When establishing a PT PMA (foreign-owned company) in Indonesia, investors often ask if they must include Indonesian employees or shareholders. The answer is clear: Indonesian employees are mandatory, but Indonesian shareholders are not.
Employee Requirements
According to Investment Law No. 25 of 2007, PT PMA companies must prioritize hiring Indonesian citizens. This principle applies to all sectors. However, companies may employ foreign experts when local talent cannot meet specific needs.
To employ foreign nationals, businesses must obtain an RPTKA (Foreign Manpower Utilization Plan) from the Ministry of Manpower. Foreign hires must also hold valid stay permits (KITAS). Importantly, PT PMA companies are obliged to provide training and technology transfer to Indonesian employees, ensuring long-term skill development.
Unlike the past, there is no longer a strict 10:1 ratio of Indonesian-to-foreign workers. This change gives companies more flexibility in building international teams while still complying with Indonesian labor policies.
Also read: Indonesia Labour Law & Employment Regulations: Complete Guide
Foreign investors often worry they need a local partner. In practice, PT PMA companies are not obligated to have Indonesian shareholders. The law allows 100% foreign ownership in many industries, as outlined in the Positive Investment List (Presidential Regulation 49/2021).
To establish a PT PMA, you need:
- At least two shareholders (individuals or legal entities, all can be foreign).
- At least one director residing in Indonesia, who may be a foreign national with the proper permits.
- At least one commissioner is also required, and this position may be held by a foreigner who does not need to reside in Indonesia.
Capital and Sector Considerations
Every PT PMA must meet the minimum investment threshold of IDR 10 billion capital. While many industries are open to full foreign ownership—including manufacturing, IT, healthcare, and tourism—certain sectors remain restricted or closed. For restricted sectors, foreign ownership caps may apply, requiring local partnerships.
Also read: What Fields Can a PMA Company Operate in Indonesia?
Why This Matters for Investors
Understanding these rules helps investors avoid costly mistakes. While you enjoy full ownership freedom, you must comply with employment obligations. Proper planning ensures your company structure aligns with regulations while maximizing growth potential.
Also read: How to Set Up PMA Company in Indonesia: Guide for Foreigner
How InvestinAsia Can Help
Navigating Indonesia’s legal framework can feel overwhelming. From employee obligations to shareholder structuring, the details matter. InvestinAsia’s PMA Company Registration Service simplifies the process.
Our experts help you:
- Structure your PT PMA legally and efficiently.
- Secure work permits and approvals for foreign staff.
- Ensure compliance with shareholder and director requirements.
- Handle capital registration and licensing smoothly.
You can also enjoy special package prices for PT PMA and KITAS services.
If you want to expand into Indonesia without regulatory stress, let InvestinAsia handle the complexities so you can focus on business growth.
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FAQs
Full foreign ownership is permitted in many sectors, as long as the industry is not restricted under the Positive Investment List.
Must a PT PMA employ Indonesian workers?
Yes. Companies must prioritize Indonesian citizens in recruitment, though foreign experts can be hired with permits.
Can foreigners hold a director position in a PT PMA?
Yes. However, the law requires at least one resident director, and this role may be filled by a foreigner with the correct permits.
What is the minimum capital requirement for a PT PMA?
The requirement is an investment of at least IDR 10 billion, with a minimum of IDR 2.5 billion in paid-up capital.
Are there restricted sectors for foreign investment?
Yes. Some industries have caps or require partnerships, while a few remain closed to foreign investors.
References:
- Asean Briefing. Shareholder Agreements in Indonesia: Legal Protections for Foreign Investors. https://www.aseanbriefing.com/news/shareholder-agreements-in-indonesia-legal-protections-for-foreign-investors/.
- BKPM. LAW OF THE REPUBLIC OF INDONESIA NUMBER 25 OF 2007 ON INVESTMENT. https://jdih-storage.bkpm.go.id/jdih/jdih/2007UUINVESTMENT25-ENGLISH-.pdf.
- Business Indonesia. FOREIGN INVESTMENT LIMITED LIABILITY COMPANY. https://business-indonesia.org/setting_up_a_pt_pma.
- SSEK. Establishing a Business in Indonesia – Directors and Board Composition. https://ssek.com/blog/establishing-a-business-in-indonesia-ai-directors-and-board-composition/.
