Types of Company in Indonesia: The Right Business Structure
Types of company in Indonesia compared: PT PMA, local PT, PT Perorangan and representative office, and how share ownership decides which one fits.
- UU No. 25 Tahun 2007 (the Investment Law). Articles 1 and 5.
- UU No. 40 Tahun 2007 (the Company Law), as amended by UU No. 6 Tahun 2023. Articles 7, 32, 33, 92, 108, 153A, 153E and 153F.
- PP No. 8 Tahun 2021 on authorised capital and the perseroan perorangan. Articles 4, 6, 8 and 9.
- PP No. 7 Tahun 2021 on micro, small and medium enterprises. Article 35.
- Peraturan Menteri Investasi dan Hilirisasi/Kepala BKPM No. 5 Tahun 2025, in force 2 October 2025. Articles 23 to 27, 227, 270, 271, 276 and 295.
- Peraturan Menteri Perdagangan No. 10/M-DAG/PER/3/2006, as amended. Articles 3 and 4.
- Perpres No. 10 Tahun 2021, as amended by Perpres No. 49 Tahun 2021. Article 2.
- PMK No. 81 Tahun 2024. Article 40.
- UU No. 25 Tahun 1992 on co-operatives, as amended by UU No. 6 Tahun 2023. Article 6.
- UU No. 16 Tahun 2001 on foundations, as amended by UU No. 28 Tahun 2004. Articles 1 and 3.
The types of company in Indonesia that a founder actually chooses between come down to four. A PT PMA (Perseroan Terbatas Penanaman Modal Asing, a foreign-investment limited company) is for any business with a foreign shareholder. A local PT, or PT PMDN (Penanaman Modal Dalam Negeri, domestic investment), is for Indonesian shareholders only. A PT Perorangan is a one-person company for an Indonesian citizen at micro or small scale. A representative office gives a foreign company people on the ground without trading. Who will own the shares decides which one fits, and MAM sets up all four.
This guide assumes you have decided to have an entity of your own. If you are still weighing that against hiring through a third party, start with our comparison of an employer of record and your own PT PMA.
Foreign or domestic: the ownership test
Foreign investment in Indonesia must be made through a PT set up under Indonesian law and based in Indonesia, unless another law says otherwise (UU 25/2007, the Investment Law, Article 5(2)). The 2025 licensing regulation says the same (Permeninves/BKPM 5/2025, Article 23(11)). Indonesian investors have a wider choice: an incorporated business, an unincorporated one, or a business in their own name (Investment Law, Article 5(1)).
A person trading in their own name, without any company, must be an Indonesian citizen, and that business always counts as domestic (Permeninves/BKPM 5/2025, Article 23(2) and (8)). For a foreign individual, nationality is read from the passport used when the company is formed. Permanent residence of another country does not change it (Article 23(13)).
One foreign shareholder is enough
The law counts a company as foreign investment whether foreign investors own all of it or hold shares alongside Indonesian partners (Investment Law, Article 1, point 3). Capital held by an Indonesian company that is itself partly foreign-owned counts as foreign capital (Article 1, point 8). So one foreign share, held directly or through such a company, makes the business a PT PMA.
Four types of company in Indonesia, side by side
| PT PMA | PT PMDN | PT Perorangan | Representative office | |
|---|---|---|---|---|
| Who owns it | Foreign investors, with or without Indonesians | Indonesian shareholders only | One Indonesian citizen | Not owned: an office of a foreign company |
| Legal entity | Yes | Yes | Yes | No |
| Earns revenue | Yes | Yes | Yes | No |
| Capital | At least IDR 2.5bn paid up | Founders set it, no minimum | Founder sets it, no minimum | None required |
| Suits | Trading in Indonesia in your own name | A business owned by Indonesians | A micro or small business, one founder | Research, liaison and supplier oversight |
PT PMA: for any foreign shareholding
A PT PMA is treated as a large enterprise whatever its size (Permeninves/BKPM 5/2025, Article 26(1)). Two figures follow from that:
- Planned investment of more than IDR 10 billion for each five-digit KBLI business line (Klasifikasi Baku Lapangan Usaha Indonesia, the standard business classification) at each project location, excluding land and buildings (Article 26(2)). For property, accommodation and farming, land and buildings do count (Article 26(5)).
- Issued and paid-up capital of at least IDR 2.5 billion for each PT (Article 26(10)).
The paid-up capital is the company’s own working money, not a deposit. It stays in the company’s account for its first 12 months, but it can be spent in that time on assets, buildings and running the business (Article 27(1)).
Foreign ownership can reach 100%, depending on the activity. Every business field is open to investment except those closed to it or reserved to central government (Perpres 10/2021, as amended by Perpres 49/2021, Article 2(1)). Our guide to KBLI codes and the online licensing system explains how the business field is checked when the company registers.
A PT needs at least two founders (UU 40/2007, the Company Law, Article 7(1)). Either can be a person or a company, Indonesian or foreign, so a foreign parent company can hold the shares (elucidation to Article 7(1)).
A PT PMA can have Indonesian shareholders beside foreign ones, or several foreign owners together. Either way it is set up in exactly the same way, and we set up both. Our PT PMA service covers the whole setup.
PT PMDN: Indonesian-owned
Every shareholder in a PT PMDN must be Indonesian: a citizen, an Indonesian company with no foreign capital, the state or a region (Investment Law, Article 1, point 5). A local PT cannot take even one foreign shareholder, because that single share makes it a PT PMA.
There is no minimum capital. The founders decide the authorised capital (Company Law, Article 32, as amended by UU 6/2023). At least a quarter of it must be issued and fully paid up (Article 33(1)), and the founders file evidence of it within 60 days (PP 8/2021, Article 4).
The capital the business runs on sets its size band, excluding land and buildings (Permeninves/BKPM 5/2025, Article 25; PP 7/2021, Article 35):
- micro, up to IDR 1 billion
- small, up to IDR 5 billion
- medium, up to IDR 10 billion
- large, above IDR 10 billion
The band affects how the business is licensed and how often the company reports its investment. Our local PT service sets out how a PT PMDN and a PT PMA differ in practice.
PT Perorangan: one Indonesian founder
A company meeting the micro and small criteria may be founded by one person (Company Law, Article 153A). That founder must be an Indonesian citizen, aged 17 or over, and completes a statement of establishment in Indonesian instead of signing a notarial deed (PP 8/2021, Article 6). The founder is the director and the shareholder at once (PP 8/2021, Article 8(4)(g)).
It stays eligible while its business capital is no more than IDR 5 billion, excluding land and buildings (PP 7/2021, Article 35). Each founder may register one a year (Company Law, Article 153E(2)), and it must produce financial statements (Article 153F(1)).
It is a real limited company. When a second shareholder joins, or the business grows past small scale, it converts into an ordinary PT by notarial deed (PP 8/2021, Article 9). Our PT Perorangan service covers the registration and that later conversion.
Representative office: a presence before a company
The law recognises five kinds of representative office (Permeninves/BKPM 5/2025, Article 24(3)). We set up two of them:
- KPPA (Kantor Perwakilan Perusahaan Asing), a foreign company’s office. It can supervise, liaise, coordinate the group’s interests and prepare the setting up of a PT PMA. It may not earn income from Indonesian sources (Article 270(3)). Its registration lasts as long as it operates (Article 270(6)).
- KP3A (Kantor Perwakilan Perusahaan Perdagangan Asing), a foreign trading company’s office. It holds a trade licence for representative offices alongside its registration (Article 271). It can promote the parent’s goods and research the market, but it may not trade or make sales (Permendag 10/2006, Articles 3 and 4).
Neither needs capital. Each registers for a tax number within a month of being set up, for the tax it withholds, even while it earns nothing (PMK 81/2024, Article 40).
Construction is the exception. A foreign construction firm’s office is known as a BUJKA office (Badan Usaha Jasa Konstruksi Asing). It may carry out works across Indonesia, but only through a joint operation with an Indonesian contractor and only if it qualifies as a large firm (Article 276).
Our representative office service confirms which kind fits your plan before anything is filed.
What founders often assume
Forms that are usually not the answer
A branch of the overseas company
A foreign company can run a licensed business in Indonesia in its own name in only a few fields, such as upstream oil and gas and air transport (Permeninves/BKPM 5/2025, Article 23(4)). For most businesses, the vehicle is a PT PMA.
CV and firma
Partnerships, and open to Indonesian investors only, because foreign investment must take the form of a PT (Investment Law, Article 5(2)).
Co-operative
A business owned by its members on co-operative principles. A primary co-operative needs at least nine people (UU 25/1992, Article 6(1), as amended by UU 6/2023).
Yayasan
A foundation for social, religious or humanitarian aims, with no members. It may not pass business results to its boards (UU 16/2001, Articles 1 and 3). See how a yayasan is set up.
A shelf company is not a separate type. It is an existing PT that you acquire instead of forming a new one.
Changing form later
A choice made now can change. When a local PT sells or transfers shares to a foreign person or company, it becomes a PT PMA, as long as the business field allows foreign ownership (Permeninves/BKPM 5/2025, Article 227). It must then meet the PT PMA rules, including the capital. We handle that conversion. A PT PMA can also become a local PT under the same article.
A PT Perorangan becomes an ordinary PT when it takes a second shareholder or outgrows small scale, as above. Of the four, a representative office is the one that cannot change into another: when the time comes to trade, a new PT PMA is incorporated.
Questions people ask
When does a new PT become a legal entity?
How many directors and commissioners does an ordinary PT need?
Does a representative office report to the investment ministry?
What this means for you
Start from ownership. If any shareholder is foreign, the answer is a PT PMA. If every shareholder is Indonesian, it is a local PT, or a PT Perorangan for a sole founder at small scale. If for now you need only people on the ground, it is a representative office. Of the types of company in Indonesia, the choice starts with that one question. The rules behind each form are ours to work through with you; your part is deciding who will own the business.