PMA — Setting Up a Foreigner Company

PMA (Penanaman Modal Asing) — Indonesia's foreign direct-investment company. The standard legal path for a foreigner to legally run a business in Bali. 5 core requirements — min capital Rp 10B (USD $670K) declared, NIB, SIUP, BPJS duties, by-industry restricted sectors (DNI). 3,000+ PMA companies registered in Bali. Diverse — hotels, restaurants, yoga, design, software, real estate. The required procedure when a foreigner starts a cafe, yoga, villa business in Bali. Knowing it = legal; not knowing it = Nominee trap and forced-closure risk.

A. PMA Definition and Structure

PMA = Penanaman Modal Asing (foreign capital investment).

Key features:

• Foreigner shareholder 1%+ — classified as PMA
• Form — PT (Perseroan Terbatas), a limited company
• Min capital Rp 10B (USD $670K) declared
• Indonesian entity — Indonesian law applies
• Entity name can hold land (HGB), bank account, employment

PMA vs PT (domestic):

PMA advantages:

• Foreigner legal operation
• Hiring foreign employees (Working KITAS) possible
• Overseas remittance / import / export
• International trust

PMA disadvantages:

• Min-capital burden
• Annual accounting / tax duties
• DNI-restricted sectors
• Working KITAS rule (1 foreigner : 10 Balinese)

Sources: UU 25/2007 (Investment Law) · UU 11/2020 (Cipta Kerja) · BKPM

B. Setup Procedure — 7 Steps

1. Decide business sector

• KBLI (Indonesian standard industry classification) code
• DNI (restricted-list) check
• Foreigner share per sector (49–100%)

2. Decide company name / shareholders

• PT PMA [Company Name]
• Min 2 shareholders
• Foreigner share — per DNI
• Balinese shareholders (avoid Nominee) — real investment recommended

3. Notaris notarization

• Articles of Association (Akta Pendirian)
• Shareholder agreement
• Capital declaration — Rp 10B+
• Cost — Rp 10–30M

4. BKPM registration (OSS)

• Online Single Submission
• NIB (Nomor Induk Berusaha, business registration number)
• By-industry licenses
• Period — 2–4 weeks

5. NPWP (tax registration)

• National tax office
• Entity NPWP + shareholder / employee NPWP

6. By-industry licenses

7. BPJS / bank / operations

• BPJS Kesehatan / Ketenagakerjaan registration
• Entity bank account (BCA, Mandiri, BNI)
• Hire / contract employees
• Start trading

Total period: 2–6 months Total cost: Rp 50–200M + capital (separate)

Sources: BKPM OSS · The Jakarta Post — PMA procedure series

C. DNI — Restricted Sectors (Daftar Negatif Investasi)

Fully prohibited sectors (foreigner 0%):

• Defense / weapons
• Casino / gambling
• Some natural resources (minerals, coral)
• Drugs / psychotropics

Restricted — foreigner ≤49%:

• Some fisheries / marine resources
• Traditional medicine / herbs
• Traditional media
• Film production (some)

Restricted — foreigner ≤67%:

• Some air transport
• Some telecoms

100% foreigner allowed (most):

• Hotels / resorts
• Restaurants / cafes
• Yoga / wellness / Spa
• Design / architecture
• Software / IT
• Education / coaching
• Real estate (PMA HGB)

2020 Omnibus Law (UU 11/2020):

• DNI heavily eased
• Positive list — restricted sectors specified
• Rest — 100% foreigner allowed

Bali specifics — some restrictions:

• Adat / religious-ritual business — restricted for foreigners
• Traditional crafts (Mas, Celuk) — Balinese preferred
• Beach / marine — some restricted

Sources: BKPM Positive List · UU 11/2020 · DNI latest sources

D. Working KITAS — Foreign-Employee Duties

Working KITAS = foreign work visa.

Duties:

• PMA company — hire 10 Balinese per 1 foreigner
• PMA Director / Commissioner — foreigner allowed
• Foreign employees — Manager+ specialist roles

Conditions:

• Foreigner — university degree + 5+ years experience
• Employer — PMA or licensed company
• Pay — 5–20× Balinese average (market standard)

Working KITAS procedure:

1. Employer company — apply for IMTA (Izin Mempekerjakan Tenaga Asing)
2. Manpower (Kemnaker) approval
3. VITAS (Visa Tinggal Terbatas) issuance (embassy)
4. Convert to KITAS after Bali arrival
5. Annual renewal

Costs:

• IMTA / KITAS annual Rp 15–30M
• DKP-TKA (foreign-employment fund) USD $1,200/year
• Total foreigner-employee cost — 5–20× Balinese

Exceptions:

• PMA company Director — no Working KITAS needed
• Investor KITAS — Director authority
• Spouse KITAS — some business possible

Sources: Kemnaker · The Jakarta Post — Working KITAS series

E. The Foreigner's View — Reality of PMA Operation

1. By-industry PMA examples

Cafes / restaurants:

• Min capital Rp 10B declared (not actually used)
• 100% foreigner possible
• F&B TDUP license
• Working KITAS — Chef / Manager
• Many Balinese staff

Yoga / wellness:

• Foreign instructor — Working KITAS
• Mandatory Balinese-instructor hire
• Additional education licensing

Hotel / villa business:

• Pondok Wisata license
• Hak Pakai / HGB land
• Banjar consent (Adat)
• Large-scale — PMA HGU / HGB

Software / IT:

• Min capital + NIB
• Remote work — some digital nomads set up PMA
• Foreigner 100% — common

Real estate:

• PMA HGB real-estate company
• No Hak Milik trading; HGB / Hak Pakai possible

2. PMA annual duties

• Year-end accounting / audit (CPA required)
• Tax filings (PPh 22% / VAT 11%)
• BPJS staff insurance
• LKPM quarterly report (BKPM)
• Annual accounting cost — Rp 30–100M

3. Common mistakes

1. Trusting Nominee

• Local name = legally void
• Recommend proper PMA path

2. Ignoring min capital

• Rp 10B declared + some actual deposit required
• 2024 BKPM tightened

3. Ignoring Working KITAS

• Foreigner — without Working KITAS running business — illegal
• Investor KITAS or Working KITAS

4. Skipping tax filings

• PMA — annual settlement duty
• Fines / license suspension risk

5. Inadequate DNI check

• Restricted sectors — 51% Balinese required
• Confirm 100% foreigner sectors

4. By-industry Bali PMA examples

5. New current — Digital Nomad Visa (2024+)

• 5-year visa, tax exemption
• No PMA required — non-Indonesia income tax-exempt
• Bali business — separate PMA

Quick Summary

Sources / References

• Wiki — Foreign direct investment in Indonesia · Perseroan Terbatas
• Official — UU 25/2007 (Investment Law) · UU 11/2020 (Cipta Kerja Omnibus) · UU 40/2007 (Company Law) · BKPM — OSS online registration · Kemnaker — Working KITAS · DJP (National Tax Office) — NPWP
• News — The Jakarta Post — PMA / foreigner-business series · Bali Post — foreigner business · Tempo — Nominee crackdown · Bali Discovery — PMA guide · Reuters — Bali foreigner enforcement
• Academic — Picard M., Bali: Cultural Tourism and Touristic Culture (Archipelago Press, 1996); Vickers A., Bali: A Paradise Created (2012); MacRae G., Banjar of Bali (Singapore University Press, 1997); Slaats H., Adat Law and Indonesia (Routledge, 2018)