Last reviewed October 7, 2026 · By the NYBACS advisory team
Short answer
Foreign investors incorporate in Indonesia through a PT PMA, a limited liability company with foreign shareholding, licensed through the risk-based Online Single Submission (OSS) system. Each business activity is identified by a KBLI code that must be open to foreign investment under the Positive Investment List. Since BKPM Regulation No. 5 of 2025, the minimum paid-up capital fell to IDR 2.5 billion per KBLI, while the planned investment value generally remains above IDR 10 billion.
Key takeaways
- Foreign-owned companies must be PT PMA entities; ownership limits depend on each KBLI code under the Positive Investment List.
- BKPM Regulation No. 5 of 2025 cut the minimum paid-up capital from IDR 10 billion to IDR 2.5 billion per KBLI, but the total investment plan generally must still exceed IDR 10 billion, excluding land and buildings except in specified sectors.
- A PT PMA needs at least two shareholders, at least one director and at least one commissioner.
- The company is formed by a notarial deed in Indonesian, approved by the Ministry of Law, then registered on OSS to obtain its business identification number (NIB).
- PT PMAs must file quarterly investment activity reports (LKPM) in addition to tax filings.
Indonesia at a glance
| Common entity for foreign owners | PT PMA (foreign-investment limited liability company); representative offices for non-trading presence |
|---|---|
| Company registry | Ministry of Law (AHU) for legal-entity approval; OSS (Ministry of Investment/BKPM) for NIB and business licensing |
| Foreign ownership | Up to 100% in most sectors under the Positive Investment List; some KBLI codes capped, reserved or conditional |
| Local director / resident requirement | At least one director and one commissioner; no nationality rule for most roles, but foreign directors working locally need RPTKA and KITAS |
| Registered office | Indonesian domicile address consistent with zoning rules for the KBLI |
| Key tax registrations | NPWP via OSS; VAT (PKP) registration above the turnover threshold; BPJS for employees |
| Recurring compliance | Quarterly LKPM, monthly tax, annual tax return, annual GMS, licence maintenance |
| Typical setup timeline (indicative) | A few weeks to NIB; often one to three months more for licences and banking |
Indicative only. Rules, filings, fees, ownership restrictions and timelines vary and change — confirm the current position before acting.
Why the PT PMA is the default route
Indonesia requires foreign direct investment to be made through a PT PMA (Perseroan Terbatas Penanaman Modal Asing). Alternatives exist but are narrower:
| Option | Can it trade? | Typical use |
|---|---|---|
| PT PMA | Yes, within its licensed KBLI codes | Operating subsidiaries, manufacturing, services, distribution |
| Representative office (KPPA) | No direct sales or invoicing | Market research, promotion, coordinating with distributors |
| Foreign trade representative office (KP3A) | No sales; trade promotion only | Supporting imports and distributors |
| Construction representative office (BUJKA) | Project-based, often with local partners | Foreign contractors |
The Positive Investment List (Presidential Regulation No. 10 of 2021, as amended) opens most sectors to 100% foreign ownership, but some KBLI codes are capped, reserved for cooperatives and micro, small and medium enterprises, or require partnerships. Your KBLI selection therefore determines both ownership and licensing.
Step-by-step: forming a PT PMA
- Select KBLI codes that match the real activities and check each one's foreign-ownership status and risk level.
- Plan capital. Model the investment value (generally more than IDR 10 billion per KBLI, with related codes allowed to be grouped under BKPM Regulation 5 of 2025) and the paid-up capital of at least IDR 2.5 billion, which must generally remain in the company's account for 12 months unless used for capital expenditure or working capital.
- Reserve the company name through the Ministry of Law's AHU system.
- Sign the deed of establishment before an Indonesian notary. Foreign shareholders can sign through a power of attorney.
- Ministry of Law approval of the deed, which gives the company legal-entity status.
- OSS registration to obtain the NIB, which also serves as an importer identification and customs access number, together with the tax ID (NPWP).
- Risk-based licences — standard certificates or permits — for each KBLI, plus location and zoning approvals.
- Open a bank account and inject capital.
Indicatively, deed-to-NIB can take a few weeks; risk-based licences, office arrangements and banking often take one to three months more.
Shareholders, directors and documents
Shareholders may be individuals or companies, with at least two in total. The board of directors (direksi) manages the company and the board of commissioners (dewan komisaris) supervises it; each needs at least one member. Foreign directors who work in Indonesia need a work-permit plan (RPTKA) and a limited-stay permit (KITAS), and certain positions, such as human resources director, are closed to foreigners.
Corporate shareholders typically provide their articles, certificate of incorporation, board resolution and power of attorney. Individuals provide passports. Indonesia has been a party to the Apostille Convention since June 2022, so documents from Convention countries are apostilled and then translated into Indonesian by a sworn translator.
Tax and post-licensing registrations
The PT PMA receives its NPWP (tax ID) through OSS and is taxed on worldwide income, generally at 22%. It must register as a VAT-able entrepreneur (PKP) once turnover exceeds the threshold, commonly IDR 4.8 billion a year, or earlier if it registers voluntarily. Tax administration has moved to the Directorate General of Taxes' Coretax system, so access rights for directors and representatives should be set up early.
Employees are registered for BPJS Ketenagakerjaan (employment social security) and BPJS Kesehatan (health insurance). The quarterly LKPM investment report to the Ministry of Investment is mandatory, and missing it can lead to sanctions affecting the business licence.
Banking and KYC in Indonesia
Indonesian banks open accounts once the deed, Ministry of Law approval, NIB and NPWP exist. They usually ask for identification of all directors, commissioners and beneficial owners, and many prefer at least one director with a KITAS and a local tax ID. Foreign directors living abroad can struggle to complete in-person verification. Remitting paid-up capital from abroad should be planned with the bank so the inflow is documented as share capital.
Ongoing compliance and whether Indonesia is the right market
Recurring obligations include quarterly LKPM reports, monthly tax filings and an annual corporate tax return within four months of year-end, an annual general meeting of shareholders, maintaining risk-based licences, beneficial-owner disclosures, and audited financial statements where the company meets audit criteria or a regulator requires them.
Indonesia rewards investors who want direct access to a very large domestic market, resources, manufacturing or digital services. The capital commitment and licensing depth are higher than in Singapore, which many groups use as a holding and regional base while operating through a PT PMA. Malaysia and Vietnam are the usual alternatives for a smaller initial footprint.
Common mistakes to avoid
- Choosing KBLI codes that do not match the actual business, leading to licences that do not cover what the company does.
- Relying on pre-October 2025 guidance about IDR 10 billion paid-up capital, or assuming the investment plan threshold has disappeared.
- Using a nominee Indonesian shareholder to bypass ownership limits, which is prohibited.
- Missing quarterly LKPM reports because the company is still pre-revenue.
- Appointing a foreign director who will work in Indonesia without a work-permit and KITAS plan.
- Remitting capital without clear documentation that it is a share subscription.
Documents and records to prepare
- Passports of individual shareholders, directors and commissioners
- Parent certificate of incorporation and articles, apostilled
- Board resolution approving the investment and appointing representatives
- Power of attorney for signing the notarial deed
- Sworn Indonesian translations
- Domicile or office lease documents
- Capital and investment plan by KBLI
NYBACS 360° support
How NYBACS helps
- Maps your activities to KBLI codes and checks foreign-ownership status and risk level.
- Models capital and investment value under BKPM Regulation No. 5 of 2025.
- Coordinates our Indonesian partner on the notarial deed, Ministry of Law approval, OSS licensing and NPWP.
- Prepares apostilled documents, translations and the banking KYC pack.
- Sets up LKPM, tax and annual corporate compliance calendars.
Frequently Asked Questions
What is the minimum capital for a PT PMA now?
Under BKPM Regulation No. 5 of 2025, paid-up capital is generally at least IDR 2.5 billion per KBLI, and the overall investment plan must generally exceed IDR 10 billion. Grouping of related KBLI codes and sector exceptions can change the numbers, so model your case specifically.
Can a PT PMA have a single shareholder?
No. A PT PMA needs at least two shareholders, which can be individuals or companies, including two companies within the same group.
Do I need to live in Indonesia to be a director?
Not necessarily, but a director who works in Indonesia needs a work permit and KITAS, and banks often prefer at least one locally resident director.
Is a representative office cheaper than a PT PMA?
It can be simpler, but it cannot sell, invoice or earn revenue in Indonesia. It suits market testing, not operations.
What is the LKPM report?
It is the quarterly investment activity report a PT PMA files through OSS, covering capital realisation, employment and progress. It is required even before the company earns revenue.
