Starting a business in Indonesia requires choosing the right legal entity from the beginning. For Indonesian founders, local entrepreneurs, and companies fully owned by Indonesian shareholders, a Local-Owned Company, commonly known as a Local PT, is one of the most common business structures.
A Local PT allows businesses to operate as a limited liability company in Indonesia, obtain a Business Identification Number or NIB, apply for relevant business licenses through the OSS system, open a corporate bank account, and conduct commercial activities legally.
However, choosing a Local PT must be done carefully. A Local PT is intended for Indonesian ownership. If your business involves foreign shareholders, foreign control, or foreign investment, you may need to assess whether a PT PMA or another compliant business structure is more suitable.
What Is a Local-Owned PT in Indonesia?
A Local-Owned PT is an Indonesian limited liability company whose shares are owned by Indonesian individuals or Indonesian legal entities. It is generally used by local businesses that want a formal corporate structure with separate legal personality, limited liability, and access to business licensing.
Under Indonesia’s company law framework, a standard limited liability company is closely connected to the roles of shareholders, directors, and commissioners, which are part of the corporate governance structure under Law No. 40 of 2007 on Limited Liability Companies.
A Local PT is different from a PT PMA, which is a foreign investment company established when there is foreign ownership in the company. This distinction is important because some business activities may have specific foreign ownership limitations, licensing requirements, or investment restrictions under Indonesia’s investment regulations.
Local PT vs PT PMA: What Is the Difference?
| Aspect | Local-Owned PT | PT PMA |
|---|---|---|
| Ownership | 100% Indonesian-owned | Partly or fully foreign-owned |
| Suitable for | Indonesian founders or Indonesian companies | Foreign investors or joint ventures with foreign shareholders |
| Capital requirement | Depends on business scale and structure | Generally subject to higher investment requirements |
| Business fields | Can operate in sectors available to local companies | Must comply with foreign investment restrictions and sectoral rules |
| Licensing | Through OSS based on KBLI and risk level | Through OSS with foreign investment considerations |
| Best for | Local businesses, Indonesian entrepreneurs, local expansion | Foreign investors entering the Indonesian market |
Choosing between a Local PT and a PT PMA should not be based only on cost or speed. The right structure depends on ownership, control, source of capital, business activity, licensing requirements, and long-term compliance.
Who Can Establish a Local PT?
A Local PT is suitable for:
- Indonesian individuals who want to formalize their business;
- Indonesian-owned companies expanding into a new business line;
- Local business partners entering a joint venture with other Indonesian parties;
- Entrepreneurs who need a legal entity to apply for NIB, licenses, contracts, tenders, or corporate banking.
For foreign investors, a Local PT should not be used as a shortcut to avoid foreign investment rules. If a foreign party intends to own or control the company, a proper legal review is strongly recommended to determine whether a PT PMA, commercial cooperation, distribution arrangement, or another structure is more compliant.
Minimum Structure of a Local PT
A standard Local PT generally requires the following corporate structure:
| Requirement | Minimum |
| Shareholders | 2 shareholders |
| Director | 1 director |
| Commissioner | 1 commissioner |
| Registered address | Required |
| Business activity | Must be aligned with the correct KBLI |
| Deed of establishment | Prepared by a notary |
| Approval from MOLHR | Required for legal entity status |
For micro and small businesses, Indonesia also recognizes a simplified form known as Perseroan Perorangan, or individual limited liability company, which can be established by one person if it meets the relevant micro and small business criteria. PP No. 8 of 2021 regulates capital requirements and registration procedures for companies that meet micro and small business criteria, including individual companies established by one person.
Capital Classification for Local Companies in Indonesia
Business scale is important because it may affect licensing, compliance obligations, and business classification.
Based on Indonesia’s MSME framework under PP No. 7 of 2021, business classification is connected to capital and annual sales criteria. PP No. 7 of 2021 regulates the facilitation, protection, and empowerment of cooperatives and micro, small, and medium enterprises.
In practice, business scale is commonly classified as follows:
| Business Scale | Capital Classification |
| Micro Business | Up to IDR 1 billion, excluding land and building for business premises |
| Small Business | More than IDR 1 billion up to IDR 5 billion, excluding land and building for business premises |
| Medium Business | More than IDR 5 billion up to IDR 10 billion, excluding land and building for business premises |
| Large Business | Above IDR 10 billion |
Because capital classification may affect licensing and reporting obligations, companies should confirm the correct classification before registering their business through OSS.
Step-by-Step Process to Establish a Local PT in Indonesia
1. Business Activity and KBLI Review
The first step is identifying the correct business activity and KBLI code. This is important because the selected KBLI will determine the company’s licensing requirements, business risk level, and possible additional permits.
Indonesia’s current risk-based licensing framework is regulated under PP No. 28 of 2025, which covers business licensing, OSS system services, supervision, sanctions, and licensing requirements based on business risk analysis.
2. Company Name Reservation
The company name must be checked and reserved before incorporation. The name should comply with Indonesian company naming rules and should not be identical or too similar to an existing registered company.
3. Preparation of Deed of Establishment
A notary prepares the Deed of Establishment, which includes the company’s articles of association, shareholder composition, capital structure, board members, company address, and business purposes.
4. Approval from the Ministry of Law and Human Rights
After the deed is signed, the notary submits the application to the Ministry of Law and Human Rights. Once approved, the company receives legal entity status.
Permenkumham No. 21 of 2021 regulates requirements and procedures for the registration, establishment, amendment, and dissolution of limited liability companies.
5. Tax Registration
After incorporation, the company must obtain its tax registration documents, including the company’s Taxpayer Identification Number or NPWP.
6. OSS Registration and NIB Issuance
The company must register through the OSS system to obtain a Business Identification Number, or NIB. OSS functions as Indonesia’s integrated electronic business licensing system, including NIB search and business licensing services.
7. Business Licensing Based on Risk Level
The required business license depends on the KBLI and risk level. Under Indonesia’s risk-based licensing system, certain activities may only require NIB, while others may require a standard certificate, verified standard certificate, specific business license, or additional technical approvals.
8. Corporate Bank Account Opening
After the company documents are completed, the Local PT can proceed with opening a corporate bank account. Banks may request the deed, MOLHR approval, NPWP, NIB, company address, shareholder information, director information, and supporting compliance documents.
9. Post-Incorporation Compliance
Establishing the company is only the beginning. A Local PT must also maintain ongoing compliance, including tax reporting, bookkeeping, corporate document updates, licensing maintenance, and other reports depending on the company’s business sector.
Documents Required to Set Up a Local PT
The typical documents and information needed include:
- Proposed company names;
- Shareholder identity documents;
- Director and commissioner identity documents;
- Registered business address;
- Business activity and KBLI selection;
- Capital structure;
- Shareholding composition;
- Contact details of the company;
- Supporting documents depending on the business sector.
Additional documents may be required if the company operates in a regulated industry, uses a specific business location, requires environmental approval, or needs sectoral permits.
Can Foreigners Use a Local PT?
A Local PT is designed for Indonesian ownership. Foreign investors should be careful when considering a Local PT structure, especially if the foreign party expects to control the company, receive economic ownership, or use nominee arrangements.
Indonesia’s investment framework provides that commercial business fields are generally open for investment unless they are closed or reserved for the central government, while certain sectors may have specific requirements or limitations.
For this reason, foreign investors should seek professional guidance before deciding between:
- PT PMA establishment;
- Local PT with lawful commercial cooperation;
- Distribution or agency agreement;
- Joint venture with a compliant ownership structure;
- Employer of Record or BPO solution for early market entry.
The safest structure depends on the real business activity, ownership plan, operational control, source of funds, and licensing requirements.
Why Work With Accura Indonesia?
Accura Indonesia assists businesses with end-to-end company formation and licensing support in Indonesia. Our team helps clients assess the right company structure, prepare incorporation documents, register the company, obtain licensing, and maintain post-establishment compliance.
Our Local PT formation services include:
- Business scope and KBLI review;
- Local PT incorporation planning;
- Company name reservation;
- Deed of Establishment preparation;
- MOLHR approval process;
- NPWP and tax registration assistance;
- NIB and OSS licensing assistance;
- Business license and supporting permit assistance;
- Corporate bank account opening support;
- Ongoing corporate secretarial support;
- Tax, accounting, payroll, and compliance services.
Start Your Local PT Formation with Accura
Setting up a Local PT in Indonesia requires more than preparing documents. You need to choose the right business structure, ensure the correct KBLI, understand licensing requirements, and maintain compliance after incorporation.
Accura Indonesia helps you establish your company with a practical, compliant, and business-oriented approach.
Need help setting up a Local-Owned PT in Indonesia? Contact Accura Indonesia today for a free consultation and get tailored guidance from our corporate specialist team.