Perseroan Terbatas (PT) serves as the primary legal entity through which foreign companies, governments, and individuals must operate to run a revenue-generating business in Indonesia. Known as a foreign investment limited liability company, a PT facilitates foreign investors’ commercial activities in this vibrant Southeast Asian market.
Any Indonesian business receiving foreign investments must be structured as a PT. These entities can vary, being classified into open, closed, domestic, foreign, individual, or general public PTs.
Key Takeaways
- Foreign Investors Friendly: A Perseroan Terbatas (PT) is a legal business entity enabling foreign investors to operate profit-oriented enterprises in Indonesia.
- Regulatory Nuances: While similar to LLCs in the US, PTs must adhere to specific Indonesian regulations that govern business entities.
- Stock Market Participation: Some PTs list shares on stock exchanges, offering wider investment opportunities.
- Diverse Structures: Indonesia hosts different types of PTs, including open, closed, domestic, individual, and general public formats.
Understanding a Perseroan Terbatas (PT)
Each country operates unique legal business structures. Comparable to the American Limited Liability Company (LLC), Indonesian PTs often make public shares available. Shareholders are only liable for the amount of their original investment, insulating them from full debt responsibility in bankruptcy situations. The articles of association in a PT detail share ownership specifics.
Indonesian regional and national laws strictly govern PT operations, encompassing license requirements based on business type. Although resembling LLCs, PTs must comply with Indonesian-specific business legislations.
Types of Perseroan Terbatas (PTs) in Indonesia
Open PT
An open PT (LLC) offers shares to the public, making ownership accessible to general investors. This structure supports straightforward stock trading activities.
Closed PT
A closed PT restricts share sales to select individuals or entities, often seen in family-run operational models.
Domestic PT
A domestic PT operates within Indonesia and adheres to the Republic’s rigorous business guidelines.
Individual PT
Individual PTs issue shares to a single proprietor, granting them exclusive control and authority over the business.
Foreign PT
A foreign PT is incorporated under another nation’s laws but aligns with local Indonesian regulations when operating within Indonesia.
General Public PT
Similar to an open PT, a general public PT allows any entity to own shares, often listing these on stock exchanges for public trading.
Requirements for Establishing a Perseroan Terbatas (PT)
The Indonesian Investment Coordinating Board (BKPM) collaborates with private businesses to implement policies and coordinate foreign investments, driving economic progression and job creation. Below are essential steps to establish a PT, including estimated timelines:
- Obtain Principal & Business License: Approximately seven days.
- Deed of Establishment and Articles of Association: One to two days via BKPM.
- Legalization of PT’s Legal Entity Status: Requires Ministry of Law and Human Rights processing within ten days.
- Acquire Domicile Letter: Local district authority issues within three days.
- Obtain Tax Identification Number (NPWP) and Taxable Entrepreneur Registration (PKP): Issued by the local tax office in three days.
- Company Registration Certificate (TDP): Provided by the agency for integrated licensing services (BPPT) within 14 days.
- Fulfill Manpower and Company Welfare Reporting: Managed by the Ministry of Manpower’s sub-department in seven days.
Special Considerations
Foreign investors must navigate Indonesia’s intricate foreign investment regulations. Establishing a PT involves significant preparation, often necessitating local expertise for compliance and approval.
Certain sectors impose partial domestic ownership requirements, prompting collaborations with local partners. Alternatively, establishing a representative office may support market research and networking efforts, granting insights before committing to forming a PT.
Related Terms: Indonesia, Business Entity, Investment, Limited Liability Company, Foreign Investment, Stock Exchange
References
- BKPM. “Profile”.
