The Indonesian government has made it easier for foreign investors to invest, register a foreign-owned company in Indonesia. If in the past years the company registration process took at least two months to be completed, the case is different in 2023. Now, a foreign investor can have their company registered in between 1 and 1.5 months.

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 percent 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 of March 5, 2021, have allows 100% foreign investment in over 200 business sectors, including transportation, energy, and telecommunication. Foreign investors can fully own a business in these sectors unless subject to specific limitations. The regulation presents one of the greatest liberalizations in foreign ownership limitations in Indonesia since the negative investment list was first introduced in the 1980s.

Requirements

1. Submit an investment plan of at least 10 billion Rupiah (approximately U.S. $700,000), an investment plan can be either cash or fixed assets such as machinery however it is excluded for Land and buildings.
2. Invest an initial minimum of 2.5 billion Rupiah (approximately U.S. $170,000) as paid-in capital from shareholders.  Some industry sectors include financial services, logistics, freight forwarding, and 100  percent foreign-owned e-commerce companies.
3. Have at least two shareholders, which can be companies and/or individuals.

Paid-up capital shall be paid after the company is established and has a bank account (stated by notary letter). A company needs to reach investment realizations above USD 1 million for obtaining a Business license as their permanent license, import license, and other licenses which relate to the company’s sector.

As such, the company registration process for PT PMA in 2023 looks like the following. The registration is done via the Online Single Submission (OSS) system.Approval of company name: it should consist of three words that are not vulgar or obscene.

• Approval of company name: it should consist of three words that are not vulgar or obscene.
• Deed of Incorporation: it should include an Article of Association, and a notary must be present.
• Approval of legal entity: After submission of Deed of Incorporation by the notary, the Ministry of Law and Human Rights will give approval.
• Registration of Tax ID (NPWP): A valid NPWP is required for securing other company’s licenses, banking activities, and fulfilling tax obligations.
• Domicile Letter: Required to show the location of your business.
• Application of NIB: A unique company profile number that guarantees an immediate operation, provided that no additional licenses are needed. Alongside NIB, Business License(s) and Location Permit will also be granted one day following the registration via OSS. NIB also serves as an import license and customs identification number to be used for the customs clearance process.
• Application of other licenses: Depending on the business sector, additional licenses such as commercial license and tourism license may be required before operation.

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.