When entering or expanding in Indonesia, choosing the right business structure is more than a legal formality—it’s a strategic decision that affects your taxes, ownership rights, licensing, and long-term scalability.

At Sindo Group, we help local and international clients make informed decisions on the most suitable entity types for their business goals. Here’s a quick guide to the most common business structures in Indonesia and how to choose the right one.

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1. PT (Perseroan Terbatas – Local Company)

A PT is a limited liability company owned by Indonesian individuals or entities. It’s the default structure for domestic businesses.

Best for: Local entrepreneurs and partnerships.
Pros:

• • Full access to most sectors

• • Easier licensing processes

• • Eligibility for local government tenders

Cons:

• • Foreign ownership not permitted (unless via nominee, which carries risk)

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2. PT PMA (Penanaman Modal Asing – Foreign Investment Company)

A PT PMA is a limited liability company with any level of foreign ownership. It’s required for foreign investors looking to legally operate in Indonesia.

Best for: Foreign investors or joint ventures.
Pros:

• • Full foreign ownership allowed in many sectors

• • Legal structure recognized by authorities

• • Access to repatriation of profits, investment incentives

Cons:

• • Requires minimum paid-up capital (typically IDR 10 billion)

• • Restricted sectors under the Positive Investment List

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3. Representative Office (Kantor Perwakilan)

A Representative Office allows a foreign company to establish a presence without engaging in direct commercial activities.

Best for: Market research, liaison offices, brand building.
Pros:

• • Easier setup, no capital requirement

• • Good for early-stage market entry

Cons:

• • Cannot generate revenue or sign contracts

• • Limited operational scope

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4. Joint Ventures

Joint ventures between foreign and local partners are common in restricted sectors or where local knowledge is key.

Best for: Industries with partial ownership caps or needing strong local networks.
Pros:

• • Access to restricted sectors

• • Local insights and networks

Cons:

• • Requires clear agreements to avoid disputes

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Key Factors to Consider

• • Ownership restrictions under the Positive Investment List

• • Capital requirements and tax implications

• • Licensing processes (OSS system, sectoral approvals)

• • Long-term exit strategy and profit repatriation

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Let’s Structure It Right, From the Start

Choosing the right entity can make or break your market entry. At Sindo, we provide end-to-end support from legal setup and tax structuring to licensing and compliance.

Reach out for a consultation to learn how we can help you build your business in Indonesia—wisely and strategically.

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