PT PMA Without the 10 Billion rupiah ?

[VartanRilen]

Hello, I would like to create a business in Indonesia, I have been with my partner for 7 years now (not married yet). And I would like to get started, I have been thinking about it for several years now and I looked for several solutions.

Firstly, the aim of the company would be web/video game development, I have worked in the past with Indonesians on projects related to this subject and I find them very competent not to mention the fact that their workforce is very affordable compared to other countries.

So let's back to why I do this post.

I have talk with few people that already setup PT PMA in Indonesia, normally according to the law it would take 10 billion rupiah (around 600K USD) to create a PT PMA type company. Obviously my budget is way above that, most of the people I spoke with and met who have had a PT PMA in operation for several years told me the same thing, that I don't I did not need these 10 billion rupiah, I also contacted a lawyer who told me the same thing (I contacted an independent lawyer) apparently the 10 billion rupiah requested for creation would serve as a barrier for avoid abuse and false companies.

So to conclude I just wonder if it is safe to choose this process? I could very well wait until marriage with my partner (which would make things easier) but I would really like to create the company before marriage (I don't want marriage too soon).

Thank you for reading me.
I repost this threat in this area I think is more appropriate than general chat.

I hope I can get some advice from you, I wish you a good day.

 

[gemima]

Hi there - I run a PT PMA business which was set up before the 10 B requirement was in place. The investors put in what was required at the time.
Not having the 10 B full paid up capital has caused us issues. I have a feeling as some point we may be forced to pump unnecessary money into the company to bring the capital up to 10 B in the deeds. We have so far avoided it (and as a shareholder myself I really hope I don't need to do that).
I know people say you can get away without the full amount - but be careful who you listen to - as a foreign owned business everything is monitored very carefully so it's not easy for these things to slip the notice of the authorities.

 

[MamangDudul]

Hi there - I run a PT PMA business which was set up before the 10 B requirement was in place. The investors put in what was required at the time.
Not having the 10 B full paid up capital has caused us issues. I have a feeling as some point we may be forced to pump unnecessary money into the company to bring the capital up to 10 B in the deeds. We have so far avoided it (and as a shareholder myself I really hope I don't need to do that).
I know people say you can get away without the full amount - but be careful who you listen to - as a foreign owned business everything is monitored very carefully so it's not easy for these things to slip the notice of the authorities.

I agree that one shouldn't do anything less than what is asked for. Sure, a lot of things might be overlooked but one day they might not be overlooked anymore and then you have more problems than when you just would have done what is required from the beginning.
Yeah I know that is still Indonesia, lots of stuff goes unnoticed. But it also isn't the Indonesia from a few decades ago. Laws concerning money and anything connected with taxes will probably only get more strict in the future and it will be harder to stay under the radar.

 

[centurion]

Tax office does not monitor the capital requirment fulfillment.

Capital requirement in amount of 10 billion is ridiculous and among highest, or even highest in the world. This have few consequences, among them preventing foreign investments, and inflated data about foreign investments, as every company is recorded as 10 billion Rp investment (realistic FDI are probably 20-40% of the government's official statistic).

If the requirement is strictly enforced, it will lead to a significant foreign investment decrease and closure of companies.

 

[MamangDudul]

I

Tax office does not monitor the capital requirment fulfillment.

Capital requirement in amount of 10 billion is ridiculous and among highest, or even highest in the world. This have few consequences, among them preventing foreign investments, and inflated data about foreign investments, as every company is recorded as 10 billion Rp investment (realistic FDI are probably 20-40% of the government's official statistic).

If the requirement is strictly enforced, it will lead to a significant foreign investment decrease and closure of companies.

Not yet, but Iam sure the day will come when things change. Ok, if someone don't wanna go the 10billion way and, so to say, operate in a grey area (as sooo many people do here) he is free to do so. But At least have what is asked, when someone really asks, though. That are just my 2cents.

 

[centurion]

I

Not yet, but Iam sure the day will come when things change. Ok, if someone don't wanna go the 10billion way and, so to say, operate in a grey area (as sooo many people do here) he is free to do so. But At least have what is asked, when someone really asks, though. That are just my 2cents.

In reality 90% of all new PMAs do not reach this tresholds (and I am talking about regular companies that operate and have employees).

 

[VartanRilen]

I talke with a Private lawyer about this and he told most of the PT PMA don't have the 10 billion requierement he also told me that nothing bad can happens as long as every 3 month the company report the tax

 

[centurion]

I talke with a Private lawyer about this and he told most of the PT PMA don't have the 10 billion requierement he also told me that nothing bad can happens as long as every 3 month the company report the tax

Well in Bali some investors (basically people using PMAs for investor visas only), have been deported and blacklisted for abusing the stay permit in cases where there was not enough (or at all) paid in capital. The check was done by the immigration.

 

[VartanRilen]

Well in Bali some investors (basically people using PMAs for investor visas only), have been deported and blacklisted for abusing the stay permit in cases where there was not enough (or at all) paid in capital. The check was done by the immigration.

In my case is not for the visa investor. For me is for starting business. So there will be moving money inside the company but not 10 billion for sure only 10% of that

 

[VartanRilen]

So I'm a Bit lost I really want to invest. Not for the stay Permit but for the business itself I'm just scare about if they see I don't have the 10 billion I dont want to be blacklisted or the money inside the company bank account block or something. And I don't want to get marry yet :/

 

[Dave70]

I talke with a Private lawyer about this and he told most of the PT PMA don't have the 10 billion requierement he also told me that nothing bad can happens as long as every 3 month the company report the tax

Every 3 months??? We are obliged to report every month… For example, withholding tax on employee salary, unless you hire no one. And VAT on goods & services, unless you don’t buy or sell anything (no Faktur Pajak received from supplier or issued to your customers).

 

[VartanRilen]

Yeah I forgot for the salary of employee so Yeah is everymonth my bad

 

[Samoerai]

Capital requirement in amount of 10 billion is ridiculous and among highest, or even highest in the world. This have few consequences, among them preventing foreign investments, and inflated data about foreign investments, as every company is recorded as 10 billion Rp investment (realistic FDI are probably 20-40% of the government's official statistic).

So, what would be the reason for this policy regarding an investment of 1,25 billion in shares and a paid-up capital of at least IDR 10 billion in a PMA?

a. the government is targeting quality investors.
The Golden Visa scheme has the potential to attract high-caliber investors and influential
entrepreneurs to Indonesia, who may be interested in investing in various industries such as
technology, tourism and infrastructure. The positive impact of this is the creation of job
opportunities and a boost to economic growth. To illustrate, a similar scheme in Portugal has
garnered investments worth more than €5 billion since its introduction, with investments
predominantly in the property sector, followed by capital injection and business establishment.
Introducing a Golden Visa scheme in Indonesia could be an attractive incentive for foreign
investors and a solution to the economic and regulatory challenges that Indonesia faces.

b. other reasons.

Research: https://www.researchgate.net/public..._EFFORT_TO_INVESTMENT_ATTRACTION_IN_INDONESIA

 

[fastpitch17]

Look at this way. Come October Prabowo will take over being president. He has a lot of new plans that will increase spending. He wants the nation to go deeper in debt while calling for an increase in financial growth. His feeding all school kids at Rp7,500 per person will cost billions of dollars and that doesn't include what is never mentioned, the cost for personnel and equipment. Prabowo's new spending have no returns on expendatures except for full stomachs. He will need to find cash to keep things going. I see him and his family directors getting hot on taxes for one remedy. So, you may want to keep that in mind. Spending will be immediate. Foreign investments take time for returns. Not over night.

 

[gemima]

In reality 90% of all new PMAs do not reach this tresholds (and I am talking about regular companies that operate and have employees).

Its for 100% foreign owned ones not all PMAs

 

[centurion]

Its for 100% foreign owned ones not all PMAs

For all.

 

[centurion]

So, what would be the reason for this policy regarding an investment of 1,25 billion in shares and a paid-up capital of at least IDR 10 billion in a PMA?

a. the government is targeting quality investors.
The Golden Visa scheme has the potential to attract high-caliber investors and influential
entrepreneurs to Indonesia, who may be interested in investing in various industries such as
technology, tourism and infrastructure. The positive impact of this is the creation of job
opportunities and a boost to economic growth. To illustrate, a similar scheme in Portugal has
garnered investments worth more than €5 billion since its introduction, with investments
predominantly in the property sector, followed by capital injection and business establishment.
Introducing a Golden Visa scheme in Indonesia could be an attractive incentive for foreign
investors and a solution to the economic and regulatory challenges that Indonesia faces.

b. other reasons.

Research: https://www.researchgate.net/public..._EFFORT_TO_INVESTMENT_ATTRACTION_IN_INDONESIA

All nonsense. That research, that is delusional in nature, can be used as a toilet paper if it was printed.

Indonesia lags among main ASEAN peers (Singapore, Malaysia,Thailand, Vietnam) in terms of growth or GDP and innovation. All of them have no BS regulations about oversized foreign company capital requirements and do attract "high calliber investors" contrary to Indonesia.

Phillipines have similar requirement as Indonesia (foreign company has to have around 200.000 USD), and is a semi-disfunctional state, worse than Indonesia.

 

[VartanRilen]

Then is better I don't do it except if I have the 10 Billion but ive talk to many foreigner and all of them manage company without the 10 billion but what if they get caught ?

 

[WhyMe]

I am going through the same delimma and have been living/working in Indonesia for last 6 years. It seems nearly impossible to do business or to even invest in an existing company. Every lawyer i have spoken to in Jakarta says that you need 10 Billion to start a company which is absurd. I am wondering how on earth are these small restaurants operating who are owned by foreigners?

Would appreciate details of lawyers if anyone has previously worked with them or if someone is willing to share details about setting up a company. I really want to establish a company but it seems impossible.

 

[Brian86]

I am wondering how on earth are these small restaurants operating who are owned by foreigners?

A few options;

• They are on spouse visa, their spouse legally owns the business, and the law allows them to work in it.
• They established a PT PMA when regulations were less strict/expensive and haven't been forced to comply with changes.
• They are on a foreign worker visa as a foreign expert or a director.
• They are on a visit or other non work related visa and don't legally own the business, but are acting as owner through a nominee arrangement (illegal but common for land, possibly for business as well).