Setting up a PT PMA in Indonesia is done when there’s a foreign shareholder involved, like a foreign individual, company, or another PT PMA. It’s also possible when a local PT previously owned by Indonesian shareholders gets acquired by foreign shareholders.

PT PMA is crucial for foreign investors because it’s their only direct way to invest in Indonesia as company shareholders. Unlike other forms of investment, like opening a Representative Office or dealing with local PT for financing, PT PMA offers direct ownership.

Here are five key things to know about setting up a PT PMA:

Determine the business activities: Before starting, you need to decide what the PT PMA will do. This depends on Indonesia’s Investment Negative List (DNI), which outlines allowed business activities and foreign ownership limitations.

Prepare an investment plan: To apply for a Principle License from BKPM, you need an investment plan. This plan should detail the intended investments, with a minimum of IDR 10 billion per business activity.

Arrange capital structure and shareholders: PT PMA requires a minimum authorized capital of IDR 10 billion, with 25% of that deposited as paid-up capital. You also need to decide how shares will be distributed among shareholders.

Appoint directors and commissioners: Every PT PMA must have at least one director and one commissioner. They can be either Indonesian or foreign nationals, but foreign directors need to obtain work and stay permits.

Apply for a Principle License: Once everything is prepared, you can apply for a Principle License at BKPM. This license approves foreign investment in PT PMA. It’s valid for 1-5 years, depending on the planned business activities.

After securing the Principle License, you can proceed with the establishment process, similar to setting up a local PT. This includes signing the Deed of Establishment, obtaining ministerial approval, and acquiring other necessary licenses. Once the investment plan is realized, you can apply for a Permanent Business License (IUT).