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 $1.2 million USD.Paid-up capital: at least 25% of investment plan.For some industries required capital is higher. | 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 |
Christina
February 6, 2014Dear sir/mam,
I would like to open trading company in Bali,Indonesia.Can you tell me the steps on how to do it and what kind of documents will be need it
Thank you,
Christina
Indosight
February 6, 2014Hi Christina,
Thank you for contacting us. Our consultant will be in touch with you shortly to ask you some specifying questions.
Lauri