Paid-up Capital and Investment of PT PMA

Paid-up Capital and Investment of PT PMA: What You Need to Know

Setting up a foreign-owned company (PT PMA) in Indonesia is an exciting opportunity for international investors. But before diving into the Indonesian market, it’s essential to understand two key financial components: paid-up capital and investment value. These aren’t just accounting terms — they directly affect your ability to operate legally and effectively in the country.

What is a PT PMA?

A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a limited liability company in Indonesia with foreign ownership. This is the legal entity required for foreign individuals or companies that want to do business in Indonesia.

What is Paid-up Capital?

Paid-up capital is the actual amount of capital that shareholders have injected into the company. In simpler terms, it’s the money that has already been transferred into the company’s bank account and is available for use in the business.

In a PT PMA, this capital:

• Demonstrates financial commitment to the Indonesian government

• Is used for operational and business development purposes

• Must be transferred from overseas (foreign shareholders) if they’re contributing capital

While there used to be a standard minimum (e.g., IDR 2.5 billion), current regulations focus more on the total investment plan rather than just the paid-up capital itself.

What is Total Investment?

The total investment is the full financial commitment to running the business. It includes:

• Paid-up capital

• Operational costs

• Equipment and machinery

• Office setup

• Salaries and overhead

According to BKPM (Indonesia Investment Coordinating Board) regulations, the minimum total investment for a PT PMA is IDR 10 billion (around USD 650,000), excluding land and building costs. At least 25% of that amount must be paid-up capital (around IDR 2.5 billion or USD 165,000).

Why This Matters

Complying with these requirements is essential for:

• Getting your business license approved

• Opening a corporate bank account

• Hiring expatriates

• Showing legitimacy to potential partners or customers

Failure to meet these requirements can lead to delays, penalties, or rejection of your business registration.

Final Thoughts

Understanding the difference between paid-up capital and total investment helps you plan better and ensures your PT PMA is compliant from day one. While the numbers might seem high at first glance, they reflect Indonesia’s push for serious, long-term foreign investment that contributes to the economy.