Indonesia Company (PMA) Establishment Guide

(Requirements, Procedures, Duration, Capital Regulations & Key Considerations for Incorporation)

Indonesia, with a population of about 270 million and stable economic growth, is drawing attention as an attractive investment destination for foreign companies, including Korean firms. However, in the company incorporation process, it's important to meet local laws and regulations, especially understanding capital requirements and administrative procedures precisely.

In this article, we summarize types of company incorporation, requirements, procedures, duration, paid-up capital regulations, and major matters that must be taken into consideration when establishing a company.

1. Types of Company Incorporation

When entering Indonesia, the basic forms you can choose are as follows:

1) PMA (Penanaman Modal Asing): Foreign investment company (classified as PMA if foreign shareholding is 1% or more)

2) RO (Representative Office / Kantor Perwakilan): Representative office (may engage in market research, marketing, business support; cannot make sales or generate revenue. However, for construction branches, revenue is recognized after obtaining an SBU license)

3) Local PT (Perseroan Terbatas): Domestic limited liability company (100% foreign ownership not allowed; local partner required)

2. Basic Requirements for Incorporation

1) Shareholders: Minimum of 2 persons (can be individuals or legal entities, foreigners allowed)

2) Director(s): Minimum 1 person (foreigners allowed)

3) Commissioner(s): Minimum 1 person (foreigners allowed)

4) Office address: Commercial building (office) required (residential apartment not allowed)

5) Business field code (KBLI): Must be clearly specified under the OSS (Online Single Submission) system

6) Capital requirement: Minimum paid-up capital of IDR 10,000,000,000 (i.e. one ten-billion rupiah)

3. Paid-up Capital Regulations

1) Legal Structure

a. Authorized Capital: The total capital amount that may be issued under the articles of association

b. Issued Capital: Portion of the authorized capital that is actually issued.

c. Paid-up Capital: The amount of issued capital that has been actually paid in

Under Indonesian corporate law, the issued capital must be at least 25% of the authorized capital, and the issued capital must be fully paid in. (Separate consultation may be needed for specific cases.)

2) Minimum Capital for PMA Company

a. Minimum paid-up capital requirement: IDR 10,000,000,000 (approximately equivalent to some USD amounts depending on exchange rates)

b. Therefore, a common structure is authorized capital of at least IDR 40,000,000,000, with issued/paid capital of IDR 10,000,000,000

c. However, meeting the legal requirement is possible even if the authorized capital is fully issued and paid at IDR 10,000,000,000

d. In practice, to ensure future increase in capital and scalability, many companies set authorized capital substantially higher (e.g. IDR 40-100 billion or more)

4. Steps to Establish the Company

The company incorporation is carried out through the OSS (Online Single Submission) system. The steps are:

a. Reservation of the company name – check and reserve the name via the Ministry of Law and Human Rights (AHU) system

b. Deed of Establishment notarization – prepare and sign the Articles of Association through a public notary

c. Approval by the Ministry of Law and Human Rights (SK Kemenkumham) – issuance of the corporate establishment approval

d. Tax Identification Number (NPWP) registration – register with the tax office

e. Business Identification Number (NIB) issuance – obtain business license number via OSS system

f. Additional permits depending on business field – e.g. SBU for construction, BPOM for cosmetics, Ministry of Health (Kemenkes) for medical devices, etc.

5. Duration (Time Required)

a. Basic company establishment (up to issuing NIB): about 5 business days once documents are ready

b. Including business-field specific permits: 2-3 months, varying depending on complexity of the business

6. Key Considerations in Company Establishment

Here are major information and requirements to prepare in advance to make the incorporation process smoother:

a. Company’s Name: at least three words (e.g. “ABC Global Indonesia”)

b. Shareholders’ names & share ratio: clearly specify names of shareholders and their share percentages

c. Shareholders’ contact: email, phone number needed

d. Company’s address: must be a commercial office address

e. Company’s phone number: valid local phone number required

f. Business Field (KBLI Code): choose business purpose and business classification code clearly

g. Total Authorized Capital: the total authorized capital amount that will be stated in the articles of incorporation

h. Total Paid-up Capital: must be at least 25% of authorized capital (but also meet minimum requirement of IDR 10,000,000,000)

i. Board of Directors Structure: at least one Director (foreigners allowed)

j. Board of Commissioners Structure: at least one Commissioner (foreigners allowed)

Having these items prepared in advance helps make the company establishment process much more efficient.

7. Conclusion

Establishing a company in Indonesia may be more complex than in Korea due to capital requirements, licensing procedures, etc. However, working with a professional firm like ours can minimize the setup time. (Company establishment can take about 5 business days.)

INI Consulting provides one-stop services for company incorporation, tax & accounting, licensing, and visa services, to support clients in entering the Indonesian market securely and smoothly.