Changing of PMDN status to PMA – Investment Change Registration must be owned by the investment. In Indonesia, investment has been regulated in laws and regulations, namely Law Number 25 of 2007 concerning Investment.

Many foreign investors are starting to be interested in investing in Indonesia, especially when Indonesia has joined the MEA (Asian Economic Community) or Asia Economic Society. So many foreign investors have influenced the transition of status from Domestic Investment (PMDN) to Foreign Investment (PMA).

Then is it allowed?

Below we will discuss the change of a PMDN Limited Liability Company (PT) to PMA.

The change in status from PT PMDN (local) to PT PMA did not happen immediately, because PT PMA had different terms and procedures from establishing a regular PT. There are many things that must be known, considered and understood in advance for those of you who will intend and plan to change this type of investment, especially PMDN into PMA. 

Many business fields are open to foreigners, but there are also certain business fields that are prohibited by law for PT PMA, and may only be run by a PT whose entire capital is owned by Indonesian citizens, and there are also business fields that are open to foreigners. with a limit on the percentage of foreign ownership allowed. 

What is a Limited Liability Company (PT)?

A legal entity which is a capital partnership, established based on an agreement, carries out business activities with authorized capital which is entirely divided into shares or individual legal entities that meet the criteria for micro and small businesses as regulated in the laws and regulations concerning micro and small businesses.

What is PMA?

Foreign Investment or what is commonly referred to as PMA is an investment activity, which is carried out by foreign investors and aims to be able to conduct business in the territory of the Republic of Indonesia. Investment can use entirely foreign capital or combine with domestic capital. PMA is one way for outside investors to invest by building, buying in total or acquiring companies.

Foreign Investment (PMA) can be interpreted as investment made by the private sector in the country of origin of the capital owner, or investment from one country to another country on behalf of the government of the country that owns the capital.

All regulations regarding PMA have been regulated in Law Number 25 of 2007 article 1 paragraph 3 concerning Investment which reads Foreign investment is an investment activity to conduct business in the territory of the Republic of Indonesia carried out by foreign investors, both using foreign capital wholly or in association with domestic investors.

The first step for the Company Change Procedure from PT PMDN (local) to PMA.

Conducting Comprehensive Due Diligence

Do everything you can to find out about the company over the last few years. Ask carefully about cases that have occurred within the company, if any. As well as financial statements from previous years also need to be reviewed including declarations of cash assets, loans or debts and intellectual property rights.

Business Fields Status 

Before deciding to change ownership from PT PMDN (local) to PMA, you must pay attention to the business fields previously owned, whether those business fields are open, open with certain conditions, or closed for investment.

Requirements for PMA capital

The minimum paid-up capital requirements for PMA companies have now changed and are regulated in the Investment Coordinating Board (BKPM) Regulation Number 4 of 2021 concerning Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities.

Based on Article 12 paragraph (7) of Perka BKPM 4/2021, which explains that the minimum capital requirement for PMA for issued/paid up capital is currently at least Rp. 10,000,000,000 (ten billion rupiah).

Then, there are also some special provisions that need to be noted regarding the total value of investment in certain business activities, namely:

1. For wholesale trading business activities, greater than Rp. 10,000,000,000 (ten billion rupiahs) excluding land and buildings, are the initial 4 (four) digits of the KBLI;
2. For Food and Beverage Services business activities, greater than Rp. 10,000,000,000 (ten billion rupiahs) excluding land and buildings in one activity, is per 2 (two) initial digits of KBLI per 1 (one) location point;
3. Specifically for Construction Services business activities, greater than Rp. 10,000,000,000 (ten billion rupiahs) excluding land and buildings in one activity, per 4 (four) initial digits of the KBLI;
4. Specifically for Industrial business activities that produce different types of products with 5 (five) digits KBLI in 1 (one) production line, greater than 10,000,000,000 (ten billion rupiah) including land and buildings.

Procedure for Change of PT from PMDN (local) to PMA

To find out the procedure for changing PT from PMDN (local) to PMA, you can contact us, for more details.

Conclusion

Based on the explanation above for and therefore, if you have a plan to change a PT from PMDN (local) to PT PMA, then you must first know whether the PT is subject to restrictions or not after the status change and changed to PT PMA. This is important because if the Limited Liability Company whose ownership status is to be changed is later found in the Negative Investment List (DNI), then you cannot do so. 

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