Indonesia company formation in 2026: the PT PMA and the IDR 10 billion nobody mentions

Indonesia is the fourth most populous country on earth with a fast-growing consumer economy, and foreign founders keep arriving expecting a cheap company and a Bali villa. The foreign-investment vehicle, the PT PMA, is not designed for them. It is designed for people committing real capital to a real operating business, and every number in it says so.

Here is the short version. A PT PMA — a foreign-investment limited liability company — needs at least two shareholders, one director and one commissioner. Paid-up capital was cut to IDR 2.5 billion from IDR 10 billion under BKPM Regulation 5/2025, effective October 2025, and a capital-declaration letter is accepted at incorporation. The binding constraint is elsewhere: the total investment plan must still exceed IDR 10 billion per KBLI business-activity code, excluding land and buildings. Corporate income tax is 22%. A live entity with an NIB takes about two to four weeks in a straightforward case; sector licences, the bank account and an investor KITAS add weeks.

How to set up a PT PMA

1. Reserve a company name — a minimum of three words — via AHU Online, and have a notary draft the Deed of Incorporation, the Akta Pendirian, setting out shareholders, KBLI business activities, capital and board.
2. Obtain Ministry of Law approval of the deed, the SK Kemenkumham. This is what creates the legal entity.
3. Register through OSS-RBA, the risk-based online single submission system, to obtain the NIB, the business identification number. The NIB simultaneously issues the corporate NPWP tax ID and BPJS registration.
4. Secure risk-based sector licences for your KBLI codes, open a corporate bank account and deposit or declare capital, and arrange KITAS work and stay permits for any resident foreign director.

Formation can be done remotely by granting power of attorney to an Indonesian notary. Foreign shareholder and director documents must be notarised and apostilled or legalised abroad. Bank-account opening and the KITAS usually need someone physically present.

The capital figures, in the right order

The headline reform is real: paid-up capital fell from IDR 10 billion to IDR 2.5 billion in October 2025, and a capital-declaration letter is accepted at incorporation with the actual deposit following the bank account. That is a meaningful easing.

It is also the least important of the three numbers. The total investment plan must exceed IDR 10 billion per KBLI code, excluding land and buildings — and more KBLI codes multiply the commitment. A company registering three activities is planning a much larger investment than one registering a single activity, which is a design decision to make before the notary drafts anything.

Separately, each foreign investor needs roughly IDR 10 billion of shareholding to qualify for an Investor KITAS. If the point of the exercise is a residence permit, that is the figure to plan against.

The Positive Investment List decides whether you can start

Not every sector is open to 100% foreign ownership. The Positive Investment List, Presidential Regulation 10/2021 as amended, caps or closes certain activities. Your intended KBLI codes must be checked against it before you commit money or draft a deed, because a structure built around a restricted activity has to be rebuilt.

This is the single most common way an Indonesian plan fails, and it fails late — after fees are paid and expectations are set.

Tax

Corporate income tax is 22% as of 2026. Listed companies meeting the 40% free-float test get a three-point cut to 19%. Companies with turnover under IDR 50 billion receive a 50% rate reduction on the taxable-income portion attributable to the first IDR 4.8 billion of turnover, which is a genuine benefit for smaller operators.

One change matters for anyone working from an old plan: under PP 20/2026, PT entities can no longer use the 0.5% final-tax UMKM regime. If a proposal you were given relies on that half-per-cent, it is out of date.

Governance and audit

Statutory audit by an Indonesia-registered public accountant is mandatory once total assets reach IDR 50 billion, or if the company is listed, issues public debt, or collects or manages public funds. Otherwise it is voluntary.

Under Permenkum 49/2025 every PT must hold an annual general meeting and approve an annual report within six months of year-end, with larger companies filing financials with the Ministry. This is a live obligation, not a formality, and dormant PT PMAs frequently fall foul of it.

No Indonesian-national director is legally required and 100% foreign ownership is permitted in open-list sectors. In practice at least one director should be resident in Indonesia to handle day-to-day matters, and a foreign director managing operations locally needs a work permit and KITAS. Shareholders and commissioners can be non-resident foreigners.

What it costs the state, and what it costs you

Ministry of Law ratification is IDR 1,100,000 for companies with capital above IDR 1 billion — which every PT PMA is — plus name reservation of about IDR 200,000 and State Gazette announcement fees. The NIB and NPWP carry no state fee. Notary fees, typically IDR 3 to 8 million, are a private cost, not a government charge.

State charges are trivial relative to the investment commitment. Nobody is priced out of Indonesia by the registry.

Who this is actually for

A foreign founder committing real capital to an operating Indonesian business — food and beverage, tourism, technology, trading, manufacturing — with a defined KBLI activity that is open to foreign ownership and a plan that survives the IDR 10 billion investment commitment.

It is not a cheap holding shell and was never intended to be. Anyone who wants a low-cost Asian company for holding or invoicing should look at Singapore or Hong Kong, where the entity is cheap and fast and the substance requirements are lighter. The PT PMA is the price of access to the Indonesian domestic market, and it is priced accordingly.