PT PMA vs PT PMDN — Foreign vs Local Company in Indonesia
PT PMA vs PT PMDN — Foreign vs Local Company in Indonesia
Understanding the critical difference between foreign-owned and domestic Indonesian companies. Ownership, capital, sector access, property rights, and why the legal choice matters more than the cost.
Side-by-Side Comparison
| PT PMA (Foreign Investment) | PT PMDN (Domestic Investment) | |
|---|---|---|
| Foreign Ownership | Up to 100% | 0% (Indonesian only) |
| Minimum Capital | IDR 10B (~$625K) | No minimum |
| KBLI Restrictions | Some sectors restricted | All sectors open |
| Setup Cost | $2,000-3,000 | $500-1,000 |
| Director Nationality | Foreign allowed (with KITAS) | Indonesian only |
| Tax Treatment | Same rates | Same rates |
| Land Rights | Hak Pakai (25-30 years) | Can hold SHM (freehold) |
| Investor Protection | Bilateral treaties apply | Domestic law only |
Key Differences
Ownership Structure
PT PMA allows foreign shareholders to legally own up to 100% of the company in most sectors. PT PMDN requires all shareholders to be Indonesian citizens. There is no legal way for a foreigner to own shares in a PT PMDN — nominee arrangements are illegal and unenforceable.
Capital Burden
PT PMA requires IDR 10B (~$625K) in authorized capital, with a portion paid up. PT PMDN has no statutory minimum. This is the main reason some foreigners are tempted by nominee structures — but the savings are illusory compared to the legal risk.
Sector Access
PT PMDN has access to all KBLI business classifications. PT PMA is restricted in certain sectors under the Investment Negative List (DNI), though the 2021 Investment Positive List has opened most sectors to 100% foreign ownership.
Property Rights
PT PMDN can hold SHM (Sertifikat Hak Milik) — true freehold land title. PT PMA is limited to Hak Pakai or HGB, which are long-term but not freehold. For property-heavy businesses, this is a meaningful difference.
Legal Protections
PT PMA investors benefit from bilateral investment treaties (BITs) between Indonesia and their home country, providing international arbitration options. PT PMDN disputes are resolved under domestic Indonesian law only, which can disadvantage foreign investors using nominee structures.
Pros & Cons
PT PMA (Foreign Investment)
Pros
- Legal foreign ownership up to 100%
- Bilateral investment treaty protection
- Foreign directors allowed
- Transparent, enforceable structure
- Access to international arbitration
Cons
- Higher minimum capital ($625K)
- Higher setup costs ($2,000-3,000)
- Some KBLI sectors restricted
- Hak Pakai only (no freehold)
PT PMDN (Domestic Investment)
Pros
- No minimum capital requirement
- Lower setup costs ($500-1,000)
- All KBLI sectors open
- Can hold SHM (freehold land)
- Simpler licensing process
Cons
- Zero foreign ownership allowed
- Nominee structures are illegal
- No bilateral treaty protection
- Indonesian directors only
Our Recommendation
If you're a foreigner investing in Indonesia, PT PMA is the only legal option. Using a nominee to set up PT PMDN is illegal and unenforceable. We've seen dozens of investors lose everything through nominee structures. PT PMA costs more upfront but protects your investment.