Indonesia Local PT Company Setup for Foreigners

Starting a business in Indonesia has lots of advantages from its large population to its growing economy. For those who are planning to incorporate a company in Indonesia, you may have the perception that a local PT (Perseroan Terbatas) company can only be set up by locals.

While that is true to a certain extent, a foreigner can also set up a local PT company through a local nominee director arrangement. This article will provide insights on how to set up a local PT company in Indonesia as a foreigner.

What is a Local PT Company

There are 3 main types of business entities in Indonesia – local PT company, foreign-owned PT PMA company, and a representative office (KPPA).

A local PT?company is a limited liability company established according to the laws of Indonesia. For a local PT company, only Indonesian citizens and Indonesian legal entities have to hold shares as registered shareholders.

For foreigners is not necessary to be shareholders in a local PT company in Indonesia.

Benefits of Local PT Company in Indonesia

Local PT companies are one of the most common and well-known company types in Indonesia because of the benefits tied to them. Some of these advantages include:

1. Lower paid-up capital requirement

Compared to a PT PMA company, a PT company requires a much lower paid-up capital. Depending on the scale of your business, the minimum investment value ranges from IDR 50 million to IDR 10 billion. For PT PMA companies, it stands at IDR 10 billion.

In contrast, PT PMA companies (foreign-owned companies) would need an investment value of a minimum IDR 10 billion.

2. Holding multiple business licenses without needing to commit additional paid-up capital

As a local nominee structure, the company can have three main business activities without forking out additional paid-up capital for the other businesses. The only cost incurred for the maintenance of the local PT company, such as recurring annual fees.

3. Ability for funding

With a local PT company in Indonesia, you can easily secure additional funding and capital through various means such as by issuing new shares.

4. Wider range of business opportunities

In Indonesia, certain business activities are restricted under the new positive investment list, which replaces the negative investment list. Local PT companies do not have such restrictions and have a wider range of business activities to choose from, as compared to a PT PMA company.

FUN FACT: Did you know that the new positive investment list has 46 restricted business activities for foreign investors? This has been significantly reduced from the 350 in the previous negative investment list.

Requirements to Set Up a Local PT Company in Indonesia

Before registering a local PT company, make sure that you can fulfil these requirements below, or else your company registration will not be successful.

• 2 local shareholders
• 1 director
• 1 commission
• Able to meet the minimum projected investment value, depending on the scale of your business
• Registered business address

NOTE: For registered business address, you are allowed to use a virtual office address. This is only allowed for local PT companies. Foreign companies (PT PMA) would require a physical registered business address.

How to Incorporate a Local PT Company as a Foreigner

To reap the benefits of a local PT company as a foreigner, a local nominee arrangement is necessary. This means that the company will be set up by a local nominee director, and the local nominee director will have full legal ownership of the company.

The way you as a foreigner can gain control of a local PT company in Indonesia is by setting up the company’s bank account in Indonesia. While you will not have legal ownership of the company, you can still take control of the company’s funds by managing the bank account and transactions.

RECOMMENDATION: If you plan to incorporate a local PT company as a foreigner under this arrangement, it is best to engage a trusted local nominee company or director. Here at Paul Hype Page, we can provide you with a local nominee company service.

For those who are not comfortable with letting another individual or entity have full legal ownership of your company, you can consider setting up a PT PMA company instead.

Documents Required for Incorporation of a Local PT Company

There are certain documents that you will need to provide and prepare for your company registration in Indonesia. These documents are below.

Company Documents

• Power of Attorney for submission document signed by each shareholder
• Shareholder documents
• Rental agreement between the company & building management
• Original building domicile/statement from the building management
• Building & land tax receipt (PBB) including the payment approval of the current year
• IMB or certificate of ownership if the building is owned
• Statement for lease (if any)
• Min. 3 office photos – reception, signage of company & office room with business activity
• Statement of domicile issued by the company & acknowledged by the building management
• Company letterhead & copy or sample design of the company stamp

Shareholder Documents

• Copy of Article of Association and its amendment – in English or Bahasa Indonesia
• Business registration certificate
• Board of Directors structure

Personal Documents – Directors & Commissioners

• Foreigner: Copy of coloured passport with a min. 18 months validity and 4 blank pages
• Local: ID card (KTP & Taxpayer Identity Number)
• Family card (KK)
• Indonesia visa stamp
• Residence of hotel or apartment domicile letter for the director
• Recent passport-sized photo with red background for each Board of Director