Includes license requirements for key professional services that are open to U.S. service providers
The definition of a foreign-owned company (PT PMA) is a business run or invested in by foreign investors, foreign companies, or foreign governments in Indonesia. PT PMA (Perseroan Terbatas Penanaman Modal Asing) which means limited liability company with foreign direct investment. The foreign company can be either 100% foreign-owned or partially foreign-owned. There are three minimum requirements that apply to foreign-owned companies in Indonesia, including professional providers of legal, accountancy, and consulting services.
Changes to omnibus law in Indonesia as per March 5, 2021 has opened up most business classifications to 100% foreign ownership. There are 45 business classes that maintain a partial limitation of foreign ownership and 58 business classes remain closed to foreigners because they are reserved for small to medium business with 100% ownership.
- Submit an investment plan of at least 10 billion Rupiah (approximately U.S. $700,000), including both fixed and working capital.
- Invest an initial minimum of 2.5 billion Rupiah (approximately U.S. $170,000) as paid in capital from shareholders. In some industry sectors, such as financial services, logistics, freight forwarding, and 100% foreign-owned e-commerce companies, foreign investors are required by law to invest a higher minimum amount.
- Have at least two shareholders, which can be companies and/or individuals.
All foreign-owned companies that wish to operate in Indonesia are required to submit an Investment Plan and obtain approval from the Investment Coordinating Board (BKPM). Indonesia’s Negative Investment List (DNI) is based on President Regulation Np. 44/2016. The Negative Investment List outlines three major categories: Business Fields Open to Foreign Investment, Business Fields Closed to Foreign Investment, and Business Fields that are Open to Foreign Investment subject to certain conditions.
To make investment in Indonesia more attractive to foreign investors Indonesia is moving from a Negative Investment List to a Positive Investment List. Indonesia will continue to close some sectors off entirely from foreign investment and to keep others open subject to conditions. Unless otherwise stipulated under the Positive Investment List or other regulations, 100 percent foreign ownership is allowed.
The investing entities must also request approval of the proposed company name from the Ministry of Law and Human Rights as there is possibility that the same name has already been taken or that it is improper in Indonesia.