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 researchLocal 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 to 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 | Investment plan: Minimum $1.2 million USD.Paid-up capital: at least 25% of investment plan.For some industries required capital is higher. | Micro: Less than Rp.50 million Small:Rp. 50 – 500 millionMedium: Rp. 500 – 10 billionLarge: above 10 billion |
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 |
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Not allowed to earn any revenue |
| Issuing work permits and visas for foreigners |
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| Additional required licenses |
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| Compliance |
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| Time to register |
~10 weeks |
~8 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
Incorporation
Incorporation process involves seven governmental institutions, starting from investment application and finishing with the issuance of principal license (Izin Prinsip) that allows you to start operations in Indonesia.
Indosight manages the entire incorporation process for you and your involvement is required in the beginning to get the neccesary information about your company structure and classification. For some industries you are also required to present in front of the Investment Coordinating Board where you will be accompanied by our senior consultant.
Standard incorporation time is 6-8 weeks.
2
Permanent business license
After the incorporation is completed, you are given 1-3 years (depending on your business classification) to apply for a permanent business license. Permanent business license marks the completion of investment plan and should be acquired as soon as you are eligible for that.
In case your investment plan doesn’t involve any long term investments, such as constructing a plant, you can apply for a perment business license immediately after incorporating.
3
Operational licenses
Some business activities, such as importing or construction, require additional licenses from the respective Ministries. Indosight will advise you whether your business activities require it and then will 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.