Client Alert · Corporate Law · Prasetyo Law Office · June 2026
Legal Basis
- Law No. 40 of 2007 on Limited Liability Companies (UUPT)
- Law No. 25 of 2007 on Capital Investment (UUPM)
- Law No. 6 of 2023 — Job Creation Law
- Presidential Regulation No. 49 of 2021 (Perpres 49/2021)
- Minister of Law Regulation No. 49 of 2025 (Permenkum 49/2025)
Introduction
Indonesia continues to be one of the primary investment destinations in Southeast Asia. For investors seeking to operate legally in Indonesia — whether domestic or foreign — establishing a Limited Liability Company (PT) is an unavoidable first step.
Under Article 1(1) of the UUPT, a Limited Liability Company (PT) is a legal entity in the form of a capital association, established by agreement, conducting business activities with authorized capital fully divided into shares, and meeting the requirements set forth by law.
Under Article 1(1) of the UUPM, capital investment refers to all forms of investment activity — whether by domestic or foreign investors — to conduct business within the territory of the Republic of Indonesia.
Two Types of PT in Indonesia
| Aspect | PT PMDN | PT PMA |
|---|---|---|
| Capital Ownership | Entirely from domestic investors | Partially or entirely from foreign investors |
| Business Field Review | Not required | Mandatory — Perpres 49/2021 (DNI) |
| Licensing Process | OSS-RBA | OSS-RBA + BKPM verification |
A. Establishing PT PMDN
Under Article 1(2) UUPM, Domestic Capital Investment (PMDN) refers to investment activities conducted by domestic investors using domestic capital.
Requirements and Procedures
- Founders’ Agreement (Shareholder Agreement) — company name, address, Board of Directors, Board of Commissioners, shareholders (min. 2), shareholding structure
- Deed of Establishment — drawn up before an authorized Notary
- Ministerial Decree from Ministry of Law — ratification through SABH
- Business Identification Number (NIB) — via OSS-RBA
- Tax Identification Number (NPWP) — registered at Tax Service Office
- Corporate Bank Account — for operations and capital contribution
- Special Licenses — if required by sector
B. Establishing PT PMA
Under Article 1(3) UUPM, Foreign Capital Investment (PMA) refers to investment activities conducted by foreign investors — either entirely foreign or in partnership with domestic investors.
Important Note (PP 28/2025): PT PMA may only be established for large-scale business categories. Foreign investors cannot directly establish a PT PMA for small or medium enterprises (UMK).
PT PMA requires two additional mandatory elements in the founders’ agreement:
- Specific business field designation based on KBLI
- Business field review under Perpres 49/2021 — confirming the field is open to foreign investment (not on DNI)
C. Post-Establishment Compliance Obligations
Founders’ responsibilities do not end at establishment. Key ongoing obligations include:
- Compliance with capital investment regulations
- Compliance with the Negative Investment List (DNI) — Perpres 49/2021
- Foreign Manpower compliance (TKA/RPTKA)
- LKPM — Capital Investment Activity Report — quarterly submission via OSS to BKPM
- WLKP — Manpower Report — to Department of Manpower
- Annual Report via SABH — mandatory under Permenkum 49/2025; failure triggers automatic sanctions
D. Risk Mitigation
Key risks include: manpower compliance errors, reporting negligence (LKPM/WLKP/SABH), and technology/AI compliance. Each carries administrative or criminal sanctions.
Conclusion
Establishing a PT in Indonesia — PMDN or PMA — is strictly governed by law. PT PMA carries two additional requirements: KBLI designation and DNI review. Post-establishment compliance — including LKPM, WLKP, and SABH annual reporting — is not optional.
This article is for general legal information and educational purposes. Prasetyo Law Office is not responsible for any loss arising from use of this information without further legal consultation.
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