As Southeast Asia’s largest economy, Indonesia continues to attract investors seeking to participate in its dynamic growth. Yet for many foreign investors, navigating the country’s regulatory landscape can be complex. Understanding the legal requirements to establish a foreign-owned company, known locally as a Perseroan Terbatas Penanaman Modal Asing (PT PMA), is the first step toward building a compliant and sustainable business presence in Indonesia.
What Constitutes a Foreign-Owned Company in Indonesia?
A PT PMA, is a limited liability company established under Indonesian law that includes foreign shareholding, whether partial or full.
This classification is regulated under Law No. 25 of 2007 on Investment, as amended by the Job Creation Law (Law No. 11 of 2020), and further detailed in the Government Regulation No. 28 of 2025 on Risk-Based Business Licensing.
Unlike multinational corporations that operate globally through subsidiaries or branches, a PT PMA is a legally incorporated entity in Indonesia that must comply with its domestic regulatory, licensing, and investment regimes.
Legal Requirements to Establish a PT PMA
Foreign investors can establish a PT PMA either by fully owning the company or partnering with local shareholders. However, several requirements must be met:
1. Business classification
The business field must be open to foreign investment according to Presidential Regulation No. 10 of 2021 (as amended by Presidential Regulation No. 49 of 2021), which sets out which industries are fully open, open with restrictions, or closed to foreign ownership.
2. Minimum capital
The minimum capital is IDR 2.500.000.000 (two billion five hundred million rupiah), excluding land and buildings, latest regulation.
3. Paid-up capital
The minimum paid-up capital is IDR 2.5 billion, unless otherwise stated in sector-specific regulations.
4. Corporate structure
In general, a PT PMA must have at least two shareholders and appoint at least one Director and one Commissioner, in accordance with Law No. 40 of 2007 on Limited Liability Companies. However, specific requirements may vary depending on the sector and level of investment risk.
5. Legal documentation
Founders must prepare a notarial deed of establishment, proof of capital deposit, tax registration, and domicile certificate before submitting them through the General Legal Administration System (Sistem Administrasi Hukum Umum or AHU) of the Ministry of Law.
Navigating Indonesia’s Licensing Process
Once a PT PMA is legally established, obtaining the proper licenses is essential before operational activities can begin. Indonesia currently adopts a risk-based licensing framework regulated under Government Regulation No. 28 of 2025, which supersedes the previous PP No. 5 of 2021 but maintains transitional provisions—licenses issued under the old regulation remain valid until updated or replaced by new implementing regulations.
Under this framework, the type of license required depends on the assessed level of business risk:
- Low-risk businesses require a Business Identification Number (NIB)
- Medium-risk businesses must also obtain a Standard Certificate
- High-risk businesses require both an NIB and a formal Business License
All licensing processes are centralized through the Online Single Submission (OSS) system managed by the Investment Coordinating Board (BKPM), which serves as the primary authority facilitating foreign investment in Indonesia.
From Licensing to Ownership: Understanding Local Nominee Risks
After completing the licensing process, many investors face another challenge—ownership structuring. While Indonesia restricts foreign participation in certain sectors, some investors attempt to bypass these limitations through local nominee arrangements, where an Indonesian individual or company holds shares on behalf of a foreign investor.
However, such arrangements carry significant legal risks. Under Indonesian law, nominee structures are not formally recognized, and any agreement concealing true ownership can be deemed invalid and unenforceable. This exposes investors to potential disputes or even loss of ownership control.
To mitigate these risks, foreign investors should comply with official ownership limitations and seek professional guidance on structuring their investment lawfully rather than relying on informal nominee setups.
Ensuring Legal Compliance with Moores Rowland Indonesia
Navigating Indonesia’s investment and corporate laws is not easy. Moores Rowland Indonesia’s Legal Division assists clients in drafting and reviewing incorporation documents, ensuring compliance with relevant regulations, and coordinating submissions to BKPM and the Ministry of Law. Our team also advises on lawful ownership structures, helping investors build a sustainable and compliant business foundation in Indonesia.
Need help establishing your PT PMA the correct way?
Contact Moores Rowland Indonesia today to ensure full compliance and sustainable growth from day one.
