Foreign investors planning to establish a PT PMA in Indonesia must understand that permits are not permanent. The validity of a PT PMA permit depends on the license type, business sector, and compliance with investment regulations.
Principal License Validity (Investment Registration)
The Principal License for a PT PMA is typically valid for 1 to 5 years, depending on the business line and industry. It serves as the initial approval, allowing foreign investors to establish their company and prepare for operations. However, it does not grant full operational rights.
Also read: Is PT PMA Considered an Indonesian Legal Entity?
Transition to Permanent Business License (IUT)
Once the investment realization stage is complete, PT PMAs must secure a Permanent Business License (IUT – Izin Usaha Tetap). The IUT is valid for 30 years, providing long-term operational stability. Companies that meet investment obligations may extend their IUT further.
Extension and Renewal Rules
To maintain compliance, PT PMA holders must file for Principal License extensions at least 30 days before expiry. BKPM often conducts field inspections to verify whether the company has made adequate progress. Failure to extend or convert the Principal License into an IUT can lead to license revocation.
Business License Duration Based on Scale
For smaller companies (net assets under IDR 10 billion or profits below IDR 50 billion), a business license is valid for 1 year. Larger enterprises, however, enjoy ongoing validity as long as operations continue.
Sector-Specific Conditions
Industries such as manufacturing must commence commercial production within 3 years of receiving the Principal License. Some sectors may have longer grace periods, but delays risk sanctions from BKPM.
Also read: Can a PMA Company in Indonesia Engage in Retail Trade?
Comparison with Representative Offices
Foreign representative offices (KPPA) are granted licenses valid for 3 years, which can be extended if their appointment letter remains valid. This is different from PT PMA permits, which involve stricter compliance checks.
Also read: How to Transition from a Representative Office to a PT PMA in Indonesia: InvestinAsia’s Guide
Why Compliance Matters
Failure to secure the correct license or meet deadlines can result in license revocation, fines, or even forced closure of the company. Investors who underestimate compliance timelines often face costly delays in business operations.
Smooth Path to Compliance with InvestinAsia
Setting up and managing a PT PMA in Indonesia can be complex due to sector-specific regulations and strict oversight by BKPM. InvestinAsia’s Indonesia PMA Company Registration Service ensures that your permits are valid, extensions are filed on time, and compliance is maintained throughout your business lifecycle. With professional support, investors can focus on growth while experts handle the regulatory side.
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
How long is a PT PMA Principal License valid in Indonesia?
It is valid for 1–5 years, depending on the sector and investment plan.
What is the validity period of a PT PMA Permanent Business License (IUT)?
The IUT is valid for 30 years and can be extended.
Can a PT PMA operate only with a Principal License?
No. It must transition to an IUT to continue operations legally.
What happens if I miss the Principal License extension deadline?
You cannot extend it anymore and must reapply for a new license.
Does business size affect license validity?
Yes. Smaller companies have a 1-year license, while larger ones maintain validity as long as they operate.
References:
Budidjaja. New Regulation on Capital Investment Licensing and Facilities. https://budidjaja.law/2018/01/new-regulation-on-capital-investment-licensing-and-facilities/.
