If you start a business in any country the commonly accepted logic is to incorporate a company for asset protection and personal liability reasons. The same applies in Indonesia, although most people have the perception it is too difficult or costly. This was the case previously, however these days a company can own a Villa for Commercial and Recreational Use can be setup and licensed within two weeks, on par with Singapore for time and cost.
Most foreign-owned companies establish the Indonesian version of a Limited Liability Company (LLC), which is known as a PMA—Penanaman Modal Asing –in Indonesia, since it can take the form of a 100% foreign-owned limited liability company. The advantages of this type of company are that it gives the foreign investor full control over the direction of the company and reduces the risk in finding a suitable local partner.
PMA for Villa as a Commercial & Recreational Facility code is KBLI 55194
The government recently released a new regulation, No. 24 of the Year 2018, which made the incorporation process in Indonesia more open. Previously, you were required to obtain a prior approval from the BKPM in order to set up a PT PMA. The new regulation, however, eliminated this requirement and businesses can now start operating immediately.
Furthermore, the establishment process for most business lines will proceed through a centralized system of One Single Submission, instead of several institutions as it was done formerly.
- Completely Independent from Local Partner Issues or Risks associated with leasing from the developer
- Maintains Freehold Value – Land Titles can be transferred back to Freehold
- Tax Compliant – This is the major risk that investors do not properly analyse. Read more here.
- Secure Secure Secure
- Government Approved
- Two shareholders
- The Minimum Capital Requirement for a PT PMA is IDR 10,000,000,000, which 25% is deposited as the paid-up capital, meaning IDR 2,500,000,000 (Around $170k USD) must be invested. You only need to sign a statement letter that this will be paid into the company at some point in time.
If there is a Global PMA that has all the local licenses for operation, then there is no need to apply again for the new PMA. This will save a lot of time and money for the villa
|A.||COMPANY DOCUMENTS REQUIRED||TIMEFRAME||COST (IDR)||REQUIRED|
|1||Check the name requested does not already exist (Via Notary)||6 HOURS||15,000,000||YES|
|2||Sign Akta Pendirian dan Perubahan terakhir/Company deed and all the amendments||5 MINUTES||YES|
|3||SK Menteri kehakiman & HAM /Decree of the Minister of Justice and Human Rights||3 DAYS||YES|
|4||Domicile of the company – from village office||2 DAYS||5,000,000||YES|
|5||NPWP /Tax Number||NONE||YES|
|6||TDP/Certificate of Company Registration||5,000,000||YES|
|7||ID Card all Director, Commissioner and Share holders (Only needed if local directors)||YES|
|B.||LOCAL BUSINESS LICENSES REQUIRED|
|1||ijin Lokasi (jika tanah belum dikuasai) / location permit (if land has not been purchased)||NONE||NO|
|2||Ijin Peruntukan Penggunaan Tanah /Land Use Permit||NONE||NO|
|4||HO / disturbance permission||NONE||NO|
|6||TDUP/Company Registration of a tourism business||7 DAYS||5,000,000||YES|
|7||Surat Ijin Usaha Tempat Penjualan Minuman Beralkohol /Business License Place of Sale of Alcoholic Beverages||NONE||NO|
|8||Surat Ijin Usaha Penjualan Minuman Beralkohol /Alcoholic Beverage Sales License||NONE||NO|
|9||Ijin pemanfaatan Air Bawah Tanah /Underwater utilization permit||NONE||NO|
The new one submission system (OSS) reduces the establishment time of a PT PMA from previous 3-4 months in Jakarta and 6-12 months in other cities to less than one month.