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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
When you conduct business in Indonesia there are various options for setting up a legal entity. Most common is to register a limited liability company (PT PMA) but there are also alternatives in case your capital is limited or you can handle transactions via a foreign entity.
Most common legal entity formats 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 |
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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%. |
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No restrictions | No restrictions |
| Minimum capital |
Investment plan: Minimum Rp. 10 billion (~USD 600,000) Paid-up capital: at least Rp. 2.5 billion (~USD 150,000) |
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. |
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License can always be extended every 3 years |
| Key disadvantages |
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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 licenses required |
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| Compliance |
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| Time to register |
~10 weeks |
~8 weeks |
~6 weeks |
~6 weeks |
| Set up with Emerhub |
