Foreign-owned Company Registration in Indonesia
There are several options for company registration in Indonesia for foreign investors. In the tables below we compare different legal entity types available to foreign investors in Indonesia.
Legal entity types in Indonesia
| Type | Limited Liability Company with Foreign Direct Investment | Local limited liability company | Representative office | Representative office for trading |
|---|---|---|---|---|
| Indonesian abbreviation |
PT PMA |
PT |
KPPA |
K3PA |
| Allowed activities | Can conduct all business activities within the business field it got approval for | Can conduct all business activities within the business field it got approval for | Market research, local representation | Local representation |
| Best option for | Foreign companies and investors looking for full or partial ownership in a company operating in Indonesia | Local investors who are not involving any foreign shareholders |
|
Foreign trading companies that don’t need to earn revenue from their Indonesian entity |
| Foreign ownership restriction | Foreign ownership can be anything from 0% to 100% depending on the business classification. Classifications that are not in Negative Investment List can be owned 100%. |
|
No restrictions | No restrictions |
| Minimum capital | Minimum paid-up capital is 2.5 billion IDR (~175,000 USD). For some industries, the required capital is higher. |
|
No capital requirement | No capital requirement |
| Key benefits | Can operate fully as an independent limited liability company within the business classification | Smaller capital requirement and faster process as long as no foreign shareholders are involved. |
|
License can always be extended every 3 years |
| Key disadvantages |
|
No foreign shareholders |
|
Not allowed to earn any revenue |
| Issuing work permits and visas for foreigners |
|
|
|
|
| Additional required licenses | Additional operating licenses needed for some industries | Additional operating licenses for some industries | Representative office needs to be extended every 3 years | |
| Compliance |
|
|
|
|
| Time to register |
~2 weeks |
~2 weeks |
~6 weeks |
~6 weeks |
| Set up with Emerhub |
Watch Marlissa Dessy explaining key aspects of company registration in Indonesia
Process of foreign-owned company registration in Indonesia
1
Approval of investment
Emerhub will first determine your business activities and the allowed foreign ownership in your industry, as regulated by the Negative Investment List.
Before you can proceed to company registration, you first need to receive approval on your investment from the Ministry of Law and Human Rights.
2
Incorporation
The incorporation process proceeds through the One Single Submission System for most business lines. For some business classifications, however, the regulations differ. After the incorporation process is completed, you will receive an identification number (Nomor Induk Berusaha/NIB) that allows you to operate in Indonesia.
Emerhub manages the entire process on your behalf and your involvement is required only in the beginning to get the necessary information about the structure and classification of your company.
Standard incorporation time is 2 weeks.
3
Operational licenses
Some business activities, such as importing or construction, require additional licenses from the respective Ministries. Emerhub will advise you whether your business activities require it and will then acquire the licenses for you.
Shelf companies
Shelf company is a company without any activities that was specifically created for the purpose of being acquired by an Emerhub client. While the total acquisition process is not shorter than setting up a greenfield company, it provides several benefits:
- Shelf company already has an existing bank account, registered address and has correctly submitted all the necessary reports. This means you will be buying a company with a clean history that you can use to conduct business, participate in tenders, issue invoices etc.
- Shelf company becomes available for doing business immediately after the purchase.
Shelf import companies
Shelf import company is an import company that has already acquired the necessary licenses to begin immediate trading activities. Get in touch with Emerhub to find out whether we have an available shelf import company for your products.
Nominee companies
Nominee company’s shareholders are Emerhub’s legal entities (local companies) and the shares are pledges on your behalf. This is beneficial in the following circumstances:
- Industries where the foreign ownership is restricted or forbidden
- If you don’t wish to own company under your name
Nominee company with proper set of legal agreements is the safest way to have somebody else hold shares in your company. You will have total control over the company and can transfer assets to other legal entities as you wish.
It is much safer practice than trusting local individuals to act as nominee shareholders who hold control over your company and could walk away with your assets at any time.
Get in touch with Emerhub consultants to discuss the most suitable form of legal entity for your business.
