Frequently Asked Questions: #foreigninvestmentindonesia

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:

  • Domicile Certificate
  • Tax Number (NPWP)
  • Company Registration
  • 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 Negative Investment List (DNI) to ensure your business sector is open to foreign investment and to determine if local shareholders are required.
• Consider additional services if needed, such as:
  • Professional (“Nominee”) Shareholder Services 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.

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A PMA (Penanaman Modal Asing) company is a type of limited liability company in Indonesia that allows foreign ownership and investment. Key features include:

• It is an Indonesian legal entity that can have any amount of foreign share ownership, from partial to 100% foreign-owned.

• PMA companies are established based on a defined business activity and require approval from the Indonesian Investment Coordination Board (BKPM).

• They allow foreign investors to legally conduct business, generate income, and own assets in Indonesia.

• The percentage of foreign ownership allowed depends on the business sector, as regulated by the Negative Investment List (DNI).

• PMA companies must comply with Indonesian laws and regulations, including obtaining necessary licenses and permits to operate.

• There are minimum capital requirements, generally IDR 10 billion (around USD 700,000) in total investment.

• They can sponsor work permits (KITAS) for foreign employees.

• PMA companies provide foreign investors with legal protection under Indonesian law.

• They allow access to Indonesia’s large consumer market of over 270 million people.

• PMA status is required for foreign entities to legally enter many regulated business sectors in Indonesia.

Overall, a PMA company is the primary vehicle for foreign direct investment in Indonesia, allowing foreign investors to establish a legal presence and conduct business activities in the country.

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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
• Regulated by the Indonesian Investment Coordinating Board (BKPM)
• Must comply with the Negative Investment List (DNI) which outlines sectors open or restricted to foreign investment
• Requires a minimum investment amount, typically around USD 700,000 (though this can vary)
• 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 certain business sectors, as per the DNI
• Provides a formal structure for foreign investors to participate in Indonesia’s growing economy

Setting up a PMA company involves several steps, including investment approval, company registration, obtaining necessary 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 Negative Investment List (DNI) is a crucial regulation in Indonesia that affects foreign investment in the following ways:

• Definition: The DNI is a list of business sectors that are either closed or have restrictions for foreign investment in Indonesia.

• Purpose: It aims to regulate and control foreign investment to protect certain sectors of the Indonesian economy and promote local business development.

• Impact on foreign investors:

  • Determines which business sectors are open, partially open, or closed to foreign investment
  • Specifies maximum foreign ownership percentages for partially open sectors
  • May require partnerships with local Indonesian companies in some sectors

• Key considerations:

  • The list is periodically updated by the Indonesian government
  • Some sectors may require a minimum investment amount for foreign participation
  • Certain sectors may have additional licensing or operational requirements

• Examples of restrictions:

  • Some sectors may be completely closed to foreign investment
  • Others may allow only partial foreign ownership (e.g., 49% or 67%)
  • Some businesses may require local partners or shareholders

• Importance for PMA companies:

  • Foreign investors must consult the DNI before planning their investment in Indonesia
  • It helps determine the feasibility and structure of a proposed PMA company
  • Compliance with DNI regulations is essential for obtaining necessary permits and licenses

• Seeking professional advice:

  • Due to the complexity and frequent updates of the DNI, it’s advisable to consult with experts like Okusi Associates for the most current information and guidance on how the DNI affects specific investment plans.

By understanding and adhering to the DNI, foreign investors can ensure their PMA company plans align with Indonesian regulations and avoid potential legal issues or investment restrictions.

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Foreigners can establish the following types of business entities in Indonesia:

1. Foreign-Owned Limited Liability Company (PT PMA):

• Allows foreign ownership up to 100% in many sectors
• Requires minimum investment of IDR 10 billion
• Needs at least 2 shareholders, 1 director, and 1 commissioner
• Can conduct profit-generating activities

2. Representative Office (KPPA):

• Used for market research and promotion
• Cannot engage in direct sales or revenue-generating activities
• No minimum capital requirement
• Limited to 3-5 year permit duration

3. Foreign Trade Representative Office (KP3A):

• Specifically for assisting with trading activities
• Cannot engage in direct sales
• Can be established in various regions of Indonesia

4. Foreign Construction Services Business Entity (BUJKA):

• For foreign construction companies
• Can participate in large-scale projects
• Must partner with a local Indonesian company

5. Branch Office:

• Extension of foreign parent company
• Limited to certain sectors like banking and oil/gas

The most common choice for foreign investors looking to conduct business activities in Indonesia is the PT PMA. Representative offices are often used as an initial step to explore the market before establishing a full PT PMA. The type of entity allowed depends on the business sector and activities, as regulated by Indonesia’s Positive Investment List.

URL: https://okusiassociates.com/types-of-business-entities-for-foreigners-in-indonesia

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The Negative Investment List (Daftar Negatif Investasi or DNI) is a key regulation in Indonesia’s foreign direct investment (FDI) regime that outlines restrictions on foreign investment in various business sectors. Here are the key points about the DNI and its effects on foreign investment:

• Purpose: The DNI specifies which business fields are:

  • Closed to foreign investment
  • Restricted to investment (e.g. reserved for Indonesian SMEs or state-owned companies)
  • Open to foreign investment but with certain conditions or ownership limitations

• Structure: The list categorizes business fields under government classifications and determines:

  • Sectors where foreign investors can have 100% ownership
  • Sectors requiring partnerships with Indonesian businesses
  • Specific regulations that apply to certain sectors

• Updates: The DNI is typically updated every two years to reflect changes in investment policies.

• Scope: The current DNI contains 280 business fields. Sectors not listed are supposed to be open to 100% foreign ownership.

• Effects on foreign investment:

  • Determines maximum foreign ownership percentages for different sectors
  • Requires foreign investors to partner with local companies in some fields
  • Sets compliance requirements with local regulations for certain sectors
  • Creates some uncertainty due to potential for wide interpretation

• Minimum investment: While not directly part of the DNI, there is a nominal minimum investment of USD 300,000 for foreign-owned companies.

• Location: Foreign investment companies generally have freedom to choose their location in Indonesia.

The DNI plays a crucial role in shaping foreign investment in Indonesia by defining the sectors and conditions under which foreign companies can operate. It’s important for foreign investors to carefully review the latest DNI and consult with experts to understand how it applies to their specific business plans in Indonesia.

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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 Negative Investment List (DNI) restrictions
   • 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. Foreign Investment Limited Partnership (CV PMA)
   • A partnership between foreign and local investors
   • Less common and more restricted than PT PMA
5. Foundation (Yayasan)
   • Non-profit organization
   • Can be established by foreigners for social, religious, or educational purposes
   • Cannot engage in commercial activities
6. Foreign Company Domicile (Badan 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 Negative Investment List (DNI) to check sector restrictions
• 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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Yes, a foreign investor can obtain a KITAS (Kartu Izin Tinggal Terbatas, or Limited Stay Permit Card) without a job offer in Indonesia. This is possible through the following methods:

• Investor KITAS: Foreign investors who own shares in a PMA (Penanaman Modal Asing) company can apply for an Investor KITAS. This type of KITAS is not tied to employment but to the individual’s status as a shareholder in the Indonesian company.

• Requirements for Investor KITAS:

  • The foreigner must be a shareholder in a PMA company
  • The company must be properly established and registered in Indonesia
  • The investment amount should meet the minimum required by regulations (typically around USD 1 million, but this can vary)

• Benefits of Investor KITAS:

  • Allows the investor to stay in Indonesia for extended periods
  • Provides the ability to act as a director or commissioner of the company
  • Does not require a separate work permit (IMTA) for working in the invested company

• Alternative: Retirement KITAS:

  • For individuals aged 55 or older
  • Allows long-term stay without employment
  • Requires proof of pension or sufficient funds to support oneself

• Process:

  • Establish or invest in a PMA company
  • Prepare necessary documents (company registration, proof of investment, etc.)
  • Apply for the Investor KITAS through the immigration authorities
  • May require assistance from a sponsor company or agent

• Duration:

  • Initially granted for 1 or 2 years
  • Can be extended as long as the investment remains active

• Limitations:

  • Investor KITAS holders are generally restricted from working for companies other than the one they’ve invested in
  • Regular reporting and compliance with immigration regulations is required

It’s important to note that immigration regulations can change, and the process can be complex. Working with a professional service provider experienced in Indonesian immigration matters is advisable to ensure compliance and smooth processing of the Investor KITAS application.

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Indonesia offers several types of visas for foreign investors and workers:

Business Visa (Visa Bisnis) * For business-related activities such as meetings, conferences, or market research * Valid for 60 days and can be extended up to 4 times (maximum stay of 180 days) * Does not permit employment or receiving income in Indonesia

Investor KITAS (Kartu Izin Tinggal Terbatas) * For foreign investors in PMA companies * Valid for 1-2 years and renewable * Allows the holder to live and work in Indonesia

Work Permit and KITAS * For foreign employees working in Indonesia * Includes: - KITAS (Temporary Stay Permit Card) - MERP (Multiple Exit Re-entry Permit) - IMTA (Work Permit) * Usually valid for 1 year and renewable

Dependent KITAS * For family members (spouse and children under 18) of KITAS holders * Allows them to stay in Indonesia but not work

Retirement Visa * For retirees aged 55 or older * Valid for 1 year and renewable * Requires proof of pension/income and health insurance

Key points: * All visas require sponsorship, either from a company or an individual * Visa regulations can change, so it’s important to check current requirements * Some visas have specific financial or investment requirements * Processing times and costs vary depending on the type of visa

For assistance with visa applications and renewals, Okusi Associates offers immigration services for foreign investors and workers in Indonesia.

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Indonesia offers several types of visas for foreign investors and workers:

1. Investor KITAS (Limited Stay Permit)

• Available for 1-2 years for investors who own shares in an Indonesian company
• Requires minimum investment of IDR 1 billion in invested shares
• Allows multiple entries/exits and work as director/commissioner

2. Golden Visa (E28B, E28C, E28D)

• Valid for up to 5-10 years
• For investors, business owners, directors/commissioners
• Requires proof of minimum living expenses of US$5,000
• Allows multiple entries/exits and pathway to permanent residency

3. Work Permit KITAS

• For foreign employees sponsored by an Indonesian company
• Requires approval of Foreign Worker Utilization Plan (RPTKA)
• Valid for 1-2 years, renewable

4. Business Visa

• For business trips, meetings, conferences (not for employment)
• Single or multiple entry options available
• Valid for 60 days per visit

5. Digital Nomad Visa (E33G)

• For remote workers employed by overseas companies
• Valid for up to 1 year
• Requires proof of employment and minimum income

6. Retirement Visa

• For retirees aged 55+
• Valid for up to 5 years
• Requires proof of pension/savings

The specific requirements and benefits vary for each visa type. Consulting with an experienced firm like Okusi Associates is recommended to determine the most suitable visa option based on individual circumstances.

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