It’s said that foreign nationals (WNA) must invest a minimal of IDR 10 billion ($630,000) to start a PT PMA in Indonesia. They are free to decide where to invest, which turns out to be real estate in most cases. In reality, the PT PMA minimum capital investment isn’t needed to establish the PT PMA. So, how does the minimum capital that needs to be invested to start a PT PMA work? And where does the minimum capital requirement of IDR 10 billion ($630,000) come from?
Understanding the PT PMA minimum capital investment in Indonesia
When establishing a PT PMA, which means Perseroan Terbatas Penanaman Modal Asing, in Indonesia, the Investment Coordinating Board in Indonesia (BKPM) specifies the minimum capital requirements to be IDR 10 billion ($630,000). The exact minimum capital investment varies depending on the industry in which foreigners are investing.
The minimal capital required to start a PT PMA is, in reality, not as straightforward as it seems. The stated sum is essentially an investment plan to be realized over the future, making it more of an intention rather than an immediate requirement. This means you don’t have to invest any money before or during the start of the PT PMA.
This flexibility in the PT PMA minimum capital investment has been used by many foreigners who set up a PT PMA only to get a KITAS, which allows them to stay in Indonesia for two years, without having any intention to invest in Indonesia. While this is somewhat of a grey area, it’s, in reality, a common practice.
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4 things you didn’t know about the PT PMA minimum capital investment
Let’s clarify four things you probably didn’t know about the minimum capital needed to start a PT PMA in Indonesia.
1. The PT PMA minimum capital requirement is more of an intention
Many people aren’t aware that the PT PMA minimum capital of IDR 10 billion ($630,000) is more of an intention than a hard requirement. This amount will be invested per the company’s proposed investment plan over three years. There’s no need to deposit the entire amount immediately, which gives investors the time to invest more or less money in the long rather than the short term.
2. These are the possible consequences of not fulfilling the investment intention
While you may not have to invest the PT PMA minimum capital upfront, failing to invest or incur costs within two years can create issues when extending your KITAS. If the immigration office notices a lack of investment activity, they may decline your extension request.
3. Foreigners can buy property in Bali with a PT PMA
Foreigners can use a PT PMA to buy property in Bali or anywhere else in Indonesia. The property will be owned by the PT PMA rather than the individual. Foreigners can have full ownership and control over the PT PMA, allowing them to buy, own, and manage their property in Indonesia. Buying property with a PT PMA is mainly done by foreign investors who want to start property rentals in Bali or elsewhere in Indonesia.
4. Varying minimum capital requirements based on industry
The PT PMA minimum capital can be higher for industries that require more substantial investments. Financial and banking services, natural resources extraction, manufacturing, etc., are sectors where a higher minimum capital is anticipated.
How to start a PT PMA in Indonesia?
To establish a PT PMA, you must prepare a detailed business plan, submit an investment plan to the BKPM, and prepare the necessary incorporation documents. Once your application is approved, you must register the company with the Ministry of Law and Human Rights. Following this, you must acquire the necessary licenses and operational permits, register for tax, and complete other post-incorporation procedures.
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Get help with establishing a PT PMA in Indonesia
Conclusion
The PT PMA minimum capital requirement is one of the critical aspects to understand when setting up a foreign-owned company in Indonesia. However, its intention-based approach offers business owners a certain degree of flexibility. Regardless, making strategic decisions regarding investment to maintain your business legality is essential, especially if you are using the PT PMA to secure a KITAS.
Frequently Asked Questions (FAQs)
How much does it cost to set up a PT PMA in Indonesia?
The cost to set up a PT PMA in Indonesia can vary greatly, depending on the business sector, scale of operation, and professional fees. However, typically, it ranges from IDR 15 million ($945) to IDR 35 million ($2,205), depending on the location, such as Jakarta or Bali.
What are the requirements for PT PMA in Bali?
The requirements for PT PMA in Bali are a minimum investment plan of IDR 10 billion ($630,000), a business plan, detailed use of funds, and compliance with the Negative Investment List, which stipulates the allowed foreign ownership percentage for different industries.
What is the PT PMA minimum capital in Bali to buy a property?
The PT PMA minimum capital in Bali to buy property is the same as anywhere else in Indonesia, IDR 10 billion ($630,000). However, this sum is meant to be an investment plan over three years and doesn’t have to be deposited upfront. The property will be registered under the company’s name, not the individual’s.
