Challenges of Establishing a PT PMA for Foreigners in Indonesia

Establishing a PT PMA (foreign-owned company) in Indonesia involves significant challenges, primarily high capital requirements (minimum IDR 10 billion), complex, shifting regulations, and, in some sectors, mandatory local partnerships.

Key hurdles include navigating bureaucratic licensing, obtaining work permits (KITAS) for expats, meeting strict tax compliance, and managing logistical, cultural, and language barriers.

High Capital Requirements

One of the biggest hurdles is the minimum investment requirement.

• Minimum investment plan: IDR 10 billion (excluding land and buildings)
• Minimum paid-up capital: IDR 2.5 billion (25%)
• Funds must align with the approved business activity (KBLI)

For many startups or small foreign founders, this creates financial pressure, especially if the business is still in its early stages.

Regulatory Complexity & Licensing

Indonesia uses the OSS RBA (Online Single Submission – Risk-Based Approach) system, which categorizes businesses based on risk level. While designed to simplify licensing, it often creates confusion for foreign investors.

Common issues include:

• Choosing the wrong KBLI business classification
• Misunderstanding risk levels (low, medium, high risk)
• Licenses issued but not yet effective until post-licensing commitments are fulfilled

A single mistake at this stage can delay operations or force a full restructure. That’s why you have to learn how to get a business license and permit in Indonesia before you establish your PT PMA.

Strict Compliance & Reporting Obligations

PT PMA companies must comply with ongoing obligations, including:

• Tax compliance (monthly & annual filings)
• LKPM (Investment Activity Reports) submission every quarter
• Proper bookkeeping and audited financial records (where required)

Failure to comply may result in administrative sanctions, fines, or even business suspension.

Sector Restrictions & Local Partnership Requirements

Not all sectors are fully open to foreign ownership.

• Some business fields have foreign ownership limits
• Certain sectors require mandatory local partners
• Rules may change due to government policy updates

Without proper verification, foreign investors risk entering restricted sectors unknowingly.

Long Timelines & Bureaucracy

Even with complete documents, timelines can be unpredictable:

• Company deed & legalization
• NIB and operational licenses
• NPWP (tax ID) registration
• Bank account opening

Delays often occur due to document revisions, system errors, or inter-agency coordination.

Visa & Work Permit Challenges (KITAS & RPTKA)

Foreign directors and employees must obtain:

• RPTKA (Foreign Manpower Utilization Plan)
• KITAS (Limited Stay Permit)

These processes can take several weeks and are tightly linked to:

• Company capital
• Job position eligibility
• Business activity approval

Incorrect structuring may result in visa rejection.

Operational, Cultural & Language Barriers

Indonesia’s legal and business environment is highly contextual.

Foreign founders often struggle with:

• Bahasa Indonesia–only legal documents
• Local business customs and expectations
• Managing operations across different regions
• Understanding unwritten regulatory practices

These challenges can slow growth if not properly managed.

Learn more: Challenges When Starting a Business in Indonesia for Foreigners and How to Overcome Them

How to Mitigate These Challenges

• Use Professional Assistance
  Working with experienced consultants helps prevent costly errors, especially in licensing, KBLI selection, and compliance structuring.
• Ensure Proper Capital Planning
  A realistic and compliant investment plan is essential, not only to pass initial approval but also for future reporting and audits.
• Verify Local Partners Carefully
  If a partnership is required, thorough due diligence is critical to avoid legal and operational risks.

How BaliEasy Helps

Visa BaliEasy supports foreign founders end-to-end by:

• Structuring compliant PT PMA setups
• Identifying the correct KBLI & licenses
• Managing OSS, NIB, and post-licensing commitments
• Assisting with KITAS & work permits
• Providing 24/7 human customer support

With the right guidance, establishing a PT PMA in Indonesia becomes a structured, predictable process instead of a costly trial-and-error journey.