Penanaman Modal Asing Indonesia, or usually called PMA Indonesia, is a sector that usually deals with trading issues especially with foreign parties. There are several things need to be considered, because PMA has a very important purpose for the economy in Indonesia. One of them is to bring great investors from abroad. With the presence of PMA Indonesia, it can make economic growth in Indonesia become better and provide an opportunity to expand the economy in Indonesia with a good way.

Based on the law No. 40/2007, about the Limited Liability Company, PMA can be made because it can help the foreign company who wants to make investments in Indonesia. Since Indonesia has several sectors which are partially or fully closed for investment, PMA can give more information to foreign parties about how to do a trading and investment legally in Indonesia. One of them is with having some connections with local entrepreneur in Indonesia, and it will be better if they already have a local business together. Now we will explain about how important PMA for foreign investors / companies in investment and trading issue.

What is the Difference between PMA Indonesia and KPPA Indonesia?

There are two methods that can help foreign investors to start or expand their business in Indonesia, with PMA Indonesia and KPPA Indonesia. These two methods, have different way to help foreign company / investor in Indonesia. PMA Indonesia will be useful for the company / investor who wants to have some businesses in Indonesia, and make the transaction directly in the local markets.

However, if the foreign parties want to do some survey first before start the business, for a purpose to know how’s the market condition in Indonesia, they can start it by build KPPA Indonesia. Actually, it will be safe to start it by build KPPA first. So they can see how’s the progress of the market in Indonesia, and whether it can give a big profit for them. If they’ve learned about it and think that start a business in Indonesia will be profitable, they can continue it to the next step, build the PMA.

How to Establish PMA in Indonesia?

When the foreigner wants to build PMA Indonesia, there are some requirements that they need to know. To find out about these requirements, you can search it from Indonesia Investment Coordinating Board or usually known as Badan Koordinasi Penanaman Modal (BPKM). They will give some information about how to set the PMA and make a deal for a foreign company to do an investment in Indonesia. Even this things it’s not something that you must do, but with doing  this, it can help the investors to get some advices from BPKM. One of them is how to make a connection with local company in Indonesia. Make a connection with local company sounds simple and might be not so important for your business. However, by doing this connection, it can help you to avoid any problem when you running your business in Indonesia. Different countries, will have different culture and rules of business. By making a connection with local company, they will tell you about the culture and rules of business in Indonesia, which you need to know before you do an investment. Some foreign company have done this thing before because they want to prevent the problem that could happen with their business in the future.

The process can be started with the foreign companies tell about their business plan to local companies, and ask their help to set it. They also need to give some documents that needed for running a business to the local company. Due to the high demand for cooperation from foreign companies, there are several local companies in Indonesia offering this agreement with them. Based on  the information from the official procedure, this agreement need around USD $3000 as a cost, includes the establishment of PMA. This procedure will take around 10 weeks until done.

There is another option that investor can choose before they do an investment in Indonesia. They can use the PMA that has been established. Some company do this to make their business run faster because they don’t need to build a new PMA again as a first step. Build a new PMA will take a long time. There are some permits and documents that need to be prepared. Below are the detail of some documents with the estimated time to get it.

  • Principle License & Business License from BKPM
  • License is the first document that foreign investors need to get and it also very important for making the PMA run properly, without any problem. To get this document, it takes around 7 days.

  • Deed of Establishment
  • After get the license, foreign investor need a Deed of Establishment. This document need to be legalized by a public notary, and usually takes 1 – 2 days.

  • Legalization of the legal status of the PMA from Ministry Law and Human Rights

    It will take a long time to get this document. Because to complete the document itself, it will take around 10 days.

Those are the examples of some permits and documents that the investors need to prepare for the making of PMA before start their business. Beside those 3 documents, still there are more documents need to be prepares. The foreign companies must make sure to get all the documents completely before start their business or make investments in Indonesia, to avoid any problem in the future.

If you have any questions about PT PMA and its requirements, or want to book a consultation for assistance, you can arrange a meeting with ABP Advocates at:
H:+62 21 2985 7270

Muhda Partner ABP Advocates
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