Founding a PMA Company

A: The Founding Process
Step 1. Approval for Foreign Direct Investment “PMA-Company”
Prepare and send the application (Model I/PMA) with required documentation, compiled according to the investment plan. Set up a joint venture agreement if you are making the investment with Indonesian partners. PMA companies with SP-PMA shall file applications for investment implementation licenses required for the realization of their investments. SP-PMA shall be automatically cancelled if no realization of projects taken place in the form of concrete activities for 3 (three) years starting from the date of its issuance.


Step 2. Establish Articles of Association of PT-PMA Company from Notary
As stipulated by Foreign Investment Law, PMA companies shall take the form of a Limited Liability Company (Perseroan Terbatas, PT) and subject to Corporate Law. Articles of association of PT shall be registered by the founder of PMA companies.

Step 3. Registration of company address with local council (domicile)
Determine the Company Address

Step 4. IRD registration
NPWP - Tax registration code SPPKP - Value added tax registration code

According to Value Added Tax Laws, PMA companies are subject to report their business activities to the Directorate General of Taxation in its respected operational area.

Application for registration for tax-payer registration number (Nomor Pendaftaran Wajib Pajak, NPWP) and for taxable entrepreneur confirmation number (Nomor Pengukuhan Pengusaha Kena Pajak, NPPKP) shall be filed to the Directorate General of Taxation of the Ministry of Finance.

Step 5. Approval of Article of Association Company from Ministry of Justice and Human Rights

Detailing proof of capital investment and open Bank Account in the name of PMA Companies (especially for new PMA Companies) and send it to the Ministry of Justice for approval and issuance of State Gazette

Step 6. Registration of Company with the Department of Industry and Trade

Approval of TDP - Company registration code

Step 7. Employment Report
Approval of Employment Report (UU No. 7/1981)

Step 8. Plan for Employment of Foreign Personel
Approval of application for RPTKA plan for employment of foreign personnel Expatriates Work Permits & Stay Permits

Step 9. Import License & Incorporate Facilities
Approval of APIT-Limited importer’s identification number from BKPM Approval of NPIK - Special Importer Identification Number from the Ministry of Industry and Trade

What is limited Importers Identification Number?
Limited importer's identification number (Angka Pengenal Importir Terbatas, APIT) is the identification number serving as the license to import capital goods and basic/auxiliary materials to be used by relevant PMDN or PMA companies in the process of production of the approved investment projects.

How to apply
Application for APIT shall be submitted to Head of BKPM.
Applications for APIT shall be submitted by using APIT Form.
Approval for applications
Approval of the application for APIT shall be issued by in the form of APIT decrees (SK-APIT).

SK-APIT shall be issued by Head of BKPM on behalf of the Minister of Industry and Trade.

Validity period
APIT shall be valid for the entire territory of Indonesia starting from the date of stipulation as long as the companies concerned are still engaged in production activities.

Other provisions
PMDN and PMA companies in the trading services business intending to import for goods for trading purposes shall have their APIT effective also as the General Importer's Identification Number (Angka Pengenal Importir Umum, APIU).

In the event that there are changes in names, addresses and boards of executive directors or those signing import documents, the relevant companies shall file applications for the modification of APIT to Head of BKPM.

The process of Approval of APIT
Administration Fee : Rp. 2.500.000,- Other location : Rp. 3.500.000,-

Approval-APIT shall be issued not later than 14 working days after the receipt of correct and complete applications.

Step 10. Letter of Approval of Custom Facilities
1. Approval of Capital Goods Masterlist from BKPM

How to apply
Applications for approval of the import of capital goods with facilities for PMDN and PMDN companies shall be filed to Head of BKPM.

Applications for approval of the import of capital goods shall be filed by using Model IV.A.

Approval of applications
Approval of applications for the import of capital goods with facilities shall be issued in the form of letter of approval (Surat Persetujuan, SP) of customs facilities for capital goods with the master lists of capital goods attached.

SP of customs facilities for capital goods shall be issued by the Head of BKPM on behalf of the Minister of Finance.

Validity period
The validity period of SP of customs facilities for capital goods shall conform to the period of project completion.

Other provisions
Applications for change in approval of the import of capital goods already possessed shall be filed to the Head of BKPM. Their approval shall be issued not later than 14 (fourteen) working days after the receipt of correct and complete applications.

In the event that the capital goods already imported are to be exported, the relevant companies shall file application for re-export of capital goods to the Head of BKPM.

The process of Approval of Capital Goods Masterlist
Administration Fee : Rp. 6.500.000,- Other location : Rp. 7.500.000,-

Approval-Capital Goods Masterlist shall be issued not later than 20 working days after the receipt of correct and complete applications.

2. Approval of Raw Materials Masterlist from BKPM

How to apply
Applications for approval of the import of basic/auxiliary materials with facilities for PMDN and PMA companies shall be filed to Head of BKPM.

Applications for approval of the import of basic/auxiliary materials shall be filed by using Model IV.B.

Approval of applications
Approval for applications for the import of basic/auxiliary materials with facilities shall be issued in the form of letter of approval (Surat Persetujuan, SP) of customs facilities for basic/auxiliary materials with the master lists of basic/auxiliary materials attached.

SP of customs facilities for basic/auxiliary materials shall be issued by Head of BKPM on behalf of the Minister of Finance.

Validity period
The validity period of SP of customs facilities for basic/auxiliary materials is as follows:

PMDN and PMA companies without IUT shall be granted basic/auxiliary materials import facilities for the need of 1 (one) year’s production for an import period of 1 (one) year;

PMDN and PMA companies with IUT shall be granted basic/auxiliary materials import facilities for the need of 2 (two) years’ production for an import period of 2 (two) years.

The process of Approval of Raw Materials Masterlist

Administration Fee : Rp. 6.500.000,- Other location : Rp. 7.500.000,-

Approval-Raw Materials Masterlist shall be issued not later than 20 working days after the receipt of correct and complete applications.

Step 11. UUG/HO-Nuisance act Permits
Approval of Nuisance act permit (Izin Undang-Undang Gangguan, Izin UUG/HO) is issued by the office of regency/municapality concerned. PMA companies reside in industrial estate are not required to obtain this permit.

Step 12. Other Approval & License to build a Factory or Office Building
Location permit Land title (title deed) Building construction permit


Step 13. Fixed Business License
Provincial approval for Fixed Licenses (BAP) Approval of IUT - Fixed Business License (IUT)

A Limited Liability company is established either under foreign shareholders or through a joint venture with Indonesians or wholly owned by Indonesian shareholders and must be approved by the Ministry of Justice. It doesn't matter who is the owner of an Indonesian Limited Liability company, they must comply with Indonesian law and are considered an Indonesian company and the company can subsequently be changed or sold to the shareholders, foreign or Indonesian.

As you can see from this very brief introduction, the process is a complicated and lengthy one and can be a virtual mine field to those who are unfamiliar with dealing with Indonesian ministries. It is essential to acquire the advisory services of a professional investment consultant which specializes in assisting foreign companies who want to invest in Indonesia.

How to aquire Business License
Permanent business license (Izin Usaha Tetap, IUT) is the license that shall be possessed by companies for the realization of commercial production of goods as well as services as the implementation of SP-PMDN or SP-PMA already obtained by the companies.

How to apply ?
Applications for IUT shall be filed to Head of BKPM.

Applications for IUT shall be filed by using Form IUT (Application for Permanent Business License in the Framework of PMDN/PMA).

Approval of applications
Approval of applications for IUT shall be issued in the form of decisions on IUT (Surat Keputusan IUT, SK-IUT).

SK-IUT shall be issued by Head of BKPM on behalf of Minister in charge of relevant business.

Validity period
IUT shall be valid for:

30 (thirty) years starting from the realization of commercial production for PMA companies; as long as the companies are engaged in operation/production for PMDN companies.

PMA companies could renew their IUT validity periods by filing application for IUT renewal for their business activities. Applications for IUT renewal shall be filed before the expiration of the companies' IUT to Head of BKPM by using Form IUT. The renewed IUT are valid for 30 (thirty) years starting from the expiration of the relevant IUT. In addition, PMA companies undertaking business expansion shall be granted IUT validity extension of 30 (thirty) years starting from the realization of commercial operation/production of their expansion projects.

Other provisions
SP-PMDN or SP-PMA shall be valid as the license for commercial production. When the companies are already engaged in commercial production they shall submit Commencement of Production Statement which is a statement on the preparedness for production to Head of BKPM. Upon reviewing the statement, Head of BKPM shall directly issue IUT.

The process of Approval of IUT-Permanent Business License
1. For Trading and Service Sector

Administration Fee : Rp. 11.500.000,- (Jakarta), Other location : Rp. 12.500.000,-

2. For Industry (Manufacture or Fabrication)
Administration Fee : Rp. 14.500.000,- (Jakarta), Other location : Rp. 15.500.000,-

Location in Industrial Estate
1. For Trading and Service Sector : Rp. 9.500.000,-
2. For Industry (Manufacture or Fabrication) : Rp. 12.500.000,-

Approval-IUT shall be issued not later than 40 working days after the receipt of correct and complete applications.