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Foreign Owned Company (PT PMA)

Indonesia offers great opportunities to foreign investors due to the country’s large and young population, rising consumption, abundant natural resources, and cheap labour. Therefore, each year foreign direct investment (FDI) realization in Indonesia tends to grow.
This section discusses the incorporation of a foreign investment limited liability company in Indonesia, known as Perseroan Terbatas Penanaman Modal Asing (abbreviated PT PMA). It is the legal entity through which a foreign investor can conduct commercial activities in Indonesia.

Foreign Owned Company (PT PMA) FAQ's

Q.What is PMA?
A. : Based on Law No. 25/2007 regarding Investment (New Investment Law), a foreign investment in Indonesia is defined as an investing activity conducted by a foreign investor for the purpose of running a business within the territory of Indonesia. The legal entity through which a foreign person, foreign company, or foreign government body can conduct business in Indonesia (meaning generating revenue streams and profit) is the PT PMA. The establishment of a PT PMA is regulated by Law No. 40/2007 regarding Limited Liability Companies (Company Law). Such a company can be either 100 percent foreign-owned or partially foreign-owned.

It is important to stress that various sectors in Indonesia are closed, or partially closed, to foreign investment. To find out which sectors are open to foreign investment you need to access the Negative Investment List (Daftar Negatif Investasi), a list compiled - and regularly revised- by the Indonesia Investment Coordinating Board (BKPM). In case a sector is partially closed to foreign investment, then the list states the maximum allowed percentage of foreign ownership. This means that you will need to have a local (Indonesian) partner in order to engage in business in that particular sector.

Q.Who can establish PT PMA?
A. : Minimum 2 (two) or more Foreign Individuals, Foreign Entities, Indonesian Citizens, and Indonesian Legal Entities are allowed to hold shares in PT PMA. PT PMA is the only allowed form of foreign direct investment in Indonesia by foreign investors.

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