Perseroan Terbatas (PT)

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Perseroan Terbatas (PT): Overview and Types

A Perseroan Terbatas (PT) is the legal corporate form used for revenue-generating businesses in Indonesia. Foreign companies, governments, or individuals that want to conduct commercial activities in Indonesia generally must establish a PT (often referred to as a foreign investment limited liability company). The PT structure is broadly comparable to a limited liability company (LLC) in other jurisdictions, but it is governed by Indonesian law and specific regulatory requirements.

Key takeaways

  • A PT is the required vehicle for foreign direct investment in Indonesia when conducting commercial business.
  • Shareholders’ liability is limited to their invested capital.
  • Some PTs can list shares on a stock exchange, allowing public investment.
  • PTs come in several types (open, closed, domestic, foreign, individual, general public) with different ownership and transfer restrictions.
  • Establishing a PT requires compliance with Indonesian regulatory bodies, notably the Investment Coordinating Board (BKPM), and may involve lengthy administrative steps.

How a PT works

A PT issues shares and operates under articles of association that define ownership and governance. While its limited-liability nature resembles an LLC, Indonesian rules determine which business sectors may accept foreign investment, ownership limits, and licensing requirements. Regional authorities and licensing agencies may impose additional requirements that vary by location and activity.

Types of PTs

  • Open PT: Issues shares to the public; shares are freely tradable.
  • Closed PT: Issues private shares with transfer restrictions; common for family-owned companies.
  • Domestic PT: Incorporated and operating primarily within Indonesia; must comply fully with national regulations.
  • Individual PT: Owned entirely by a single person who holds all issued shares and control.
  • Foreign PT: Established by an entity incorporated abroad but also subject to Indonesian laws when operating in Indonesia.
  • General Public PT: Similar to an open PT; shares can be owned by any entity and may be listed on a stock exchange.

Establishment process and typical steps

The Indonesian Investment Coordinating Board (BKPM) coordinates foreign investment and implementation of investment policy. Typical administrative steps and approximate processing times (may vary by case and locality):

  1. Obtain principal license and business license — ~7 days
  2. Deed of Establishment (Articles of Association) legalized by a public notary; file with BKPM — 1–2 days
  3. Legalization of entity status with the Ministry of Law and Human Rights (MOLHR) — ~10 days
  4. Obtain a domicile letter from the local district authority — ~3 days
  5. Apply for Tax Identification Number (NPWP) and taxable entrepreneur registration (PKP) — ~3 days
  6. Company Registration Certificate (TDP) from integrated licensing services — ~14 days
  7. Submit Manpower Report and Company Welfare Report to the Ministry of Manpower — ~7 days

These are common milestones; additional permits or longer timelines may be required depending on industry, location, and the need for sectoral approvals.

Special considerations for foreign investors

  • Sectoral restrictions: Not all sectors are fully open to foreign ownership. Some require partial domestic ownership or local partners. Review the current negative investment list and sector-specific regulations.
  • Compliance complexity: Setting up a foreign investment PT can require specialist advice to navigate licensing, capital requirements, and employment rules.
  • Representative offices: For market research or limited non-commercial activities, a representative office may be an alternative to full incorporation while assessing opportunities.
  • Due diligence: Perform regulatory, tax, and commercial due diligence before committing capital or signing partnership agreements.

Conclusion

A Perseroan Terbatas (PT) is the standard corporate form for doing commercial business in Indonesia, including by foreign investors. While it provides limited liability and can accommodate public share ownership, forming and operating a PT requires compliance with Indonesian laws, licensing procedures, and sector-specific restrictions. Foreign investors should plan for administrative lead times and consider local advisers to ensure regulatory compliance.