Running a PT PMA in Indonesia means understanding who can lead your company, and how to do it legally. Foreign directors play a key role in daily business management, but their appointment comes with specific legal requirements that every PT PMA owner must follow. This guide covers everything you need to know about foreign company directors in Indonesia for 2026.
Indonesia Law & Regulatory Basis for Foreign Investment
Understanding the Legal Framework in Indonesia
Indonesia’s rules for foreign investment and corporate governance are anchored in several key laws. These laws set the foundation for who can be a director, what authority they hold, and what limits apply.
The main legal sources include:
- Law No. 25/2007 on Investment — defines investment rights and protections for foreign investors in Indonesia
- Company Law No. 40/2007 (UUPT) — governs the structure and duties of directors and commissioners in all Indonesian companies
- Omnibus Law on Job Creation (Law No. 11/2020) — updated several rules on investment and workforce management
- Presidential Regulation No. 10/2021 (Positive Investment List) — defines which business sectors are open or restricted to foreign ownership
Laws Governing Corporate Governance
Under Company Law No. 40/2007, every Indonesian company must have two governing bodies: the Board of Directors (Direksi) and the Board of Commissioners (Dewan Komisaris). These two boards have separate and distinct functions, directors run the company, while commissioners supervise it.
The law states that directors must be individuals, not legal entities. They must be legally capable of performing legal acts. A history of bankruptcy or fraud-related convictions can disqualify someone from serving.
Authority of Foreign Directors under Indonesian Law
Indonesian Company Law does not require directors to be Indonesian citizens. A foreign national can legally hold a director position in a PT PMA as long as they are appointed through a General Meeting of Shareholders (RUPS) and the appointment is recorded in a valid notarial deed. However, citizenship is only one part of the picture, immigration, work permits, and sector-specific rules also apply.
Types of Companies in Indonesia Eligible for Foreign Directors
Not all Indonesian company types allow foreign directors in the same way. Here is a quick overview:
| Company Type | Foreign Director Allowed? | Notes |
| PT PMA (Foreign-Owned Company) | ✅ Yes | Standard structure for foreign investors |
| PT (Local Company) | ⚠️ Usually restricted | Typically requires Indonesian nationals |
| Representative Office (KPwA) | ⚠️ Limited | Head of office rules apply |
| Branch Office | ❌ Not applicable | No separate legal entity |
Foreign directors are most commonly found in PT PMA structures, where foreign ownership is already a built-in part of the company design.
Eligibility Requirements for Foreign Directors
Legal Status and Visa Requirements
To legally serve as a director of a PT PMA, a foreign national must:
- Be at least 18 years old
- Not have been declared bankrupt by an Indonesian court
- Not have a prior conviction for financial or capital market crimes
- Be appointed through a formal General Meeting of Shareholders (RUPS)
- Have the appointment recorded in a notarial deed within 30 days of the RUPS
- Obtain approval from the Ministry of Law and Human Rights (MOLHR)
The notarial deed and MOLHR approval are required steps. Without them, the appointment is not legally valid, and no immigration permit can be processed afterward.
Domicile, KITAS, and Working Permit
A foreign director who lives and works in Indonesia must hold a valid KITAS (Kartu Izin Tinggal Terbatas / Limited Stay Permit). This requires a supporting document called the RPTKA (Foreign Manpower Utilization Plan), followed by an IMTA (Work Permit Notification).
If a foreign director is based outside Indonesia and does not physically work inside the country, the KITAS is technically not required. But this arrangement is often impractical. Without a KITAS, a foreign director cannot:
- Open a corporate bank account in Indonesia
- Register for a personal NPWP (Tax Identification Number)
- Carry out many routine government filings and legal tasks
There are two types of stay permits relevant to PT PMA directors. An Investor KITAS is suited to directors who own shares in the company. A Working KITAS applies when the director receives a salary from the company. Understanding the difference helps you choose the right path from the start.
Read more: Investor KITAS vs Working KITAS: Which One Is Right for You?
What Kind of Company in Indonesia Has Foreign Directors?
Foreign directors are found mainly in PT PMA companies. A PT PMA is a foreign-owned limited liability company, the only structure in Indonesia that allows majority or full foreign ownership. Sectors such as manufacturing, technology, hospitality, logistics, and trade commonly operate as PT PMAs with foreign directors at the helm.
Some sectors require Indonesian nationals in director roles, including multi-level marketing companies, direct selling businesses, and entities in the capital markets space. Always verify sector-specific requirements before appointing a foreign director.
Board of Directors and Board of Commissioners: Functions in a Company
Under Indonesian Company Law, the Board of Directors and Board of Commissioners serve very different roles.
Board of Directors (Direksi):
- Manages daily company operations
- Represents the company in legal and commercial dealings
- Signs contracts, licenses, and government submissions
- Bears legal responsibility for the company’s regulatory compliance
Board of Commissioners (Dewan Komisaris):
- Supervises the Board of Directors
- Ensures the company follows its Articles of Association (AOA)
- Provides advisory and oversight functions
- Does not manage daily operations
This two-tier structure creates a built-in system of checks and balances. It separates management power from supervisory power, a key feature of Indonesian corporate governance.
Understanding PT PMA Companies in Indonesia
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the standard legal vehicle for foreign investors operating a business in Indonesia with direct ownership. It is a fully recognized legal entity, separate from its shareholders, that can own assets, enter contracts, employ staff, and hold licenses.
A PT PMA Must Have at Least:
- 2 shareholders — can be foreign individuals or foreign companies
- 1 director — can be a foreign national
- 1 commissioner — can be a foreign national
- Minimum paid-up capital of IDR 2.5 billion (~USD 150,000), per Minister of Investment Regulation No. 5 of 2025
- A registered business address in Indonesia
- A valid corporate NPWP (Tax Identification Number)
At least one board member must hold an Indonesian NPWP. If a foreign director is based in Indonesia, they must also register for a personal NPWP.
Learn how: What is NPWP in Indonesia: A Complete Guide for PT PMA Owners
What Do Foreign Company Directors in Indonesia Do?
A foreign director in a PT PMA is responsible for all operational aspects of the company. Under Indonesian law, their key duties include:
- Representing the company before government agencies, banks, and third parties
- Signing contracts, licenses, permits, and official government filings
- Managing day-to-day operations, employees, and business decisions
- Ensuring the company meets all tax and regulatory obligations
- Opening and managing corporate bank accounts
- Liaising with BKPM (Investment Coordinating Board) and the tax authority (DJP)
One important practical note: opening a corporate bank account requires the director to be physically present in Indonesia during the account opening process. Foreign directors must bring their passport and KITAS when visiting the bank.
See: How to Open a Corporate Bank Account in Indonesia for PT PMA
Restrictions of Foreign Directors
Not all director roles in Indonesia are open to foreign nationals. Key restrictions include:
- Personnel/HR Director positions are reserved exclusively for Indonesian nationals under Ministry of Manpower Decree No. 349 of 2019
- Capital market entities, directors of stock exchanges, clearing institutions, and settlement depositories must be Indonesian citizens
- Direct selling and multi-level marketing companies must appoint Indonesian nationals as both directors and commissioners
- Sector-specific regulations may impose additional local requirements in areas such as defense, telecommunications, education, and media
Foreign directors must also comply with Indonesia’s anti-monopoly and fair competition laws. Any conduct that restricts market competition or abuses a dominant position is prohibited.
How to Appoint a Foreigner as Director in an Indonesian Company
Appointing a foreign director follows a defined legal process. Missing any step, or doing them in the wrong order, can delay or invalidate the appointment.
- Hold a General Meeting of Shareholders (RUPS) to formally approve the appointment by shareholder resolution
- Draft a Notarial Deed within 30 days of the RUPS, a licensed Indonesian notary must prepare this document
- Submit to the Ministry of Law and Human Rights (MOLHR) for official recording in the company registry, failure to notify within 30 days may result in administrative sanctions
- File the RPTKA (Foreign Manpower Utilization Plan) with the Ministry of Manpower to formally register the foreign director position
- Apply for a VITAS (Limited Stay Visa) through the Indonesian immigration authority
- Apply for KITAS and IMTA (Work Permit Notification) once the director arrives in Indonesia
Required Documents for Appointment
- Passport copy of the foreign director
- Proof of address (or KITAS if already in Indonesia)
- Notarial deed of appointment
- Articles of Association (AOA) of the PT PMA
- Company registration documents (NIB, AHU approval)
- RPTKA submission to the Ministry of Manpower
Compliance and Reporting Obligations
After appointment, the foreign director must:
- Register for a personal NPWP with the Indonesian tax office
- Obtain KITAS and IMTA if residing and working in Indonesia
- Report any board changes to MOLHR within legal deadlines
- Ensure annual corporate tax returns (SPT Badan) are submitted on time
- Keep company records updated and accurate in the company registry
Risks and Challenges of Appointing a Foreign Director
Bringing in a foreign director can strengthen your business, but it also creates real compliance risks if not handled properly. Common risks include:
- Immigration violations — a foreign director actively managing the company without a valid KITAS may face fines, deportation, or business sanctions
- Manpower regulation breaches — placing a foreigner in a restricted role (e.g., HR Director) can attract legal penalties for the company
- Tax non-compliance — failing to register NPWP or submit tax returns on time creates personal and corporate liability
- Operational disruption — if the director is based abroad and cannot access Indonesia, daily business may stall
Foreign directors in 2026 also need to stay on top of Indonesia’s Coretax (PSIAP) migration. Companies that did not register NPWP credentials in the new system may face reporting delays and increased audit exposure.
Common Pitfalls When Choosing Directors
- Appointing a foreign director to a restricted position without checking sector-specific rules
- Missing the 30-day MOLHR notification deadline after the RUPS
- Starting work in Indonesia before the KITAS has been approved
- Choosing a director with a prior bankruptcy record or financial crime conviction
- Failing to update company documents and the company registry when the board changes
Learn more: Top 5 Challenges When Starting a PT PMA in Indonesia
Tax Implications for Foreign Directors
A foreign director who qualifies as a tax resident in Indonesia, spending more than 183 days per year in the country, is subject to Indonesian personal income tax. Key tax obligations include:
- NPWP registration is mandatory for any director who lives and works in Indonesia
- Monthly salary paid by the PT PMA is subject to PPh 21 (income tax withholding)
- Dividend payments to foreign directors/shareholders are subject to withholding tax, typically 20% for individuals without NPWP, or 10% for those with NPWP; rates may be reduced under a double taxation treaty
- Annual personal tax return (SPT Tahunan) must be filed if the director holds an NPWP
- Transfer pricing rules apply when a PT PMA transacts with related parties or parent companies abroad
Non-resident directors, those spending fewer than 183 days in Indonesia, are taxed only on Indonesian-sourced income at a flat 20% rate, which may also be reduced by treaty. Companies must ensure correct payroll deductions are made and reported monthly to stay compliant.
Legal Duties & Liabilities of Foreign Directors
Under Article 97 of Company Law No. 40/2007, every member of the Board of Directors is fully personally liable for losses suffered by the company if they are found to be at fault or negligent in the performance of their duties. This principle applies to foreign directors just as it does to Indonesian nationals.
Personal liability can arise when:
- A director acts outside the scope of the company’s Articles of Association
- A director allows the company to engage in fraudulent or unlawful conduct
- A director fails to maintain proper company records or financial statements
- The company is declared bankrupt due to the director’s fault or negligence
A director can defend against personal liability by proving: losses were not caused by their mistake; they acted in good faith and with prudence; there was no conflict of interest; and they took steps to prevent the damage.
Additionally, under Article 97(7), other board members or the Board of Commissioners can bring a lawsuit on behalf of the company against a director who caused losses through misconduct or negligence. This makes proper board governance, and clear Articles of Association, essential from day one.
FAQ: Common Questions About Directors in Indonesia
Who is Eligible to be a Commissioner for a Company in Indonesia?
Any individual, Indonesian or foreign, can serve as a commissioner in a PT PMA. They must be legally capable, not declared bankrupt, and free from prior financial crime convictions. There is no citizenship requirement for the commissioner role in a PT PMA.
Can a Foreign Individual Be a Director in an Indonesian Company?
Yes. Indonesian Company Law does not require directors to be Indonesian citizens. Foreign nationals can legally serve as directors in a PT PMA. However, they must comply with immigration, work permit, and tax requirements. For local PT (non-foreign-owned companies), sector-specific rules may require Indonesian nationals in director positions.
Does a Director Need to Live in Indonesia?
Not as a strict legal requirement, but practically yes. At least one director must be able to carry out operational duties inside Indonesia. Without a resident director, tasks like bank account opening, tax registration, and government license applications cannot proceed.
Can a Bankrupt Person Be a Director?
No. Any individual declared bankrupt by an Indonesian court, or found responsible for the bankruptcy of a previous company they managed, is legally disqualified from serving as a director or commissioner.
Can a Company Be a Director?
No. Under Indonesian Company Law, a director must be a natural person (individual). Legal entities such as holding companies or corporate bodies cannot hold a director position.
Do Foreign Directors Need a KITAS?
Yes, if they live and work in Indonesia. A KITAS is required for any foreign national performing work activities inside the country. Working without one is an immigration violation that can lead to fines, deportation, and sanctions against the PT PMA.
Learn more: What is an Investor KITAS? A Complete Guide for Foreign Investors
How Many Directors Does a PT or PT PMA Need?
A PT PMA needs at least one director. If there are multiple directors, one is designated as the President Director, who leads the board. All directors can be foreign nationals, though companies with local shareholders are often advised to include at least one Indonesian director.
Who Appoints Directors?
Directors are appointed, and removed, by the General Meeting of Shareholders (RUPS). The resolution must be documented in a notarial deed and registered with the Ministry of Law and Human Rights to take legal effect.
Can a Director Be Held Personally Liable?
Yes. Under Article 97(3) of Company Law No. 40/2007, directors are personally liable for company losses caused by their fault or negligence. This includes foreign directors, whether they are based inside or outside Indonesia. Maintaining accurate records, staying within the AOA, and acting in good faith are the best ways to protect yourself.
Need Help Setting Up or Appointing Directors in a PT or PT PMA?
Getting your company structure right from the start protects your business and prevents expensive legal problems later. Whether you are setting up a new PT PMA, replacing an existing director, or navigating KITAS and tax registration, having the right support team matters.
EZPZ Indonesia helps foreign business owners register PT PMA companies, appoint legally compliant directors, and handle all requirements, from notarial deeds and MOLHR filings to KITAS processing and NPWP registration.
Also read: Why Indonesia is the Best Country to Start a Business as a Foreign Investor
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