Setting up a foreign-owned company (PT PMA)

To hold a plantation, a mining licence, a warehouse or most other commercial assets in Indonesia, a foreign investor needs an Indonesian company. Once it has a foreign shareholder, that company is a PT PMA: a limited liability company (perseroan terbatas, PT) with foreign investment (penanaman modal asing, PMA).

Forming one is mostly paperwork, and quick next to what follows. The choices made at the start (the business codes, the capital and the shareholders) decide which licences the company can get later, so settle them before the deed is signed.

Shareholders and officers

A PT PMA is an ordinary company under the Company Law (Law 40 of 2007). It needs at least two shareholders, who can be individuals or companies, foreign or Indonesian. The one-person company added by the Job Creation Law is only for Indonesian citizens with micro and small businesses, so it isn’t an option. If the shareholders ever fall to one, the law gives six months to bring in a second. After that, the remaining shareholder is personally liable for the company’s obligations and losses.

Under BKPM Regulation 5 of 2025, one foreign shareholder is enough to make a company a PMA, and a local company that takes in foreign capital has to convert. How much a foreigner can own depends on the business line. Most lines are fully open. Some cap the foreign share or attach conditions, and a few are closed, as set out in which sectors foreign investors can enter.

The company has a board of directors (direksi), which runs it, and a board of commissioners (dewan komisaris), which supervises it. Each needs at least one member, and foreigners can sit on both. A foreign director who lives and works in Indonesia needs a work permit and a stay permit, which have their own timetable.

The shareholders on the register are the owners the law recognises. The company also has to declare its beneficial owners, the people who really own or control it, under Presidential Regulation 13 of 2018. Article 33 of the Investment Law (Law 25 of 2007) voids any agreement that shares are held in one person’s name for someone else, which is why nominee arrangements fail when they’re tested.

OSS, the NIB and the business codes

Licensing runs through the Online Single Submission system (OSS), run by the Ministry of Investment and Downstream Industry, which is also the Investment Coordinating Board (BKPM). Its legal basis is Government Regulation 28 of 2025, which replaced Government Regulation 5 of 2021 on 5 June 2025.

Every activity has a five-digit code in the Indonesian standard industrial classification (Klasifikasi Baku Lapangan Usaha Indonesia, KBLI). The code sets the foreign ownership rule, the risk level and the licences the activity needs:

• Low risk needs only the business identification number (Nomor Induk Berusaha, NIB).
• Medium-low risk needs the NIB and a standard certificate based on the company’s own statement.
• Medium-high risk needs the NIB and a standard certificate that the authority verifies.
• High risk needs the NIB and a licence, often with an environmental impact assessment (AMDAL).

Plantations and mines need full licences. Most activities also need basic approvals for their location first: spatial-use approval (KKPR), environmental approval and, for buildings, a building approval (PBG) and a certificate of fitness (SLF).

Choose codes for what the company will really do. They go into the articles of association and into OSS, and every later licence, report and investment test runs per code. Changing the company’s business activities later means amending the articles, with the Ministry of Law’s approval.

Capital and the investment plan

BKPM Regulation 5 of 2025 has applied since 2 October 2025 and replaced the 2021 rules. A PT PMA now faces two separate tests.

The first is the investment plan. The company must plan to invest more than IDR 10 billion for each five-digit KBLI code at each project location, not counting land and buildings, with exceptions for some sectors the regulation lists. Nothing has to be deposited for this test. The regulation sets no fixed date to reach it, but every quarterly report shows how far the company has got.

The second is paid-up capital. The minimum fell from IDR 10 billion to IDR 2.5 billion, unless a sector rule asks for more. The money has to stay in the company’s account for 12 months from payment, except when it’s spent on assets, construction or running the business. The Company Law adds that at least 25% of the authorised capital must be issued and paid up.

Bring the capital in by bank transfer and keep every record. The same papers matter when dividends or sale proceeds go out, as moving money in and out explains. A PT PMA can hold land on a right to build (HGB), a right to cultivate (HGU) or a right of use (Hak Pakai), but never freehold (land rights in Indonesia).

Reports once it exists

From the NIB onwards, the company files an investment activity report (Laporan Kegiatan Penanaman Modal, LKPM) in OSS every quarter, for each business activity and location. Under the 2025 regulation it’s due by 15 April, 15 July, 15 October and 15 January for the quarter just ended. It’s due even when nothing was spent. Missed reports bring written warnings, then sanctions that can suspend the business and block the company’s other requests in OSS.

How long it takes

The notarial deed and the Ministry of Law’s approval usually take days once the documents are ready, and the NIB follows in OSS. The bank account and the capital transfer often take longer when the shareholders and directors are abroad. Expect a few weeks to reach a company with its NIB.

The licences for the business itself take far longer. A plantation or a mine needs land, spatial, environmental and sector approvals, and often a forest-area check, before anything is built. That takes months, and on a large project it can take years.

Where to start

• Confirm the KBLI codes and the foreign share each one allows before anything else.
• Agree the shareholders, the split and who will serve as directors and commissioners.
• Budget the paid-up capital and the investment plan for each code and location.
• Check that the asset you want can be held on a title the company can own.
• Put the LKPM dates in the calendar from the day the NIB is issued.