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7 June 2021 (closed)
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The limited liability company (local PT or foreign PT PMA) in Indonesia is regulated under law number 40 of 2007 (Company Law). The Company Law sets the minimum establishment requirements for a limited liability company, but does not regulate the different company types for limited liability companies in Indonesia. These are regulated in law number 20 of 2008 (SME Law) which essentially differentiates micro companies, small companies, medium companies and large companies. This column will discuss the differences in company types in Indonesia.
Minimum Requirement by Company Law
Article 32 of the Company Law sets the minimum amount of authorized capital for a limited liability company in Indonesia on 50 million rupiahs. The same article also regulates that for certain sectors the minimum amount may be set higher.
Micro, Small, Medium and Large Limited Liability Company Types
The SME law further defines article 32 of the company law and splits the limited liability company up in the following company types:
1. Micro Company: a limited liability company will be categorized as micro company if:
a. it has a net capital of maximum 50 million rupiahs, excluding land and buildings; or
b. it has an annual sales turnover of maximum 300 million rupiahs.
2. Small Company: a limited liability company will be categorized as small company if:
a. it has a net capital of between 50 million rupiahs and 500 million rupiahs; or
b. it has an annual sales between 300 million rupiahs and 2.5 billion rupiahs.
3. Medium Company: a limited liability company will be categorized as medium company if:
a. it has a net capital of between 500 million rupiahs and 10 billion rupiahs; or
b. it has an annual sales between 2.5 billion rupiahs and 50 billion rupiahs.
4. Large Company: a limited liability company will be categorized as large company if:
a. it has a net capital of more than 10 billion rupiahs; or
b. it has an annual sales of more than 50 billion rupiahs.
Company type for foreign investment limited liability company (PT PMA)
Article 1(4) SME law defines a large company as an economically productive company which is conducted by business entities with total net assets or annual sales greater than a Medium Company type, which includes state-owned enterprises or private national company, joint ventures, and foreign companies conducting economic activities in Indonesia. Based on the foregoing, foreign investors can only establish a large company type in Indonesia in the form of a PT PMA. The micro, small and medium company types are business forms which can only be utilized by domestic investors.
This is recently confirmed by regulation of the head of the Indonesia Investment Coordinating Board (BKPM), number 5 of 2013 as amended by BKPM regulation number 12 of 2013, which regulates in article 22, in line with the SME Law, that the authorized capital of a foreign investment company (PT PMA) must amount at least 10 billion rupiahs.