Bali Business Blueprint: The PT PMA Way

Bali Business Blueprint: The PT PMA Way

Indonesia, with its strategic location, abundant resources, and significant market size, has always been an attractive destination for foreign investors. Bali, in particular, with its global reputation as a tourist hotspot, offers unique opportunities for businesses, especially in the tourism and hospitality sectors. For foreigners or foreign companies aiming to tap into this potential, understanding the process of setting up a PT PMA (Penanaman Modal Asing) is crucial. This article provides a detailed guide on establishing a PT PMA in Indonesia and Bali.

What is a PT PMA?

A PT PMA, or Penanaman Modal Asing, is a foreign-owned limited liability company in Indonesia. It’s the primary vehicle for foreign investors looking to conduct business in the country. The PT PMA structure allows foreign entities and individuals to have ownership in an Indonesian company, subject to certain restrictions and requirements.

Steps to Establish a PT PMA

  1. Determine the Business Sector
    • Business Field: Ensure your intended business is open to foreign investment. Indonesia’s Negative Investment List (DNI) specifies sectors that are either closed or have limitations for foreign investors.
    • KBLI Classification: Determine which Indonesian Standard Classification of Business Fields (KBLI) your business aligns with. This classification affects your business scope, risk classifications, required licenses, and other essential matters.
  2. Foreign Share Ownership
    • Based on the Positive Investment List, most sectors are open to 100% foreign investment. However, some sectors have specific limitations. Always check your business activity against the KBLI to ensure compliance.
  3. Investment Plan and Capital Requirements
    • A PT PMA should have an investment value exceeding IDR 10 billion (~USD 660 thousand), not including land and buildings. This requirement aims to protect local businesses and promote significant foreign ventures.
    • Usually, this capital requirement can be over a few years and does not need to be invested upfront. This allows for investment projects to start smaller and then grow.
  4. Shareholder Structure
    • A PT PMA requires at least two shareholders, which can be individuals, legal entities, or a mix of both. Some sectors have specific shareholder requirements.
  5. Company Management
    • A PT PMA should have at least one director and one commissioner. Note that certain roles may have restrictions based on the Indonesian Manpower Law or specific business activities.
  6. Legal Procedures
    • Begin with a deed of establishment, legalized by a local public notary, containing the company’s articles of association.
    • Submit the deed to the Ministry of Law and Human Rights for approval.
    • Once approved, apply for a Taxpayer Identification Number (NPWP) and a Business Identification Number (NIB) via the Online Single Submission (OSS) System.
  7. Nominee Agreement
    • Such agreements, which confirm share ownership in a limited liability company on behalf of others, are prohibited and considered null and void.

Bali-Specific Considerations

While the general process of setting up a PT PMA remains consistent across Indonesia, Bali, as a major tourist destination, has specific nuances:

  • Tourism and Hospitality: Given Bali’s reputation, there’s significant potential in the tourism and hospitality sectors. However, these sectors might have specific regulations and requirements.
  • Land Ownership: Foreign companies can’t own land in Indonesia, including Bali. They can, however, obtain rights to use or lease land.
Source: https://bluesarin.com

Conclusion

Setting up a PT PMA in Indonesia and Bali is a structured process with several legal and regulatory steps. While the potential for business growth is significant, it’s crucial to understand the local landscape, stay updated with regulations, and possibly collaborate with local partners or consultants to navigate the intricacies of the Indonesian business setup.

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