Recently, we’ve heard louder voices from central and provincial politicians claiming that PT PMA structures—foreign investment companies—hurt local opportunities.
The narrative is simple: foreigners set up companies and somehow push Indonesian SMEs aside. It’s a convenient political line, but the reality is more complex. Yes, there have been abuses of the PT PMA framework, particularly around visa sponsorships.
Everyone knows about “shell PMAs” set up just to secure residency permits. These cases damage credibility and invite the criticism we hear today. But focusing only on the abuse ignores the broader truth: most PT PMAs represent serious investors who bring tremendous positive economic impact. Far from competing with local SMEs, they often support and enhance them.
The Economic Reality
When structured properly, a PT PMA doesn’t hurt local businesses—it fuels them. Foreign investors entering Indonesia rely on Indonesian suppliers, partners, and employees.
Take residential tourism as an example:
- Mass Tourism: A couple comes for a week, stays in a hotel, eats at a few restaurants, and leaves. Their spending is real but concentrated in a handful of providers.
- Residential Tourism: A foreign family sets up long-term through a PT PMA, rents a villa for years, sends two kids to local schools, hires drivers and household staff, eats daily at warungs, shops at local markets, and engages the community.
The second scenario delivers far greater, steadier impact—income for SMEs, jobs for locals, and investment in education and housing.
The Legal Framework Already Exists
The regulatory system governing PT PMAs is not absent. In fact, it is comprehensive:
- OSS (Online Single Submission): PT PMAs must register through OSS, introduced by the Omnibus Law and Positive Investment List, tying each company to a specific KBLI (Indonesian business classification code).
- Land Zoning: Whether KBLI activities are permissible depends on zoning. In Bali, this is governed by PERDA No. 2/2023, which lays out which activities are allowed in which zones.
- Build Permits (PBG/SLF): Construction approvals are linked to zoning and KBLI activity.
- Business Licensing: Sector risk profiles are regulated under Indonesia’s Risk-Based Licensing system.
And now, a step further:
- PP No. 28 of 2025: This new regulation consolidates risk-based business licensing into one umbrella framework, aligning OSS, KBLI, and zoning regulations nationwide. It sets clear requirements before businesses can secure their licenses and strengthens the monitoring system.
On paper, Indonesia now has a unified and modern system.
Where Things Break Down
The challenge is not the law—it’s enforcement.
1. Weak Oversight and Corrupt Practices
Local enforcement has been inconsistent, sometimes due to habit, sometimes due to corruption. This undermines trust and feeds the perception of abuse.
2. Notaries as the First Front
Every PT PMA begins with a notarial deed. Notaries are the first gatekeepers, but too often they overlook zoning and KBLI rules—or worse, exploit loopholes. This creates entities that are legally incorporated but misaligned with land-use laws.
Why This Matters
When PT PMAs are set up in zones or KBLI categories where they don’t belong, it fuels the narrative that foreigners are misusing the system. In truth, the misuse is rooted in weak enforcement, not in the PT PMA concept itself.
Properly applied, Indonesia’s new framework under PP 28/2025 should eliminate this. It ties together OSS, KBLI, zoning (including provincial maps like Bali’s PERDA 2/2023), and risk-based licensing into a single, enforceable system.
A Way Forward
To maximize the benefits of PT PMAs while protecting local interests, three steps are critical:
- Enforce PP 28/2025 Consistently: The new regulation is designed to close loopholes. Apply it rigorously.
- Hold Gatekeepers Accountable: Notaries and local licensing officials must be properly trained and monitored.
- Promote Transparency: Investors should be able to see clearly how KBLI codes map onto zoning categories in each province.
Conclusion
The PT PMA debate should not be framed as “foreigners versus locals.” Properly structured and legally compliant PT PMAs do not weaken Indonesian SMEs—they empower them.
With PP No. 28/2025, Indonesia now has the legal foundation to unify licensing, zoning, and business classifications. If this framework is properly managed and enforced, the noise around PT PMAs will fade, abuses will be minimized, and foreign investment can continue to drive growth alongside local communities.
✅ Bottom line: PT PMAs are part of the solution, not the problem. Enforcement of PP 28/2025 is the key to ensuring they remain so.