Why the entity comes before almost everything
A foreign company cannot conduct commercial activity in Indonesia without a PT PMA. It is not a preference or a tax optimisation, it is the only legal vehicle through which a foreign party can hold shares, sign binding contracts, employ staff and generate revenue. Using a nominee arrangement through a locally owned company to work around this is explicitly prohibited under Article 10 paragraph 1 of Law No. 25 of 2007 on Investment, and carries consequences that reach past administrative sanction.
Contracts and banking
Corporate bank accounts, enforceable supplier contracts and employment agreements all require the entity to exist first.
Product registration
BPOM registration must be filed by an Indonesian entity. Without one you depend entirely on a distributor holding your licence.
Commercial legitimacy
Indonesian corporate clients, government counterparts and banks routinely ask for proof of legal standing before engaging.
The two numbers everyone confuses
These are different figures governing different things, and mixing them up is the most common cause of licensing delay.
Paid up capital
Equity actually deposited into the company account by shareholders. Set at a minimum of IDR 2.5 billion per company under Ministry of Investment and BKPM Regulation No. 5 of 2025, effective 2 October 2025, reduced from IDR 10 billion.
Investment plan value
Total planned project spend, which remains above IDR 10 billion per five digit KBLI code per project location, excluding land and buildings. This did not change.
Why it matters
Treating the investment plan as a capital deposit requirement, or the reverse, produces a licensing application that does not reconcile and gets held up in review.
The twelve month capital lock
Article 27 paragraphs 1 and 2 of the same regulation state that paid up capital cannot be moved out of the company account for at least twelve months from the date it is deposited, except for asset purchases, construction or operational needs. This is declared by the applicant through a self declaration in the OSS system. Before this regulation the obligation was not set out explicitly, and the practice it targets is capital deposited only to satisfy the deed and then withdrawn.
The lock connects to reporting. Investment realisation is monitored through the periodic LKPM report, and an entity that deposits the minimum and then shows no progress toward the cumulative investment plan risks having its business identification number suspended in the OSS system. In practical terms the capital requirement is no longer a one time gate, it is an ongoing commitment that has to be evidenced.
How registration actually proceeds
Confirm the KBLI code first
Business activities map to five digit Indonesian standard industrial classification codes, and the code determines the licensing pathway, the sector specific obligations and whether full foreign ownership is even available. Getting this wrong after incorporation is expensive to unwind.
Check the Positive Investment List
Foreign ownership is governed per KBLI code. Some sectors are fully open, some are capped, and a small number are closed entirely. Sector eligibility attaches to the code, not to a general description of the business.
Reserve the name and draft the deed
Company name reservation with the ministry, then a notarised deed of establishment setting out the articles, shareholders, directors and commissioners.
Register through OSS-RBA
Risk based business licensing through the online single submission system, which issues the business identification number and the licences attached to the risk level of the activity.
Deposit capital and open banking
Capital must be genuinely deposited into the company account, not merely stated in the deed. Corporate account opening is often slower than foreign investors expect and may require in person attendance.
Report and keep reporting
LKPM reporting is periodic and continuing. Compliance here is what keeps the licence live once the entity exists.
PT PMA compared with a representative office
These are not two versions of the same thing. They permit different activities.
| PT PMA | Representative office | |
|---|---|---|
| Revenue | Can generate revenue, invoice clients and hold contracts. | Cannot generate revenue. It exists to represent, coordinate and research. |
| Ownership | Foreign shareholding permitted subject to the Positive Investment List for the relevant KBLI code. | Not a shareholding vehicle. It is a presence, not a company. |
| Capital | Subject to minimum paid up capital and investment plan thresholds. | No equivalent paid up capital threshold, because there is no equity to hold. |
| When it fits | Any brand that will sell, import, employ at scale or hold product registrations. | Market study, liaison and coordination before a commercial decision is made. |
Where foreign investors most often get stuck
Choosing the KBLI code late
The code governs everything downstream. Choosing it after documents are drafted means redoing the documents.
Assuming 100 percent ownership
Sector caps attach to specific codes. A general assumption about the industry is not a substitute for checking the code.
Underestimating banking
Corporate account opening is frequently the slowest step and often requires physical presence.
Treating LKPM as optional
Reporting is the mechanism through which the licence stays valid. Silence is not neutral.
Where Arfadia fits
Arfadia does not incorporate companies, prepare deeds or handle licensing submissions. Those require notaries and licensed business licensing consultants. This page exists because entity structure determines what a brand can say publicly, which market claims it can make, and how quickly it can start building visibility. A brand that understands the sequence starts the visibility track at the right moment instead of losing months.
Arfadia is not a law firm, notary or licensed business licensing consultant. This page is a plain reading of published regulation as of August 2026, provided so brands can ask better questions of their advisers. Capital thresholds, sector rules and procedures change, and several changed during 2026 alone. Verify current requirements with a licensed adviser before acting.
- Law No. 25 of 2007 on Investment, Article 10 paragraph 1 on nominee prohibition
- Ministry of Investment and BKPM Regulation No. 5 of 2025, Articles 26 and 27
- Government Regulation No. 28 of 2025 on Risk Based Business Licensing
- Positive Investment List, foreign ownership by KBLI code
Frequently Asked Questions
What is the minimum capital for a PT PMA?
Can we deposit the capital and then use it?
Can a foreigner own a local PT instead?
Is 100 percent foreign ownership available?
How long does the whole process take?
Does Arfadia set up companies?
Entity settled, still invisible?
Legal presence and market presence are different problems. The second one is ours.
Talk to Arfadia See client portfolio