What is PMA company in Indonesia? Those who are interested in investing in Indonesia likely want to know about it. PMA (Penanaman Modal Asing) is an Indonesian term referring to a company fully or partially owned by foreigners. It’s different from foreign companies’ representative office because it can obtain a license to do a full-business, not simply local customer care and research like a representative office does.
PMA company is a legal entity in which foreign investors can invest and do their business in the country. It has the same as rights and liabilities as any other company in Indonesia. The owner of the company is minimum two—either an individual or legal entity such as investment company or government. The organization structure must consist of at least one director and one commissioner. PMA can also employ foreign workers as long as they obtain the permit to do so.
Business Sectors of PMA
You can establish a PMA company in many business sectors in Indonesia or, another choice, is to transform the existing Indonesian-owned company into PMA. However, not all sector is open to foreign investors as there are three categories of companies based on its openness to foreign investment.
- Open sectors—refer to business sectors in which companies can be 100% owned by foreigners. There is no special pre-requisite of establishing a new PMA or opening a franchise in this sector. There are at least seven business sectors which are included in this category; those are the restaurant, bar, café, sports center, swimming pool, football field, and tennis field.
- Open with a condition—refers to the sectors in which companies are open for foreign investment but with a certain condition. What is PMA company in Indonesia often refers to a type of sectors? The percentage of foreign capital in the company depends on the specific sector. The average percentage of foreign capital is 49% or 51%, and there are some other sectors which a maximum foreign capital at 70% and 67%. This includes the majority of business sectors in Indonesia, including mineral and energy, hospitality, and other sports facilities.
- Close sectors—are those sectors in which private business isn’t allowed. The sectors are usually related to the state safety and strategic affairs. Moreover, it’s the government discretion to choose which business sectors are close only for foreigners but open for Indonesian nationals. Since 2016, this type of sectors includes tour & travel and guide service.
To understand which business sectors which are currently open for PMA, you can check the Investment Negative List. The latest regulation on the list is the President Regulation Number 44 of 2016. This regulation states the status of business sectors about their openness to foreign capital.
Other Indonesian regulations which are relevant to the foreign-owned company in Indonesia is the Law Number 25 of 2007 about Capital Investment and the Head of Investment Coordinating Board Regulation Number 14 of 2015. From these regulations, it’ll be known about “what is PMA company in Indonesia”. It’ll also be known that PMA company must obtain certain licenses before starting their business in Indonesia. Moreover, a PT PMA must have a minimum IDR10 billion, in which 25% of it must be paid before registering the company to the Indonesian government.
HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on establishing your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with investment regulation.
SMART Consulting is an Indonesian Corporate Legal Services firm. SMART has worked and assisted with foreign investors in establishing PMA Companies in Indonesia with 100% success rate, including assisting them in preparing for BKPM Presentations, and we also assist in providing advisory services for the investors in regards to their business sectors from a legal perspective.
Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
Reference: Smart Consulting