Indonesian Companies
Indonesia remains one of Southeast Asia's most attractive destinations for foreign investment: abundant natural resources, a population of over 280 million with a fast-growing middle class, and broad macroeconomic stability. The rules for setting up a foreign-owned company, however, were rebuilt from the ground up by the 2020 Omnibus Law on Job Creation, so most older guides are now obsolete, including anything that still cites a "Negative Investment List" or a USD 300,000 capital minimum.
Foreign investment in Indonesia runs through a single vehicle: the PT PMA (Penanaman Modal Asing), a limited liability company. Any foreign shareholding at all, from one per cent to a hundred, makes a company a PMA, and the requirements are the same regardless of the percentage. Other company forms, such as the CV and UD, remain reserved for Indonesian nationals.
Setting up Business Activities and a Company in Indonesia
To sell into Indonesia without a local presence, you can appoint an agent or distributor. For a foothold without trading, a Representative Office gives you legal standing but cannot conduct transactions or receive revenue in Indonesia. Most foreign investors who intend to actually operate skip these halfway measures and incorporate a PT PMA from the start.
Representative Office
A Representative Office is established according to the line of business and the licences issued by the relevant department. Its core limitation is that it cannot conduct direct sales or issue bills of lading. These offices suit marketing, market research, and buying or selling liaison, but most businesses find them too restrictive and form a company instead.
Limited Liability Co or Perseroan Terbatas (PT)
The PT PMA is incorporated under Company Law No. 40 of 2007. The governing investment framework is no longer Law No. 25 of 2007 standing alone: that statute has been amended by the Omnibus Law on Job Creation, now Law No. 6 of 2023, and its implementing regulations, which are the operative reference for foreign investment across all sectors.
Foreign ownership is now read off the Positive Investment List (Presidential Regulation No. 10 of 2021, as amended). The logic is inverted from the old regime: every business line is open to full foreign ownership unless a rule specifically caps it, requires an Indonesian partner, or closes it. A handful of sectors, among them narcotics and gambling, are shut to all investors. Ownership limits are keyed to your KBLI activity code, so confirm the position for your sector before committing.
Incorporation of PMA Company
Licensing is handled by the Ministry of Investment and Downstream Industry (formerly BKPM) through the online OSS system, on a risk-based model. Your KBLI classification sets the risk tier: low-risk activities need only a Business Identification Number (NIB); higher-risk ones require further standard certificates or permits. Incorporation typically takes three to six weeks.
On capital, two separate figures apply. Since October 2025 the minimum paid-up capital is IDR 2.5 billion (around USD 150,000), reduced from IDR 10 billion, and it must remain in the company's Indonesian account for at least twelve months. Separately, the planned investment must still exceed IDR 10 billion per KBLI code per location, excluding land and buildings. Note also that the investor KITAS remains a distinct immigration threshold of IDR 10 billion of shares per individual, and was not lowered by the capital change.
A standard PMA has at least two shareholders, one director, and one commissioner, and files quarterly investment-realisation reports (LKPM) once operating. The rules shift often; for the current position on your sector, see establishing a company in Indonesia.
This section written with assistance from the people at Okusi Associates.
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