The PT PMA and il Capital requirement; no longer overlooked!
(Now IDR 10 Billion Make no mistake!)
- An Investment Capital of IDR 10 Billion (about USD 690.000) is mandatory.
Increased from IDR 2.5 Billion (about USD 172.500)
Nevertheless, the idea that an investment of 10 billion does not need to be fulfilled at the time of PMA establishment is very common among foreign investors. WHY?
When you read some law, this seems to be true as based on for example Article 6 paragraph (2) point b of BKPM Regulation 1/2020, the requirement that must be fulfilled at the time of establishment is that authorized and issued capital are at least 25% of the total investment value. Therefore, what investors need to fulfill in time is IDR 2,500,000,000 (two billion five hundred million Rupiah). Stating such in a notarial letter was enough!
Result: numerous PMA’s were established to obtain one- and two-years investor ITAS’, only to avoid Immigration regulation. A loophole was found!
On 1 April 2021, the BKPM (Indonesia’s Investment Coordinating Board) issued BKPM Regulation 4 of 2021 regarding il increase of paid-up capital requirements that foreign investors have to pay when establishing a company in Indonesia. A foreign investment company is now required to have 10 billion rupiah in paid-up capital, up from the previous 2.5 billion rupiah. This investment value excludes any investments for land or buildings. This regulation came into effect on 2 June 2021.
Result: numerous PMA’s will face issues, when BKPM and or the Tax,or Manpower other appointed government department will check on them. This Immigration loophole is closed.
- A Statement Letter before a notary that you are good for IDR 10 billion is only possible to escape the immediate investment. Good for setting up only and get all company documents. Within one year though, the amount must be paid-up!
It is a persistent urban legend among foreign investors, that as long as the authorized capital is included in the Deed of Establishment and meets the investment value of 25% of the authorized capital, it is no longer necessary to fulfill the investment value. This is wrong!
Because based on Article 6 paragraph (5) of BKPM Reg. no. 5/2019 concerning Amendments of the Investment Coordinating Board Reg. no. 6/ 2018 concerning Guidelines and Procedures for Licensing and Investment Facilities (BKPM Reg. no. 5/2019), the total value of the investment as authorized capital must be fulfilled within 1 (one) year from the date the company obtained a business license.
Thus, after the new company receives its business license, it is obliged to start fulfilling the total investment value as stated in the approved deed of establishment, usually IDR 10 billion.
No escape possible or does the Indonesian government has some surprise coming, due to the devastating consequences of the pandemic to the national economy and their wish / need to get the small and medium foreign investors to be able to invest in remarkable Indonesia as well!