How to Set Up a Local PT Company (PT PMDN) in Indonesia

The ‘Perusahaan Terbatas’ (PT) or Limited Liability Company is the most popular form of business structure in Indonesia. While a foreign-owned PT is called PT PMA, a locally owned PT is referred to as PT PMDN (Domestic PT).

In this article, we will guide you through the steps for setting up a local PT company in Indonesia.

Overview of local PT Company in Indonesia 

A local PT company (PT PMDN) in Indonesia is a limited liability entity where only Indonesian citizens or local legal entities hold shares.

PT PMDN companies in Indonesia benefit from favorable regulatory terms, lower minimum capital requirements, and access to a broader range of business sectors compared to foreign-owned companies (PT PMA).

In comparison to a PT PMA (foreign owned company) which has a minimum capital requirement of at least IDR 2.5 billion (approximately 150,000 USD) , a local PT company has lower minimum capital requirements of IDR 50 million (approximately USD 3,300).

Moreover, the establishment process of a locally-owned PT involves fewer regulatory hurdles than foreign-owned companies.

For instance, local PT companies do not require the involvement of Indonesia’s Investment Coordinating Board (BKPM) for approvals, unlike foreign-owned entities that must meet stricter oversight and reporting standards.

Requirements to Setup a Local PT Company in Indonesia

To set up a local PT company in Indonesia, you will need to meet the following requirements:

• At least two Indonesian shareholders (citizens or entities).
• One director who must be an Indonesian resident.
• One commissioner.
• A registered business address. 
• Minimum paid-up capital of IDR 50 million (~3,300 USD)

How to Register a Local PT Company in Indonesia

The steps to registering a local PT (PT PMDN) company requires regulatory screening to ensure compliance with the layers of Indonesian business laws.

Emerhub can assist you through every step of the registration process, ensuring full compliance and efficiency. Our team of experts are well-versed with local regulations and can help you compile, produce, and certify all necessary information and documents.

Step 1. Reserving the Company Name

When setting up a local PT company in Indonesia, the first step is to reserve the company name with the Ministry of Law and Human rights. Note that the company name must consist of 3 words, be unique, non-offensive,and comply with business naming regulations in Indonesia. 

If you already have a name in mind, use our Indonesia company name search tool to see its availability. Emerhub can also reserve your company through the Online Single Submission System (OSS) on your behalf.

Step 2. Documents Preparation and Submission

This requires preparing and submitting detailed information such as the deed of establishment, articles of association, and the Business Identification Number (NIB) which Emerhub can obtain for you via the OSS system. Note that all official documents must be in Indonesian but unofficial English translations can be attached for reference. 

Step 3. Tax Registration

Your company will need to register for a tax identification number (NPWP) with the Directorate General of Taxes. Upon approval, Emerhub will secure the tax registration certificate and help you set up the company’s tax reporting system to stay compliant.

Step 4. Additional Permits and Licenses

Your company may require specific licenses depending on its industry and your planned business activities. 

Some examples of these licenses are: 

• Trading Business License (SIUP) and Import License (API) for trading companies.
• BPOM License and Halal Certification for food and beverage businesses
• Industrial Business License (IUI) for manufacturing businesses.

Emerhub’s team of experts is well-equipped to manage all necessary license applications for your company, ensuring compliance with Indonesian regulations across various sectors.

Step 5. Post-Registration Requirements

After the company incorporation, the next step is to open a corporate bank account in Indonesia and register your employees for social security programs. 

Moreover, you must ensure compliance with ongoing reporting obligations such as filing monthly and annual tax returns, and submitting financial statements with the Indonesian Financial Accounting Standards (SAK).

Is it Possible for Foreigners to Set up a Local PT Company?

For foreign investors who plan on setting up a local PT company to access restricted industries, they often do so through a nominee arrangement. 

However, using nominee arrangements is risky for foreign investors because they don’t legally own the company. This is why it’s best to work with local experts like Emerhub to navigate the legal nuances and ensure you stay fully compliant.

Register Your Local PT Company (PT PMDN) in Indonesia with Emerhub

Emerhub has been helping companies enter the Indonesian market since 2011. We offer comprehensive support for setting up your local or foreign owned PT company in Indonesia. 

Our local experts handle the entire business setup process on your behalf from incorporating your businesses, to employing highly skilled local talents, and navigating through complex local regulations.

Ready to incorporate your business in Indonesia? Fill out the form below to discuss your needs and plans with our experts.