Company Registration in Indonesia: PT PMA Guide for Foreign Investors
Everything you need to know about setting up a foreign-owned company in Indonesia. Corporate structures, new capital rules under BKPM Reg 5/2025, the Positive Investment List, KBLI classifications, and realistic cost and timeline breakdowns.
Talk to an ExpertOverview
Indonesia is Southeast Asia's largest economy, with a GDP exceeding USD 1.3 trillion and a population of 280 million. The country has been steadily liberalizing its foreign investment regime, most recently through the Omnibus Law on Job Creation (UU Cipta Kerja) and the updated Positive Investment List, making it significantly easier for foreign companies to establish operations.
The PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the only legal vehicle through which foreign investors can conduct revenue-generating business in Indonesia. Unlike representative offices, a PT PMA can sign contracts, invoice clients, hire employees directly, and hold operational permits in its own name.
A major development in 2025 is BKPM Regulation 5/2025, which reduced the paid-up capital requirement for PT PMA from IDR 10 billion to IDR 2.5 billion. This lowers the barrier to entry substantially, though the total investment plan must still exceed IDR 10 billion when factoring in fixed assets and projected working capital.
Corporate Structures
Three main structures are available, but only the PT PMA allows foreign investors to operate commercially.
PT PMA
Perseroan Terbatas Penanaman Modal AsingThe only vehicle for foreigners to conduct revenue-generating business in Indonesia. Requires at least two shareholders (individual or corporate) and one local director is recommended but not mandatory since OSS reform.
Representative Office (KPPA)
Kantor Perwakilan Perusahaan AsingCannot generate revenue, sign contracts, or invoice clients in Indonesia. Useful for scouting the market before committing to a PT PMA. Must have a foreign parent company with at least 5 years of operating history.
PT PMDN
Perseroan Terbatas Penanaman Modal Dalam NegeriExclusively for Indonesian nationals and entities. Lower capital thresholds and access to sectors reserved for domestic investors. Not available to companies with any foreign equity.
Capital Requirements
Under BKPM Regulation 5/2025, the paid-up capital for PT PMA has been significantly reduced. Here are the four key capital thresholds every foreign investor must understand.
Positive Investment List
Presidential Regulation 10/2021 replaced the old Negative Investment List with a Positive Investment List, categorizing all business activities into four groups.
Sectors allowing 100% foreign ownership with no conditions — includes IT, consulting, manufacturing, e-commerce, and most services.
Sectors requiring a minimum percentage of Indonesian shareholding — typically 33-67% local ownership depending on the activity.
Activities reserved for micro, small, and medium enterprises (MSMEs). Foreign investors may participate through partnership or investment schemes only.
Activities entirely closed to all private investment — includes narcotics cultivation, gambling, and certain chemical weapons-related production.
KBLI 2025 Business Classification
The KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) is Indonesia's standard business activity classification system. Every PT PMA must register the correct 5-digit KBLI codes in its articles of association and OSS-RBA profile. These codes determine which permits are required, whether foreign ownership restrictions apply, and what tax incentives may be available.
The 2025 update expanded the classification to cover emerging sectors including fintech, digital health, carbon trading, and AI services. Companies that registered under the previous KBLI must verify that their codes are still accurate and reclassify if necessary.
All existing PT PMA entities must align their registered KBLI codes with the 2025 classification by June 18, 2026. Companies that fail to reclassify risk permit suspension and restrictions on future NIB amendments. New registrations after January 2025 automatically use the updated codes.
Cost Breakdown
Typical registration and setup costs for a PT PMA, excluding the paid-up capital requirement.
Registration Timeline
Four phases over 4-8 weeks. Some steps can run in parallel once the legal entity is established.
Document Prep & Notary
- Prepare articles of association
- Notarize Deed of Establishment
- Collect shareholder KTP/passport copies
- Secure domicile letter from office provider
SK Menkumham
- Submit deed to AHU Online system
- Receive SK (legal entity approval)
- Company officially exists as legal entity
- Obtain company registration certificate
NPWP / NIB / OSS-RBA
- Apply for corporate NPWP at tax office
- Register on OSS-RBA portal
- Obtain NIB (Business Identification Number)
- Select KBLI codes and apply for activity permits
Bank / BPJS / Permits
- Open corporate bank account
- Register with BPJS Kesehatan & Ketenagakerjaan
- Obtain sector-specific operational permits
- Onboard first employees
PT PMA vs. EOR: Which Path is Right?
Answer four quick questions and we'll recommend whether setting up a PT PMA or using an Employer of Record makes more sense for your situation.
What is your primary goal in Indonesia?
Frequently Asked Questions
Common questions about registering a PT PMA in Indonesia.
Plan for 4-8 weeks from start to finish. The notarial deed and SK Menkumham can be done in 1-2 weeks, but NPWP registration, OSS-RBA setup, bank account opening, and BPJS registration each add time. Banking due diligence alone can take 2-3 weeks for foreign-owned entities.
Under BKPM Regulation 5/2025, the paid-up capital for a PT PMA is IDR 2.5 billion (approximately USD 155,000), reduced from the previous IDR 10 billion. However, the total investment plan must still be at least IDR 10 billion, which includes fixed assets and projected working capital over the investment period.
Yes, in over 200 sectors listed as fully open on the Positive Investment List (Presidential Regulation 10/2021). IT services, software development, consulting, e-commerce, and most manufacturing activities allow 100% foreign ownership. Some sectors require a minimum Indonesian shareholding, and a small number are reserved for SMEs or closed entirely.
KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) is Indonesia's standard business classification system. Every PT PMA must select the correct 5-digit KBLI codes that match its actual activities. The codes determine which permits are required through OSS-RBA, whether foreign ownership restrictions apply, and what tax incentives are available. Using incorrect codes can result in permit denials or compliance issues.
Not necessarily. The incorporation process can be handled by a local notary and law firm with a power of attorney. However, bank account opening often requires at least one director to appear in person for a Know Your Customer (KYC) interview. Some banks allow video KYC for foreign directors, but this varies by institution.
An Investor KITAS (Kartu Izin Tinggal Terbatas) is a limited stay permit for foreign investors who want to reside in Indonesia. Each foreign director or commissioner holding an Investor KITAS must demonstrate a personal investment of at least IDR 10 billion in the company. This is separate from the company's paid-up capital requirement.
Annual requirements include filing a corporate income tax return (SPT Tahunan), submitting an Investment Activity Report (LKPM) to BKPM quarterly, filing monthly tax returns (PPh 21, PPh 23, PPN), maintaining BPJS contributions for all employees, and renewing operational permits as needed. Non-compliance can result in penalties, permit revocation, or restrictions on future investment.
The standard corporate income tax rate is 22%. Listed companies meeting certain public float thresholds qualify for a reduced 19% rate. SMEs with annual turnover below IDR 50 billion receive a 50% discount on the standard rate for the portion of turnover up to IDR 4.8 billion. VAT is 11% (increasing to 12% under the Harmonized Tax Law). Withholding tax on dividends to foreign shareholders is 20%, subject to tax treaty reductions.
