13 Steps to Setup a PMA in Bali

13 Steps to Set Up a PMA (Foreign-Owned Company) in Bali

Bali, known for its stunning landscapes, vibrant culture, and thriving business environment, has become an attractive destination for foreign investors. If you’re looking to start a business in Bali, you’ll likely need to establish a PMA (Penanaman Modal Asing), or a foreign-owned limited liability company. Setting up a PMA in Indonesia involves navigating through various legal and bureaucratic processes, but with the right guidance, you can make it happen. Here’s a step-by-step guide on how to set up a PMA in Bali.

1. Determine Your Business Type

Before setting up a PMA, you need to decide on the type of business you want to run. Different sectors have different regulations regarding foreign ownership. The Indonesian Negative Investment List (DNI) outlines which sectors are open to foreign investment and which are restricted or closed.

Ensure that your business category is eligible for foreign investment. If fully restricted, you might need an Indonesian partner or consider a nominee structure.

2. Check Minimum Capital Requirements

To set up a PMA, you must meet the minimum capital requirement set by Indonesian law. Currently, the minimum investment capital for a PMA is IDR 10 billion (around USD 670,000), though only IDR 2.5 billion (about USD 170,000) needs to be paid upfront as shareholder capital. It’s important to understand that these figures represent total investment, not just operational cash flow.

3. Choose Your Company Structure

You’ll need to determine the ownership structure of your PMA. A PMA must have at least two shareholders, which can be individuals or legal entities. Typically, you as a foreign investor can own up to 100% of the company, depending on the sector.

4. Find a Reputable Corporate Service Provider

Working with a corporate service provider that specializes in setting up PMAs in Indonesia is essential to navigating the process smoothly. They can help you handle everything from documentation to local licensing and legal compliance, ensuring you don’t miss any crucial steps.

5. Reserve Your Company Name

Before moving forward, you’ll need to reserve a company name for your PMA. The name must meet specific criteria, including being unique and not already in use. This can be done through the Ministry of Law and Human Rights (Kemenkumham) website.

6. Draft the Deed of Establishment

The next step is drafting the Deed of Establishment, which outlines your company’s business activities, shareholders, capital structure, and other important details. This document must be drafted by an Indonesian notary in the Indonesian language.

7. Obtain Approval from the Ministry of Law and Human Rights

Once the Deed of Establishment is signed, the notary will submit it to the Ministry of Law and Human Rights for approval. This is a crucial step in legally registering your company as a PMA.

8. Register with the Indonesian Investment Coordinating Board (BKPM)

Your PMA must be registered with the Indonesian Investment Coordinating Board (BKPM). This board is responsible for regulating foreign investments in Indonesia. You’ll need to submit your business plan, investment details, and other required documentation to get approval.

9. Get a Business Identification Number (NIB)

Once registered with BKPM, your company will be issued a Business Identification Number (NIB). The NIB functions as a business license, tax identification number (NPWP), and customs identification for your company. It also serves as proof that your PMA is officially registered.

10. Obtain Sector-Specific Licenses

Depending on the type of business you are setting up, you may need to apply for additional sector-specific licenses. For example, if you’re starting a restaurant, you’ll need food safety and hygiene certifications, while a construction company will need permits from the Ministry of Public Works. The process and requirements for these licenses vary depending on the industry.

11. Open a Bank Account

After your company is legally registered, you’ll need to open a corporate bank account in Indonesia. This is where you will deposit your paid-up capital and handle all your business transactions. Most Indonesian banks require specific documents, such as your Deed of Establishment, NIB, and passport, to open a corporate account.

12. Hire Employees and Register for Social Security

If you plan to hire employees, you’ll need to register your PMA with BPJS Kesehatan (Health Insurance) and BPJS Ketenagakerjaan (Manpower Insurance). These are mandatory social security programs that provide health insurance and employment protection to your workers.

13. Report to BKPM and Comply with Tax Obligations

Once your business is operational, you will need to submit regular investment reports to BKPM to ensure compliance with Indonesia’s foreign investment regulations. Additionally, you must comply with local tax laws, which involve registering for VAT (if applicable) and filing regular tax returns