1. Understand What a PT PMA Is

A PT PMA (Foreign-Owned Company) is the legal entity that allows foreigners to fully operate a business in Indonesia. It gives you the right to hire staff, obtain licenses, and legally generate income.

Obligations When Establishing a PT PMA

1. Minimum Investment Requirements

Indonesia requires a minimum investment plan of IDR 10 billion per business activity, which includes capital and assets.

• Paid-up capital is commonly IDR 2.5 billion, but this may vary depending on your business.

2. Mandatory Licenses & NIB

You must obtain:

• NIB (Business Identification Number)
• Operational or Commercial License depending on your sector
• Additional sector-specific permits (tourism, villa rental, F&B, etc.)

3. Registered Office Address

A PT PMA must have a legal domicile address. Many businesses begin with a virtual office before securing a physical workspace.

4. Annual Reporting Obligations

Every PT PMA must submit:

• LKPM (Investment Activity Report) every quarter
• Annual Tax Return (SPT)
• Employee tax and BPJS contributions if applicable

5. Compliance With Indonesian Labor Laws

Hiring must follow Indonesian employment rules, including:

• Contracts
• Local and expatriate workforce balance
• Work permits (KITAS) for foreign employees

Common Missteps to Avoid

1. Choosing the Wrong Business Classification (KBLI)

Many investors choose a KBLI that does not match their real activities. This can cause licensing delays or legal complications later.

2. Underestimating Capital Requirements

Some investors plan to operate on a smaller budget than what the PT PMA legally requires — leading to rejected applications or compliance issues.

3. Not Filing LKPM Reports

Failure to submit quarterly reports is one of the most common mistakes. It can result in penalties or temporary suspension of your business license.

4. Using a Non-Valid Address

Setting up a PT PMA with an unverified or residential address often leads to delays and rejections from the authorities.

5. Not Planning Tax Structure Properly

Without proper tax planning, businesses may face higher-than-expected:

• Corporate income tax
• VAT
• Withholding tax for international transactions

6. Incorrect Visa Strategy

Confusing business visas, work permits, and investor KITAS often results in costly visa mistakes.