Introduction
Moving to Indonesia can be exciting. You may want to build a business, live here, and work through your own company. Indonesia allows foreign investors to establish companies. The usual structure is a foreign-owned limited liability company.
This company is called a Perseroan Terbatas Penanaman Modal Asing, or PT PMA. It operates under Indonesian law. A PT PMA may sponsor your employment in Indonesia. However, incorporation alone does not give you permission to work. You must satisfy company, investment, employment, and immigration requirements. Each area has separate rules and approval processes.
I will explain the main steps in friendly, practical language. I will also identify the legal grounds supporting the process.
The Main Legal Framework
The primary corporate law is Law No. 40 of 2007 concerning Limited Liability Companies. This law regulates company formation, management, capital, shareholders, directors, and commissioners. It also establishes the legal personality of Indonesian companies.
The law has been affected by the Jobs Creation reforms. The relevant current framework includes Law No. 6 of 2023. Law No. 6 of 2023 confirms the Government Regulation in Lieu of Law No. 2 of 2022 concerning Job Creation.
Foreign investment is also governed by Law No. 25 of 2007 concerning Investment. This law regulates foreign investment activities and investor protections. The investment framework uses a risk-based licensing system. Businesses must obtain licenses that match their activities and risk levels.
Immigration matters are governed mainly by Law No. 6 of 2011 concerning Immigration. This law has also been amended by later legislation. Government Regulation No. 31 of 2013, as amended, provides further immigration procedures. Government Regulation No. 48 of 2021 is one important amendment.
Visa and stay permit rules are also addressed by Permenkumham No. 22 of 2023. This regulation concerns visas and immigration stay permits.
Choosing the PT PMA Structure
The first major decision involves choosing the correct business structure. A PT PMA is usually suitable for foreign investors conducting business in Indonesia. The company must be established under Indonesian law. It must also have its registered domicile in Indonesia.
The shareholders may include foreign individuals or foreign companies. However, ownership depends on the business sector. Some sectors allow full foreign ownership. Other sectors require Indonesian participation or impose special restrictions.
Some activities may remain closed to foreign investment. Other activities may receive special rules within priority sectors. You must check the current investment regulations before preparing company documents. A business that looks simple may have restricted ownership rules.
You must also select the correct KBLI classification. KBLI means the Indonesian Standard Industrial Classification. The KBLI code identifies your business activity. It affects ownership, licensing, investment, and employment requirements.
Choosing the wrong classification can create delays. It may also prevent your company from obtaining the correct licenses.
Investment and Capital Requirements
A PT PMA is generally treated as a large business. It must satisfy minimum investment requirements. BKPM Regulation No. 4 of 2021 provides important investment rules. It also regulates risk-based business licensing and investment facilities.
The general minimum investment value exceeds Rp10 billion. This amount normally excludes land and buildings. The requirement generally applies to each five-digit KBLI business field. It may also apply separately for each project location.
The company may also need minimum paid-up capital. The commonly applied amount is Rp10 billion. These amounts can differ for particular sectors. Special economic zones and certain activities may receive different treatment.
You should not assume every PT PMA has identical requirements. You should check the specific business activity before investing money. The proposed investment should reflect a genuine business plan. Your company should have realistic operations, documents, and financial resources.
Creating a company only to obtain immigration benefits can create serious legal risks. The company should conduct genuine commercial activity.
Preparing the Incorporation Documents
The incorporation process begins with corporate documentation. You will need information about shareholders, directors, and commissioners. Foreign shareholders usually provide valid passport copies. Corporate shareholders may need incorporation documents and ownership information.
You must also propose a company name. The name must satisfy Indonesian naming requirements. The company needs a registered office address. Some business activities require suitable commercial premises.
The articles of association must describe the business activities. They must also identify capital, shareholders, directors, and commissioners. An Indonesian notary prepares the deed of establishment. The notary submits the application to the Ministry of Law and Human Rights.
After approval, the company obtains legal entity status. It can then proceed with tax, licensing, and operational registrations. Using an experienced Indonesian notary is important. Mistakes in company documents can delay the entire process.
Registering Through the OSS System
Indonesia uses the Online Single Submission, or OSS, system. The system follows a risk-based approach to business licensing. The company first obtains a Business Identification Number. This number is commonly called an NIB.
The NIB identifies the company within the Indonesian licensing system. It may also support customs, tax, and employment administration. The NIB is not always the only required license. Additional approvals depend on the business sector and risk level.
Low-risk activities may need fewer approvals. Higher-risk activities may require technical, environmental, or sector-specific licenses. Some businesses require environmental approvals. Others need local permits, operational certifications, or professional registrations.
You should not treat the NIB as permission to conduct every activity. Your actual operations must match your approved licenses. The company must keep information accurate. Changes involving shareholders, directors, activities, or addresses may require updates.
How the Company Sponsors Your Work
A PT PMA may employ you as a foreign worker. However, the company must comply with foreign-worker rules. The primary regulation is Government Regulation No. 34 of 2021 concerning the Use of Foreign Workers.
This regulation governs foreign-worker applications, approvals, compensation, reporting, and supervision. The company usually needs an approved RPTKA. RPTKA means Foreign Worker Utilization Plan.
The RPTKA identifies your position, duties, workplace, and employment period. It also explains why the company needs foreign expertise. The company applies through the Ministry of Manpower system. The application requires corporate and employment information.
The company may need to pay the Foreign Worker Compensation Fund. This payment is called DKPTKA. The company may also need to appoint an Indonesian counterpart. This supports knowledge transfer and local workforce development. Permenaker No. 8 of 2021 provides detailed implementation rules. It covers RPTKA documents, approval periods, payments, reporting, and sanctions.
You must work in the approved position. You should not perform activities outside your authorization.
Applying for the Correct Immigration Status
RPTKA approval does not automatically create immigration status. You also need the correct work visa and stay permit. Depending on your situation, you may apply for a limited stay visa. After entering Indonesia, you may receive a temporary stay permit.
This permit is commonly called an ITAS. The permit must match your approved employment and company sponsorship. You must not work using a tourist or visitor status. Doing so may violate immigration and employment rules.
Your company information, employment position, and immigration application should remain consistent. Inconsistencies can delay approval or create compliance concerns. Your family members may apply for separate immigration status. Their permits may depend on your principal permit.
You should keep your passport, visa, stay permit, employment documents, and company records current. Expired documents can cause avoidable problems.
What You Must Avoid
You should not enter Indonesia as a tourist and begin working. That shortcut creates unnecessary legal exposure. You should not work for a different company from your approved sponsor. You should also avoid unauthorized side activities.
Your company should not sponsor you without a genuine employment relationship. Sponsorship must reflect real business needs. You should never submit false information. False documents can affect company registration, visas, and stay permits.
Violations may lead to administrative sanctions. Possible consequences include fines, permit cancellation, detention, or removal from Indonesia.
Why Professional Advice Helps
The process involves several government systems. These include company registration, OSS, tax, manpower, and immigration platforms. An error in one system may affect another. For example, an incorrect KBLI can damage your RPTKA application.
A professional adviser can coordinate these processes. A lawyer at Wijaya & Co can manage corporate establishment requirements. You should also obtain tax advice. Living and working in Indonesia may create Indonesian tax responsibilities.
Your company has separate tax obligations. Your personal tax position may depend on residence, income, and the length of your stay.
Conclusion
Incorporating a foreign company can help you live and work legally in Indonesia. The usual structure is a PT PMA. The main legal foundation includes the 2007 Company Law. It also includes the 2023 Jobs Creation Law framework.
You must comply with investment, ownership, capital, licensing, and KBLI requirements. Your company must then satisfy foreign-worker rules. The company will usually need an approved RPTKA. You will also need the correct work visa and stay permit.
The Immigration Law, Government Regulation No. 34 of 2021, and Permenkumham No. 22 of 2023 provide important legal guidance. I believe careful planning is the smartest approach. You should establish a genuine business before relying on it for immigration sponsorship.
A company can support your Indonesian plans. It cannot replace compliance. When your business, employment authorization, and immigration status align, Indonesia becomes much easier to navigate. That is the lawful way to build your new life and business.
My name is Asep Wijaya, writing for Wijaya & Co. We orchestrate to assist you navigate. Thank you for reading my posts.