Owning Property for Foreigners: Why PT PMA is Your Best Bet

For foreign investors looking to own property in Indonesia, understanding the legal side of things can feel overwhelming, but a PT PMA can help simplify it. This article explores the advantages of establishing a PT PMA (Perseroan Terbatas Penanaman Modal Asing), a limited liability company with foreign direct investment, to discover the benefits of property ownership in Indonesia.

PT PMA as Legal Protection in Indonesia

Indonesian Agrarian Law restricts foreigners from directly owning land or real estate in the country. However, by establishing a PT PMA, you gain a legal entity that can own property on your behalf. This provides a secure and recognized framework for your investment, especially if you want to earn income from the property. Because under some stay permits like a tourism or multiple-entry business visa, earning active income from Indonesia is a breach of your visa status. This may lead to immigration investigations and deportation. So, setting up PT PMA before purchasing property is the necessary form of legal protection for you. 

PT PMA Beyond Property Ownership

A PT PMA offers more than just property ownership. Either it’s for personal or business purposes, a PT PMA offers other significant advantages such as:

· Legal Protection: The property certificate is held by the company, ensuring clear safeguards to secure your assets, providing a strong legal foundation for owning, building, selling, leasing, and utilizing your property.

· Business Advantages: A PT PMA streamlines commercial operations for business growth. You can hire both foreign and local employees, open offices, and handle other operational aspects.

· Immigration Options:  Depending on your needs, you can apply for stay and work permits for foreign shareholders or employees within your company. Additionally, it qualifies you for an investor KITAS (temporary residency permit).

Setting Up Your PT PMA

The process of establishing a PT PMA is straightforward. You’ll need a minimum of two shareholders, who can be foreign or Indonesian individuals or companies. A minimum paid-up capital of 10 billion rupiah (approximately $630,000 USD) is required.

Finally, you’ll need a commercial address, which can be a virtual office for added convenience. Once the company has been established, you need to register for a corporate tax ID and Business Identitiy Number (or NIB short for Nomor Induk Berusaha). You need these two in case you require additional licenses for your company in the near future.

Investment vs Cost

While establishing and maintaining a PT PMA may involve initial costs, these pale in comparison to the security and flexibility it offers. The minimized legal risk and potential for future business ventures far outweigh the initial investment. From a financial aspect, PT PMA potentially reduces tax exposure and allows you to leverage tax treaties.

PT PMA Ensures Stability

The beauty of a PT PMA lies in its flexibility. While this article focuses on property ownership, you can utilize the company structure to conduct other businesses in Indonesia. Of course, with specific regulations applying to each business classification. By establishing a PT PMA, foreign investors gain a secure and advantageous platform for owning and managing property in Indonesia. The legal protection, flexibility, and potential business opportunities make it a worthwhile investment for those seeking stability in the Indonesian market.

Simplify the Challenges

As foreigners in Indonesia, going through legal processes such as registration and filing documents certainly can be lengthy and difficult. That’s why it is recommended for you to talk to a professional service provider to simplify the challenges. Seven Stones Indonesia is ready to ease up your PT PMA establishment or assist you in obtaining other legal requirements.

If you need to learn more about how you can own a property or set up PT PMA, please don’t hesitate to contact our legal team or visit Seven Stones Indonesia office in Bali and Jakarta. With the right support, you can make your dream goals in Indonesia come true.

Compare listings