Bali offers many opportunities for foreign entrepreneurs, but choosing the right company structure is crucial. Indonesia’s company law, as regulated under Law No. 40 of 2007 on Limited Liability Companies, Law No. 25 of 2007 on Capital Investment, and the Job Creation Law (Law No. 11 of 2020), defines the frameworks for foreign participation.
Below is a professional yet easy-to-read overview of the main types of PT (Perseroan Terbatas) that foreigners can establish in Bali, their risks, strategic considerations, and why the right choice from the start will protect your investment.
PT PMA (Penanaman Modal Asing) — Foreign Investment Limited Liability Company
A PT PMA is a limited liability company with foreign shareholders, registered under the BKPM (Indonesia Investment Coordinating Board) and allowed to operate in open business sectors listed in the Positive Investment List (Presidential Regulation No. 10/2021).
Main Features:
- Minimum paid-up capital commonly set at IDR 10 billion for many sectors (varies per KBLI business classification).
- Can hire foreign staff (with work permits) and local employees.
- Eligible for Investor KITAS or Golden Visa for major shareholders.
- Can own land under Hak Guna Bangunan (HGB) or Hak Pakai titles.
Risks:
- Capital requirement is high — underfunding can cause compliance issues.
- Strict reporting obligations to BKPM and OSS.
- Limited to business activities permitted under KBLI.
Strategies:
- Conduct KBLI code mapping before formation to ensure your intended activities are permitted.
- Allocate sufficient capital in the notarial deed to meet requirements.
- Use legal due diligence to avoid land or licensing disputes.
Deep Reason to Choose:
A PT PMA is the only structure allowing full operational control for foreign investors in Indonesia — ideal for those aiming to scale, employ staff, and own commercial property legally.
PT PMA Joint Venture — Partnership Between Foreign and Local Investors
A PT PMA with both foreign and Indonesian shareholders, often required in sectors where maximum foreign ownership is capped (e.g., 49% or 67%).
Main Features:
- Complies with Positive Investment List restrictions.
- Shares responsibilities, costs, and risks between parties.
- Access to local market knowledge and networks.
Risks:
- Potential shareholder disputes — governance must be well-defined.
- Profit distribution depends on ownership percentage.
- If the local partner is weak, your operational control may be limited.
Strategies:
- Draft a comprehensive shareholder agreement (SHA) covering decision-making, dividend policies, dispute resolution, and exit clauses.
- Choose a partner with aligned vision and proven credibility.
Deep Reason to Choose:
A joint venture can be the optimal balance — foreign expertise and capital combined with local market access and legal compliance.
Representative Office (KPPA)
A non-operational office for foreign companies to conduct market research, liaison, or promotional activities (not allowed to generate revenue in Indonesia).
Main Features:
- No paid-up capital requirement.
- Allowed to hire foreign and local staff.
- Suitable for early-stage market exploration.
Risks:
- Cannot engage in commercial transactions or issue invoices.
- Limited to activities approved in the license.
Strategies:
- Use as a testing phase before setting up a PT PMA.
- Maintain compliance with activity restrictions to avoid penalties.
Deep Reason to Choose:
Ideal for companies still validating the market before committing full investment.
Choosing the right PT structure in Bali is a strategic decision balancing legal compliance, operational goals, and risk tolerance. A PT PMA is the most secure for active foreign investors, while a joint venture can be ideal for sector-restricted opportunities. Avoid nominee arrangements unless absolutely necessary — and always partner with a reputable business consultant to ensure compliance, avoid costly mistakes, and navigate Indonesia’s evolving legal landscape.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
