How Is Company Formation in Indonesia? A Short and Easy Guide for Foreign Investors

How Is Company Formation in Indonesia? A Short and Easy Guide for Foreign Investors

Are you interested in doing business in Indonesia? Besides investing in existing public companies through Indonesia Stock Exchange, you can invest in Indonesia by establishing a new business entity since the company formation in Indonesia is open for both Indonesian nationals and foreign investors.

The process of forming a new company for both Indonesians and foreigners is also similar, even though the status of the company may be different. Indonesian nationals may set up a company in sectors which are closed for foreign investment, while foreigners are only allowed to establish a foreign-owned company (PT PMA).

Regardless which type of company you want to set, generally, its formation involves the following steps.

  • Meet the requirements

The first step to form a company in Indonesia is too meet the requirement. There must be an identity card of the investors. If the company is a foreign-owned company, choosing the right sector is necessary. Foreigners are not allowed to invest in all business sectors in Indonesia, therefore: you should check the Investment Negative List.

The most recent list is regulated by the President Regulation Number 44 of 2016, with a change is frequently made once in every 3 years. PMA also has a minimum capital, that is IDR10 billion. Ensure that your planned company meets these requirements.

  • Establish the company

The next step about company formation in Indonesia is to establish it. There are several agendas during the establishment, such as creating company structure, picking a company name, creating an Article of Association, and signing a Deed of Establishment.

  • Apply for principle license

You need to apply for a principle license which shows that the government allows you to establish a company and run the business. The application must be done through Indonesia Investment Coordinating Board—online or offline.

  • Get a Letter of Domicile and Tax Identification Number

Complete the company formation in Indonesia with a letter of domicile and tax identification number. Both documents must be under the name of the company, not the owner.

  • Open a bank account

To deal with company finance, you need to open a corporate bank account. It’s the account under the company name, not its owner or investor.

  • Send the Article of Association to the Ministry of Law and Human Rights

In Indonesia, you need to send the Article of Association of your company to the Ministry of Law and Human Rights. It is the way to get the ministry acknowledge and approve that a new company is established in Indonesia.

  • Get a Company Registration Certificate

After you get the ministry approval, you can get a Company Registration Certificate. It’s an official document which signifies that your company has been established legally in Indonesia. Through the certificate, the name of your company is also registered so that no one else can use it without creating an issue.

  • Announce the establishment and obtain necessary licenses

After the company is established, you must announce the establishment. The goal is to let people, particularly the involved ones such as the bank and business partners, know that the company has been formed.

Following the completion of company formation in Indonesia, you must obtain necessary licenses to start running the business. Typically, you need a business license and even environmental license.

SMART COLAW is an Indonesian Corporate Legal Services firm. SMART has assisted Clients in dealing with matters related to Investment Law, such as assist Client to establish Foreign Direct Company and Representative Office. We also assist Clients regarding the Compliance and Corporate Legal Services.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
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