One of the most common questions foreign entrepreneurs ask when setting up a business in Bali is this: should I go with a PT PMA or a Local PT ? The answer depends entirely on who owns the business and getting it wrong can cost you everything.
The Basic Difference
- A Local PT (Perseroan Terbatas) is a standard Indonesian limited liability company. All shares must be held by Indonesian citizens or Indonesian-owned entities. Foreigners cannot legally hold shares in a Local PT and if they try to do so through a nominee arrangement, they are breaking Indonesian law.
- A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the foreign investment company structure. It is the only legal vehicle that allows foreign individuals or corporations to directly and transparently own shares in an Indonesian business.
The difference is not just technical, it is the line between operating legally and operating illegally in Indonesia.
Can a Foreigner Use a Nominee to Set Up a Local PT?
This is the arrangement many foreigners are offered an Indonesian citizen holds shares on paper while the foreigner controls everything behind the scenes. This is called a nominee structure, and it is explicitly illegal under Indonesian law.
Beyond the legal risk, the practical danger is enormous. The nominee legally owns your business. If the relationship breaks down, you have no legal standing to recover your investment, your assets, or your revenue.
A PT PMA costs more and requires more capital but it gives you full legal protection and full ownership transparency.
Which One Do You Need?
The answer is simple. If you are a foreign national and you want to:
- Own shares in an Indonesian company
- Sponsor your own work and stay permit (KITAS)
- Repatriate profits back to your home country
- Operate with full legal protection
You need a PT PMA. There is no alternative.
