Converting a Local PT Company to a PMA: Process, Costs and Pitfalls

Updated 7 August 2026 · Okusi Associates · All guides

An Indonesian local PT company may not have a single foreign shareholder. The moment any share passes to a foreign national or a foreign company, the entity becomes, in the eyes of the law, a foreign investment company (PT PMA) and must be converted accordingly. There is no de minimis threshold, no grace percentage, no ‘mostly local’ category. One share is enough. This guide sets out what the conversion involves, what it costs in capital and compliance, and the cases in which converting an existing company is the wrong move altogether.

What triggers the obligation

A PMA (Penanaman Modal Asing) company is the designated legal entity for any Indonesian business with any level of foreign share ownership; a local PT, by definition, requires 100% Indonesian shareholding. Foreigners may serve as director or commissioner of a local PT without triggering anything. Ownership is the line. Cross it, and the company must restructure as a PMA through the OSS licensing system under the Ministry of Investment and Downstream Industry (BKPM).

Before any deed is drafted, the same question that governs a fresh establishment governs a conversion: is the company’s business activity open to foreign ownership at all? The Bidang Usaha Penanaman Modal (BUPM) positive investment list determines, per 5-digit KBLI classification, whether a sector is open to 100% foreign ownership, open with conditions, or closed. A local company frequently carries KBLI classifications it never needed to think about, some of which may be capped or closed to foreigners. Screening these first is the difference between a conversion and an impasse. Okusi maintains a searchable BUPM reference for exactly this purpose.

The mechanics, in outline

The conversion is an amendment to an existing company, not the creation of a new one. The core legal steps are those of any change to shareholding, with the OSS status change layered on top:

A shareholders’ resolution approving the share transfer and the consequential amendments
Notarial deed of share transfer or amendment, executed before an Indonesian notary
Ministry of Law (AHU) approval or notification, and registration
OSS investment data update, recording the foreign ownership and the change of status to PMA
Newspaper announcement, where required

Where the capital structure must change (see below), a further amendment to the articles and Ministry of Law approval are involved. The precise sequence varies with the company’s existing deed, licences and capital position; Okusi scopes the exact filing order for each company individually.

On timing: the corporate filings themselves are quick — notarial deeds run to days, Ministry of Law ratification likewise, OSS updates similarly — and the honest delays live elsewhere. A foreign corporate shareholder’s documents must be apostilled in the home country, which takes two to six weeks and is outside anyone’s control in Jakarta. Bank compliance departments answer to no timetable. Plan in weeks, with the document preparation, not the Indonesian filings, setting the pace.

Capital: the two tests arrive with the foreign shareholder

This is where most conversion enquiries go wrong, so it deserves precision. Under Perka BKPM 5/2025 (in force since 2 October 2025), a PMA company faces two distinct capital tests, and both must be satisfied:

Test	Amount	Applies
Paid-up capital	At least IDR 2.5 billion	Per company
Investment plan	More than IDR 10 billion, excluding land and buildings	Per 5-digit KBLI, per project location

They are different instruments. The paid-up capital is share capital, evidenced at the OSS stage by a self-declaration that the funds will not be moved out of the company’s account for twelve months — a restriction on repatriating the deposit, not on spending it, since asset purchases and ordinary operations are excepted. The investment plan is a commitment realised over time; it does not need to be deposited up front. It is, however, checked: every PMA files a quarterly investment realisation report (LKPM) through OSS, and the plan declared at conversion is a promise the system revisits every quarter.

A converting local company whose paid-up capital sits below IDR 2.5 billion must increase it, by shareholders’ resolution and an amendment to the articles with Ministry of Law approval. A company operating several business classifications at several locations should also count the arithmetic honestly: the IDR 10 billion plan applies per classification per location, with concessions for wholesale trade, food and beverage, construction and certain other sectors. Regulated sectors (banking, insurance, finance) set their own, higher minima. The full regime, including where the thresholds bend, is set out in our guide to PMA capital requirements.

Presence, papers and people

The foreign shareholder’s documentary burden depends on who is buying in. An individual needs a passport, home-country tax identification number where held, contact details and a photograph. A corporate shareholder needs the heavier file — certificate of incorporation, articles, a board resolution or power of attorney naming the signatory, evidence of beneficial ownership, the signatory’s passport — and every public document in it must be apostilled (or consular-legalised, for non-Convention states). Since 2025, beneficial-ownership disclosure is an express requirement of company filings; undisclosed layering is over.

Physical presence is demanded less by the state than by the banks. The notarial and registry steps can generally proceed on properly legalised documents and powers of attorney; it is the corporate bank account where most banks insist the director appear in person.

On roles: a PT requires a minimum of two shareholders, at least one director and at least one commissioner. The same foreign investor may be both a shareholder and the director; the commissioner is a separate seat, and the two-shareholder minimum means at least one other party must hold shares in any event. A commissioner may reside abroad. A foreign director who will actually work in Indonesia needs an RPTKA ratification and KITAS.

Tax, banking and hiring after conversion

The conversion does not create a new taxpayer. The company continues, with its NPWP and its history. On tax, a PMA is not a disadvantaged class: corporate income tax at the standard 22%, VAT at 11% where registered, the same monthly withholding and employee income tax cycle as any local PT, the same annual return within four months of year-end. The genuinely new obligation is the quarterly LKPM. Miss it for two consecutive periods and an escalating ladder of warnings, suspension and licence revocation begins.

Bank accounts continue with the entity, though banks can be expected to re-run their know-your-customer review once foreign ownership appears on the register, and their timetables are their own.

Hiring Indonesians is unrestricted. Hiring foreigners is governed by the same regime that applies to every company employing foreign workers: RPTKA approval per position, the DKPTKA levy of USD 100 per month per foreign worker, a ratio of at least ten Indonesian employees per foreigner, and certain closed positions, notably in human resources.

The nominee exit

Some conversions begin as confessions. A company that is ‘local’ on paper but foreign in substance — shares registered to Indonesian holders under a side agreement for a foreign beneficial owner — is not a clever structure awaiting formalisation. Article 33 of the Investment Law (UU 25/2007) prohibits any agreement or statement affirming that shares are held for another person, and declares such instruments null and void. The better drafted the nominee documentation, the better the evidence of the breach.

Conversion is the honest exit: the shares are transferred, lawfully and on the register, to the person whose money was always behind them, and the company takes on the PMA obligations that go with the truth. It costs real capital and it starts the LKPM clock. It is also the only version of the arrangement a court will recognise.

When conversion is the wrong move

The reverse question deserves equal honesty: offered an existing local company, should a foreign investor buy and convert it, or incorporate fresh? Often the latter. A fresh PMA reaches a licensed company (NIB) in 10 to 20 working days from complete documents, with no history attached. An acquired company brings its past with it: licences whose validity must be verified and whose KBLI classifications may be capped or closed to foreign ownership, tax positions and liabilities, employment contracts with accrued termination costs, land whose status wants scrutiny, and a standing with the local community that may or may not survive new ownership. None of this is discoverable from the share register. It is discoverable from due diligence, which is why we treat it as a precondition of any acquisition, not an optional extra. An existing company is worth buying for what it genuinely owns — licences that transfer cleanly, contracts, an operating history a fresh PMA cannot have. Absent those, the seller is charging for history the buyer must then pay again to investigate.

Where Okusi fits

Okusi Associates has handled Indonesian company structures since 1997, including conversions in both directions, from its Jakarta, Bali and Batam offices. The Change to company shareholding shareholding-change service (US$ 805) covers the notarial deed, Ministry of Law registration, OSS data update and announcement; capital restructuring and other amendments are handled under Amendments to Company Structure & Ownership. Where a fresh start is the better answer, the complete Indonesian PMA Company establishment package is US$ 1,759.