Foreign investors often ask whether a PMA (foreign-owned) company in Indonesia can operate as a distributor. The short answer is yes, but with restrictions. PMA companies are permitted to engage in distribution, provided they comply with local trade regulations, appoint Indonesian partners, and follow strict licensing requirements.
Distribution Rights for PMA Companies
Indonesia permits foreign-owned companies to engage in distribution activities. Recent reforms even permit up to 100% foreign ownership in most distribution businesses, as long as the company meets the minimum capital requirement of IDR 10 billion (excluding land and buildings).
This flexibility makes Indonesia an attractive market for foreign investors, especially in sectors like consumer goods, industrial equipment, and technology.
Key Restrictions on PMA Distributors
No Direct-to-Retail or Consumer Sales
PMA entities are not allowed to sell directly to retailers, individuals, or end customers. They must operate through a regulated distribution flow.
Mandatory Local Partner Requirement
Every PMA distributor must designate a fully Indonesian-owned company (PMDN) to act as a distributor or agent.
- Distributor: Purchases, stores, and sells products independently.
- Agent: Acts as a mediator without taking ownership of goods.
This ensures that local businesses remain central to Indonesia’s trade system.
Legal Distribution Structure
The legal distribution chain is:
PMA Importer/Distributor → PMDN Distributor/Agent → Retailer → End Consumer.
Only retailers are authorized to make direct sales to the public.
Also read: 6 Advantages of Establishing a PMA Company in Indonesia
Compliance and Licensing
Partnership Agreements
Partnership agreements with Indonesian companies must be drafted in Bahasa Indonesia, notarized, and officially legalized. They also require approval from the foreign principal producer.
Distributor Registration Certificate (STP)
While PMA companies cannot obtain an STP themselves, their appointed Indonesian partners must secure it. This certificate is essential for legal distribution.
KBLI Code Alignment
Business activities must be registered under the correct KBLI codes to include import and distribution. Incorrect classification may lead to operational restrictions.
Import Licensing
Most PMA distributors require an API-U (General Importer Identification Number) to import goods for resale.
Also read: PMA (Foreign Company) Taxation in Indonesia: Complete Guide
Enforcement and Risks
Authorities are strict about compliance. Non-compliance may result in:
- Suspension of licenses
- Import rejections at customs
- Fines and operational disruptions
For sustainable operations, foreign investors must structure their business carefully and comply with trade regulations.
Also read: Can a PMA Own Land and Properties in Indonesia?
Strategic Takeaways
The restrictions are not merely bureaucratic hurdles. They reflect Indonesia’s broader economic strategy to protect domestic businesses and ensure fair participation in the market. For foreign investors, this means opportunities exist, but with careful planning and local collaboration.
Navigating Indonesia’s regulatory environment can be complex. Setting up the right business structure, securing the correct licenses, and appointing compliant partners requires expertise.
That’s where InvestinAsia’s PMA Company Registration Service can help. We provide end-to-end support, from establishing your PMA entity to ensuring your business complies with distribution regulations—so you can focus on growing your market presence in Indonesia.
You can also enjoy special package prices for PT PMA and KITAS services.
Ready to start your business and investment in Indonesia? Chat with us now for FREE consultation!
FAQs
Can a PMA company in Indonesia sell directly to consumers?
The answer is no. PMA distributors cannot conduct direct sales to retailers or consumers. They must work through Indonesian-owned partners.
What is the minimum capital requirement for a PMA distributor?
IDR 10 billion, excluding land and building assets.
Who holds the Distributor Registration Certificate (STP)?
The Distributor Registration Certificate is held by the Indonesian partner (distributor or agent), not the PMA company.
Do PMA distributors need an API-U license?
Yes, if they import goods for commercial resale.
Why does Indonesia require local partners in distribution?
These requirements exist to safeguard local businesses, support the domestic economy, and maintain fair trade practices.
