Advantages of PMA
Most
foreign-owned companies establish the Indonesian version of a Limited Liability
Company (LLC), which is known as a PMA—Penanaman Modal Asing –in Indonesia,
since it can take the form of a 100% foreign-owned limited liability company or
can be established as a limited liability company through a joint venture with
Indonesian partners.The advantages of this type of company are that it gives
the foreign investor full control over the direction of the company, no
restriction on where a PMA can operate in Indonesia, and reduces the risk in finding
a suitable local partner.
Certain business
fields require a foreign-owned company to establish a local partner and are
allowed up to a certain percentage of ownership depending on the sector. The
specifics of this are covered in the Negative Investment List. However, there
are some business activities that are closed for foreign ownership based on
Negative Investment List, therefore should
be established as Local Indonesian companies (refers to President
Regulation of Republic of Indonesia No.39/2014 concerning list of business
field that are closed to Investment and business field that are conditionally
open for investment). In this case for foreign investors still have alternative
option by establishing a local nominee company in form of local limited
liability (i.e. Perseroan Terbatas) with 100% local shareholder but keeping
under foreign investors control.
Investment
Plan for PMA
BKPM has issued
BKPM Regulation No. 5 of 2013 introduces new requirements for capital
investment registration procedures. Based on the regulation, investors should
invest above USD 1 million or refers to IDR 10 billion as their investment plan
with the minimum paid-up capital is above USD 250,000 or refers to IDR 2.5
billion. Investment plan can be either cash or fixed assets such as machinery
however it is excluded for Land and buildings.
Paid-up capital
shall be paid after the company is established and has a bank account (stated
by notary letter). Company needs to reach investment realizations above USD 1
million for obtaining Business license as their permanent license, import
license, and other licenses which relate to company’s sector.
Steps for PT. PMA company registration in Indonesia
Company Name approval
The application
for a company name is conducted through an online system, which can be accessed
by a notary. The Ministry of Law and Human Rights can reject the name for a
variety of reasons, including if it already exists or is similar to the name of
another company. Based on the latest Indonesia’s regulation, the company name
should consist three words. It shall not contain words that are considered as
vulgar or obscene in Indonesia.
Principle License (BKPM Approval)
The Indonesian
Investment Coordinating Board (BKPM) is the central authorized body for
receiving, reviewing and approving foreign investment applications as well as
monitoring approved and running projects. The investor should submit their
application and investement plan which describes their investment realizations
above USD 1,000,000. The investment plan willl be reviewed and revised by BKPM.
Once it has been approved, BKPM will issue the Principle License as an
Temporary Investment Permit. Principle License will be valid for one year and
can be extended for two years. Then company needs to apply for Business License
within three years.
Article of Association (Akta Perusahaan)
After obtaining
a Principle License from BKPM, the investor is allowed to establish a Foreign
Owned Limited Liability Company (PT. PMA) by arranging for a Article of
Association through a notary, which is valid as an Article of Association for
the company.
Ratification of Legal Entity (SK Kehakiman)
The Article of
Association shall be submitted to the Ministry of Law and Human Rights to be
legalized.
Certificate of Domicile
The next step is
to obtain a Certificate of Domicile from the landlord of the office building
and from the Sub District (“Kelurahan”), which states the address of the
company.
Tax Registration Number (NPWP)
The company
shall obtain a Tax Payer Registration Number (NPWP) and if required register as
VAT payer (PKP) at the Tax Office located at the same sub district. NPWP is
valid as company’s tax ID and beneficial for proposing bank loan, obtaining
other necessary company’s documents as well as for company’s tax payment.
Company Registration Certificate (TDP)
To finalize PT
PMA company registration, the company must arrange a Company Registration
Certificate from Provincial Government to officially register the company in
the region.
The PMA company
registration process in Indonesia is very precise and can be demanding. In addition, as the ASEAN nations update and
alter business regulations, having an expert partner on the ground in Indonesia
can be critical to success. Engaging professional assistance helps companies
navigate local regulations and understand the culture of business in Indonesia.
Source: www.cekindo.com
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