PMA SETUP FORM
For foreign investment in starting/conducting business activities through investment structure in Indonesia, the investment must be in the form of/establish the Indonesian version of a Limited Liability Company (PT), which is known as a (PMA) – Penanaman Modal Asing (“PT PMA”) –The advantages of this type of company are that it gives the foreign investor control over the direction of the company and reduces the risk in finding a suitable local partner. The capital used can be in the form of foreign capital or joint venture with domestic investors.
The government has recently enacted the Job Creation Law No. 11 year 2020 on October 2020 and Government Regulation No. 5 year 2021 concerning the implementation of risk-based business licensing on February 2021 (“GR 5/2021”), and reform labour, taxes and other important laws in order to reduce bureaucracy and stimulate investment in a post-pandemic economy.
1. Starting A Business
In general, steps to start a business in Indonesia are as follows:
1.1 Ensure Your Business Classification under the Indonesia Standard Industrial Classifications (Klasifikasi Baku Lapangan Usaha Indonesia/”KBLI”) 2020
To establish PT PMA, it is important to first understand what KBLI (as described by its five-digits KBLI code) your business falls under as stated in Annexures I and II of GR 5/2021, this will help to determine a company must only obtain Business Identification Number (Nomor Induk Berusaha/”NIB”) and a standar certification or whether it must also obtain business licenses and other licenses.
The KBLI for your PT PMA are:
- 68111 – Real Estate That is Owned and Leased
- 55193 – Villa
1.2 Ensure the Foreign Share Ownership of Your Business under Negative Investment List (Daftar negative Investasi/”DNI”) 2021
Investment in Indonesia was subject to DNI namely a list of business fields that sets out the corresponding maximum amount allowed for foreign ownership as stipulated in Presidential Regulation No. 10 year 2021 on investment business fields and its amendment in Presidential Regulation No. 49 year 2021. In essence, all business lines that are commercial by nature (except those that are closed or reserved for the Central Government) are open for investment. The KBLI for your PT PMA are 100% open for foreign investment.
1.3 Requirements for Setting Up a PT PMA
a) The PT PMA should be owned by minimum 2 shareholders. Those can be individuals or legal entities or combination of both.
b) The amount of investment required for PT PMA is more than IDR 10 billion (excluding lands and buildings) for every five-digits of KBLI per project location, with the minimum paid-up capital of IDR 10 billion.
Specifically for property construction and business with property unit types, including:
- A whole building or integrated residential complex – IDR 10 billion (including lands and buildings).
- A unit not as a whole building or integrated residential complex – IDR 10 billion (excluding lands and buildings).
1.4 Procedures for Setting Up a PT PMA
a) Obtaining a Deed of Establishment
To set up a PT PMA, the shareholders must present a deed of establishment legalized by a local public notary. Once the Articles of Association is signed by all of the shareholders in the presence of a notary, it then will be submitted by the notary to the Ministry of Law and Human Rights for approval. The Ministry will ratify the Deed of Establishment by issuing a Decree Letter (SK Menteri Hukum dan HAM) that signifies that the company has been registered as a legal entity.
b) Obtaining a Company Tax Identification Number (Nomor Pokok Wajib Pajak/”NPWP”)
Once acquiring the Deed of Establishment, the company needs to apply for a NPWP. This can be done online or through a tax office. Some provinces in Indonesia however might still require to apply for the tax NPWP through the local tax office. After completed, the NPWP will be sent directly to the company.
2. Getting License
The Online Single Submission (“OSS”) system was first developed in 2018 to be the gateway of the existing government service system in ministries/agencies and local governments. The Online Single Submission Risk Based Approach (“OSS-RBA”) is a newer version of the OSS that differentiates licenses for businesses depending on the level of business activity risk. The level of business activity risk determines the type of business license required. Through this system, the government maps the level of risk according to the line of business or KBLI.
2.1 Initial Registration
a) Register an account at OSS-RBA
To create an OSS account for both individual and non-individual business actors, a national identity number or passport is required, and the legal entity has obtained an NPWP. After entering the required information, potential investors will receive an email that functions to activate the OSS account and will receive a user id and password.
b) Making NIB at OSS-RBA
Once an OSS account has been created, potential investors must apply for NIB to OSS-RBA system. A NIB is a proof of initial registration of business actor to carry out business activities.
2.2 Risk-Based Business Licensing Services
Basic requirements of business licensing which include: (i) spatial conformity (kesesuaian kegiatan pemanfaatan ruang); (ii) environmental approval; (iii) building approval (persetujuan bangunan gedung); and (iv) certificate of proper building functioning (sertifikat laik fungsi).
3. Investment Supervision
Government set the method for supervising the business activities, which consists of routine supervision and incidental supervision. Routine supervision consists of (i) reports from business actors; and (ii) field inspections, while incidental supervision is a type of supervision that is carried out without being scheduled in advance. Government emphasizes the requirement for PT PMA to submit the Investment Realization Report (Laporan Kegiatan Penanaman Modal/”LKPM”) to the Ministry of Investment/BKPM on quarterly report or annual report. The LKPM report includes report on investment realization and, if any, issues that are faced by the company in implementing its investments.
Initial Documents and Info Requirements
To complete this form, you will need:
1. National Identification Number and NPWP for Indonesian individual or Passport/KITAS for Foreign Individual or Articles of Association for legal entity, minimum of 2 (two) for founder/shareholders’ section, minimum of 1 (one) for director’s section and minimum 1 (one) for commissioner’s section.
2. The proposed info of capital composition (the amount of authorized capital, the issued and paid-up capital with minimum IDR 10 billion for 1 KBLI)
3. The proposed info of Board of Directors (“BoD”) and Board of Commissioners (“BoC”) structure (must appoint either 1 (one) of BoD or BoC who has NPWP)
4. The proposed info of BoD and BoC address