Frequently Asked Questions: #companyestablishment

A KPPA (Kantor Perwakilan Perusahaan Asing) is a representative office of a foreign company — a licensed Indonesian presence that is not a separate company and cannot trade. It exists to represent its parent: market research, liaison with Indonesian partners and buyers, promotion, and preparing for eventual investment.

What a KPPA can and cannot do:

• Can: employ staff, sponsor a KITAS for its chief representative, rent an office, conduct market development, sign nothing that generates local revenue
• Cannot: issue invoices, earn income in Indonesia, import/export in its own name, or execute sales contracts — revenue-generating activity requires a PT PMA

Questions we field most often:

• Can the chief representative be a foreigner? Yes — the chief of a KPPA may be foreign or Indonesian; a foreign chief takes a KITAS sponsored by the office
• Does it file taxes? A KPPA has no corporate income, but it still has obligations: registering for tax, withholding and remitting employee taxes, and filing the returns that apply to a non-revenue entity. A tax-reporting-only package (without full commercial accounting) typically fits
• How does it compare on cost and speed? Establishment is generally simpler than a PMA — there is no capital requirement, because there is no company — making it a low-commitment first step

The honest decision rule: if the Indonesian activity will earn revenue within the planning horizon, establish the PT PMA now and skip the intermediate step; converting later means establishing the company anyway. If the next year or two is genuinely about study, relationships and market development, a KPPA buys presence without capital commitment.

See PT.REP for Okusi’s representative office establishment service.

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A PMA (Penanaman Modal Asing) company is a foreign direct investment entity in Indonesia that allows foreign investors to own and operate a business in the country. Key points about PMA companies include:

• Legal structure for foreign investment in Indonesia
• Allows foreign ownership of businesses, subject to certain restrictions
• Registered through the Online Single Submission (OSS) system, overseen by the Ministry of Investment and Downstream Industry (BKPM)
• Must comply with the Positive Investment List (Presidential Regulation 10/2021, as amended), which replaced the old Negative Investment List (DNI) and opens most sectors to full foreign ownership
• Requires an investment plan of more than IDR 10 billion (approximately USD 600,000) per business classification (KBLI) per location, with minimum paid-up capital of IDR 2.5 billion
• Offers benefits such as the ability to sponsor foreign work permits and conduct business activities across Indonesia
• Subject to specific tax regulations and reporting requirements for foreign-owned entities
• May require local shareholders in a small number of restricted business sectors
• Provides a formal structure for foreign investors to participate in Indonesia’s growing economy

Setting up a PMA company involves several steps, including OSS registration, company incorporation, obtaining necessary risk-based licenses, and ensuring ongoing compliance with Indonesian regulations. It’s advisable to seek professional assistance when establishing and managing a PMA company to navigate the complex regulatory environment effectively.

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The costs associated with setting up and maintaining a PMA company in Indonesia include:

Initial Setup Costs: * IDR 31,525,000 (including VAT) for the complete PMA company setup package, which covers: * Company Incorporation * Business Licensing via OSS (NIB, tax numbers, risk-based licenses) * English Translations of Important Documents * Bank Account Assistance * Free Single Entry Business Visa Sponsorships

Additional Costs: * Professional Shareholder Services (if required): IDR 14,430,000/year * Company Domicile Services: * Available in Jakarta, Bali, and Batam * Starting from IDR 12,000,000/year — subject to strict conditions, including a mandatory Okusi accounting and tax reporting package (a significant additional cost). This is a supervised arrangement for companies that do not yet have a permanent operating address, not a virtual office; see the domicile service pages for the full conditions. * Accounting and Tax Reporting: * VAT companies: IDR 39,405,000/year (including VAT) * Non-VAT companies: IDR 30,525,000/year (including VAT) * Work Permits and Visas: * Complete package (work KITAS/e-ITAS with re-entry permit included, plus RPTKA ratification — the work authorisation that replaced the former IMTA): IDR 16,500,000/year

Ongoing Maintenance: * Costs for maintaining regulatory compliance * Expenses related to accounting and tax services * Human resources and payroll management fees * Corporate secretarial services charges

It’s important to note that these costs may vary depending on the specific needs of your company and any changes in regulations. For the most up-to-date and detailed pricing information, it’s recommended to consult the Okusi Associates price list and website directly.

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Okusi Associates can provide comprehensive assistance in setting up a PMA (Penanaman Modal Asing) company in Indonesia through the following services:

• Investment Planning: Checking the Positive Investment List (Perpres 10/2021 jo. 49/2021) to confirm your business sector is open to foreign investment and advising on any ownership conditions.

• Document Preparation: Assisting with the preparation of required documents such as Articles of Incorporation, Deed of Establishment, and Investment Plan.

• Application Submission: Helping submit the investment registration through the OSS (Online Single Submission) system under the Ministry of Investment and Downstream Industry (BKPM).

• License and Permit Acquisition: Guiding you through obtaining necessary licenses and permits, including:

  • Business Identification Number (NIB)
  • Tax Identification Number (NPWP)
  • Risk-based business licenses via OSS

• Bank Account Setup: Assisting with opening a corporate bank account in Indonesia.

• Social Security Registration: Helping register your company and employees for BPJS (social security and health insurance).

• Ongoing Compliance Support: Providing services for:

  • Accounting and Tax Reporting
  • Payroll Management
  • Corporate Secretarial Services

• Work Permits and Visas: Assisting with obtaining ITAS/KITAS stay permits and RPTKA ratification (the work permit) for foreign employees; re-entry permission is included in the electronic ITAS.

• Professional Shareholder Services: Providing a professional shareholder as a temporary placeholder where Indonesian shareholding is required.

• Company Domicile Services: Providing virtual office services for company registration purposes.

• Post-Establishment Support: Offering ongoing assistance with:

  • Legal and regulatory compliance
  • License renewals
  • HR consultancy
  • Business expansion strategies
  • Product registration
  • Intellectual property protection

By leveraging Okusi Associates’ expertise, you can navigate the complex process of establishing and operating a PMA company in Indonesia more efficiently, ensuring compliance with local regulations and optimizing your business operations.

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In Indonesia, foreigners can establish several types of business entities, each with its own characteristics and requirements:

1. PT PMA (Perseroan Terbatas Penanaman Modal Asing)
   • This is the most common form for foreign investment
   • A limited liability company with foreign shareholders
   • Subject to the Positive Investment List (Presidential Regulation 10/2021, as amended), which opens most sectors to full foreign ownership
   • Minimum capital requirements apply
2. Representative Office
   • Types include:
     • Foreign Company Representative Office (KPPA)
     • Foreign Trade Company Representative Office (KP3A)
     • Foreign Construction Services Representative Office (BUJKA)
   • Cannot engage in direct commercial activities or generate revenue in Indonesia
   • Useful for market research, liaison, and promotional activities
3. Branch Office
   • Only available in certain sectors (e.g., banking, oil and gas)
   • Directly controlled by the foreign parent company
   • Limited availability and subject to specific regulations
4. CV (Commanditaire Vennootschap - Limited Partnership)
   • Available to Indonesian citizens only
   • Foreign direct investment must take the form of a PT PMA under Law 25/2007, so a CV is not an option for foreign investors
5. Foundation (Yayasan)
   • Non-profit organization
   • Can be established by foreigners for social, religious, or educational purposes
   • Cannot engage in commercial activities
6. Permanent Establishment (Bentuk Usaha Tetap - BUT)
   • A permanent establishment for tax purposes
   • Not a separate legal entity
   • Typically used for specific projects or contracts

When considering which entity to establish, foreigners should:

• Consult the latest Positive Investment List (which replaced the Negative Investment List in 2021) to check sector conditions
• Consider the nature and scope of their intended business activities
• Evaluate minimum capital requirements and investment plans
• Assess long-term business goals and expansion plans in Indonesia

It’s important to note that regulations and requirements can change, so it’s advisable to consult with a professional service provider like Okusi Associates for the most up-to-date information and guidance tailored to your specific business needs.

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The timeline for establishing a PMA (Penanaman Modal Asing) company in Indonesia can vary depending on several factors, but generally, it takes about 2-3 months from start to finish. Here’s a breakdown of the process:

• Pre-application preparation: 1-2 weeks
  • Gathering required documents
  • Checking the Positive Investment List (Perpres 10/2021 jo. 49/2021) for any sector conditions
  • Preparing the investment plan
• OSS investment registration: 3-4 weeks
  • Submitting the investment registration via the OSS (Online Single Submission) system (Ministry of Investment and Downstream Industry/BKPM)
  • Waiting for approval
• Company registration: 2-3 weeks
  • Registering with the Ministry of Law (Kementerian Hukum)
  • Confirming a registered office address (legal domicile) — a separate domicile certificate is no longer required
  • Acquiring Tax Identification Number (NPWP) and Business Identification Number (NIB)
• Obtaining licenses and permits: 2-4 weeks
  • Applying for and receiving necessary business licenses
  • This timeline can vary depending on the specific industry and local regulations
• Bank account setup: 1-2 weeks
  • Opening a corporate bank account

Factors that can affect the timeline include:

• Completeness and accuracy of submitted documents
• Complexity of the business structure
• Responsiveness of government agencies
• Any additional requirements specific to your industry

It’s important to note that working with experienced professionals, such as Okusi Associates, can help streamline the process and potentially reduce delays. They can guide you through each step, ensure compliance with current regulations, and handle much of the paperwork and communication with government agencies on your behalf.

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Yes — and if any foreign party acquires any shareholding in a local PT (PMDN), conversion is not optional: the company becomes a PMA by definition and must be brought into the PMA regime.

The conversion is a defined corporate process rather than a re-incorporation:

• Shareholder approval (general meeting or circular resolution) of the share transfer or issue to the foreign party
• A notarial deed recording the change, notified to the Ministry of Law
• Amendment of the company’s investment status and data in the OSS licensing system to PMA
• Compliance with PMA capital requirements — paid-up capital and the investment plan
• Commencement of PMA reporting obligations, notably the quarterly LKPM investment report

The questions clients raise most, briefly:

• Timeline — typically measured in weeks once documents are ready; the notarial and ministry steps are predictable, licensing adjustments less so
• Bank accounts — the company continues; accounts are updated, not closed, though banks will re-do their know-your-customer checks
• Presence — much of the process can be handled under power of attorney, but plan for some notarised documents and, depending on the bank, in-person appearances
• Tax — a PMA is not taxed differently from a local PT; corporate tax rates and monthly employee filings are the same. The differences are in capital, licensing and reporting, not tax rates
• KBLI check first — before converting, verify the company’s business classifications are actually open to foreign ownership at the intended percentage; this kills more conversions than any other issue

Conversion is also the honest exit from a nominee arrangement — replacing a concealed foreign interest with a lawful, registered one.

See our full guide: Converting a local PT to a PMA.

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Yes. Buying a shelf company (a pre-established, dormant PT PMA) changes the timeline, not the capital obligations. The two-part capital test applies to the company regardless of how you acquired it:

• Paid-up capital of at least IDR 2.5 billion (reduced from IDR 10 billion in October 2025)
• An investment plan of more than IDR 10 billion, excluding land and buildings, per business classification (KBLI) per location

A shelf company must already have its paid-up capital properly evidenced from establishment; the buyer takes the company over with that structure in place. What a shelf company does not do is provide a lawful way around the investment-plan commitment for the business you intend to run — the plan attaches to the licensed business activity, and adding or activating a KBLI brings the requirement with it.

What a shelf company legitimately offers is speed: the incorporation, tax registration and bank account groundwork already exist, so operations can begin weeks earlier than a fresh establishment. That is the honest reason to buy one.

Treat with caution any offer of a shelf company marketed as a way to “avoid the IDR 10 billion” — the claim confuses the paid-up reduction (real, now IDR 2.5 billion) with the investment plan (unchanged). Our guide to PMA capital requirements explains the two tests in detail.

Okusi Associates maintains a small stock of clean shelf companies and performs due diligence on any externally-sourced one before a client commits.

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The process for setting up a PMA company in Indonesia involves several key steps:

• Investment Permit: This involves document research, review, and preparation for investment approval.

• Company Incorporation:

  • Preparation of Articles of Incorporation
  • Drafting and notarization of the Deed of Establishment

• Obtaining Operating Licenses and Other Permits:

  • Business Identification Number (NIB) via the OSS system
  • Tax Number (NPWP)
  • Risk-based business licenses as required for the sector
  • Submission of all required documents and follow-ups

• Document Translations: English translations of all important company documents are provided.

• Bank Account Setup: Assistance in opening corporate bank accounts in Indonesia.

• Business Visa Sponsorship: Free Single Entry Business Visa sponsorships are provided while the company establishment is in progress.

• Additional Support and Advice: Guidance on staff recruitment, community relations, and government relations to help navigate the Indonesian business landscape.

Before initiating the process, it’s crucial to:

• Check the Positive Investment List (Perpres 10/2021 jo. 49/2021), which replaced the Negative Investment List in 2021, to confirm your business sector is open to foreign investment and to determine if local shareholders are required.
• Consider additional services if needed, such as:
  • Professional Shareholder Services — a temporary placeholder shareholding — if your sector requires Indonesian shareholding
  • Company Domicile Services in Jakarta, Bali, or Batam

After establishment, ongoing support is typically provided for:

• Regulatory compliance
• License renewals
• Accounting and tax services
• Human resources and payroll management
• Corporate secretarial services
• Business expansion support
• Immigration services (work permits and visas)

It’s important to note that the specific requirements and timeline can vary depending on the business sector and location. Working with experienced professionals can help ensure a smooth and efficient process.

#PMAcompany   #companyEstablishment   #businessRegistration   #investmentApproval   #operationalPermits   #foreignInvestmentIndonesia