Conduct oil and gas business activities, including partnerships, for foreign companies in the sector.

Foreign Construction Services Representative Office (BUJKA)

Engage in feasibility studies, prepare tenders, and partner in construction projects, for foreign construction firms.

Yayasan (Foundation)

Non-profit organization for social, religious, or humanitarian purposes.

Key facts about doing business in Indonesia

Total population273.8 million1 (4th in the world)
Total GDP1.186 trillion USD2 (16th in the world)
Ease of doing business ranking73rd3
Minimum time to incorporate a company5 days4
Main economic hubJakarta
CurrencyIndonesian Rupiah (IDR)
Main languages spokenIndonesian
English proficiencfy79th, low proficiency5

Annual GDP growth

General overview of the corporate law in Indonesia

Legal framework

Indonesia’s legal system is based on civil law. Foreign investments are typically channeled through a limited liability company (PT), with a specific category for foreign investments (PMA), or through Representative Offices (ROs) which cannot earn revenue.

Corporate structure

General Meeting of Shareholders

The highest decision-making body of a company. Meets at least once a year and consists of shareholders whose voting rights are proportional to their shares.

Board of Commissioners

Commissioners represent shareholders in overseeing the work of the company directors. A company must have at least one commissioner who often is also a shareholder.

Board of Directors

Directors are in charge of the day-to-day management of the company. A company must have at least one director who can be a shareholder but cannot be a commissioner. At least one of the directors needs to be an Indonesian resident.

The only legal entity type in Indonesia that allows foreign shareholders is a PT PMA.

Other (local) legal entity types

The following are other legal entity types that accept only local shareholders. Note that PT and PT PMA are the same legal entity type, the difference is just whether a company has only local or also (some) foreign shareholders.

Limited liability company with local shareholders (PT)

Limited liability company with 100% local shareholders. Depending on the size of capital is divided into micro, small, and large companies.

Commanditaire Vennootschap (CV)

Partnership with both limited and unlimited liability partners, involving active and silent partners.

Koperasi

Cooperative business model based on mutual assistance, suitable for small businesses and communities.

Firma (Fa)

Business partnership with personal liability, formed by two or more individuals.

Persekutuan Perdata (Civil Partnership)

General partnership for joint business activities, with partners sharing unlimited liability.

Badan Usaha Milik Negara (BUMN)

State-owned enterprises, managed by the government to oversee key economic sectors.

Badan Usaha Milik Daerah (BUMD)

Regional Government-Owned Enterprises, established by local governments for regional economic activities.