LOCAL COMPANY (PT PMDN)

A Limited Liability Company or PT, is the most popular and generally the form of business entity in Indonesia. PT can carry out business activities in many fields in Indonesia. PT gives an option for foreigners who wants to expand business in Indonesia suitable with what is in law No. 40 year 2007. The characteristic of PT is must establish by minimum of two local Indonesians as responsible shareholders.

BENEFITS AND DISADVANTAGES OF LOCAL COMPANY

BThe limitation of Shareholder liability is for the company’s debt
 Can easily get additional funds/capital, for example by issuing new
shares
 The viability of the company is more secure
 Efficient use of leadership, because the leadership can be 
replaced at any time through a general meeting of shareholders
 Company management has a clear responsibility to the owner or
shareholders
 Set out clearly by law and other regulations, a limited liability
company binds and protects the company’s activity
 The company registration request, less minimum capital 
investment, is specifically based on company size: small IDR 600 million, medium IDR 600 million – 10 billion, large IDR more than 10 billion.
 The company can have three main business activities.
 Usually no limitations apply, and it can use all open government 
tenders.
DIt is a subject to a separate tax, and dividends received by
shareholders will be taxed.
 The company’s trade secrets can be less secure, as all activities should be reported to the shareholders.
 The founding process takes more time and money than other entities.
 The dissolution process, changes to articles of association, mergers
and takeovers require time and money, as well as approval by a General Meeting Of Shareholders (RUPS).
 The company is 100% owned by local shareholders and foreigners
must apply to local shareholders for a reliable nominee agreement.

FOREIGN-OWNED COMPANY (PT PMA)

PT PMA (Penanaman Modal Asing) or Foreign Investment Company, one of the option for foreign investors to company registration in Indonesia. In PT PMA can use foreign capital fully or in a part with a domestic investors. Before an investor decides to register a PT PMA in Indonesia, he has to investigate his exact business activities regarding the Negative Investment List. Which notes foreign ownership limits in certain business classifications. The Investment Coordination Board or also called BKPM will issue this.

The minimum investment plan is US$1 million, and is allocated for Indonesia for land, building, work capital, etc. The minimum requirement for paid-up capital is US$250,000. That shall deposits after the company is established and bank account is issued. After incorporation, the company is required to submit an Investment Activity Report and monthly tax reports. Even if the company does not have any activities.

BENEFITS AND DISADVANTAGES OF FOREIGN OWNED COMPANY

BPT PMA has same rights and responsibilities as local companies.
 Minimum of two shareholders (can be individuals or legal 
entities).
 Minimum organizational structure is one Director and one 
Commissioner.
 Easy and quick license permits.
 The granting of special customs facilities at PMA.
 On-site tax or import duties are lower.
 The foreign investor owns 100% or less of the company.
 Can sponsor many foreign employees.
DThe company must make monthly tax reports.
 The company is required to provide reports on business activities to the BKPM every 3 months so that the BKPM may monitor the company’s development.
 The minimum investment plan is US$1 million.

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