13 Steps to Setup a PMA in Bali

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

Bali, with its tropical charm and thriving economy, has become a hotspot for foreign entrepreneurs looking to start businesses. Setting up a PMA (Penanaman Modal Asing) — a foreign-owned company — is the most common way for foreigners to legally own and operate a business in Indonesia. While the process may seem complex, breaking it down into manageable steps can make it much more approachable. In this article, we’ll guide you through the 13 essential steps to set up a PMA in Bali.

1. Define Your Business Activities

The first step is identifying the scope of your business activities. In Indonesia, each business activity is classified under the KBLI (Indonesia Standard Business Classification) codes. Choose the code that best fits your business.

2. Choose the Right Legal Consultant

Engage a reputable legal consultant or agency with experience in PMA setups. They will guide you through the documentation and compliance requirements.

3. Decide on Shareholders and Capital Structure

A PMA must have at least two shareholders, which can be individuals or corporate entities. The minimum capital requirement for a PMA is typically IDR 10 billion (~USD 700,000), though not all of this needs to be paid upfront.

4. Prepare Company Documents

Draft the required legal documents, including the Articles of Association and shareholder agreements. These must be notarized by an Indonesian notary.

5. Obtain Approval from BKPM

Submit your application to the Indonesia Investment Coordinating Board (BKPM). This step involves securing approval for your proposed business plan and structure.

6. Obtain Company Domicile Letter

You’ll need a domicile letter from your business address in Bali. This is a critical document for the subsequent registration steps.

7. Apply for a Tax Identification Number (NPWP)

Register your company with the local tax office to obtain your NPWP, which is required for all financial transactions and tax filings.

8. Open a Corporate Bank Account

With your NPWP and legal documents, open a corporate bank account in an Indonesian bank. This account will be used for all business transactions.

9. Obtain Business Identification Number (NIB)

Apply for your NIB through the OSS (Online Single Submission) system. This number serves as your company’s primary business license.

10. Secure Additional Licenses (if required)

Depending on your business activities, you may need additional permits, such as tourism licenses, restaurant permits, or import/export licenses.

11. Register for Employment Social Security (BPJS Ketenagakerjaan)

If you plan to hire employees, you’ll need to register your company with BPJS, Indonesia’s employment social security system.

12. Hire Local Staff and Expatriates

Follow Indonesia’s labor laws when hiring employees. If you plan to hire expatriates, secure work permits (KITAS) for them.

13. Stay Compliant with Reporting Obligations

Once your PMA is operational, you must stay compliant with ongoing reporting requirements, including monthly and annual tax reports and investment activity updates to BKPM.