INDONESIAN REGULATORY CONFLICT: PT PMA, COMPANY LAW VS IMMIGRATION
AUTHOR: Erniw87 DATE: November 2025
The tension between Indonesia’s Company Law (UUPT) and Immigration Law over the authority and status of directors in Foreign Investment Companies (PT PMA) has persisted for more than a decade.
Despite ongoing regulatory reforms, these laws continue to speak different languages when defining the word “work.”
Directors Under the Company Law
The position of a company’s board of directors in an Indonesian Limited Liability Company (PT) generally refers to Law № 40 of 2007 concerning Limited Liability Companies (UUPT) — which serves as the main legal foundation regulating company organs, including the Board of Directors.
This law defines the rights, authorities, obligations, legal responsibilities, and protections of directors.
Based on Article 92 paragraph (1) and Article 98 of the UUPT, the board of directors generally holds the following rights and responsibilities as stated in the company’s deed of establishment:The board of directors has full authority and responsibility for managing the company in the interests and for the purposes of the company.
- The board of directors represents the company both inside and outside the court.
- The board of directors may grant written authorization to one or more individuals to act on behalf of the company.
- The board of directors is entitled to receive salaries or allowances, as determined by the General Meeting of Shareholders (RUPS).
Meanwhile, Articles 97 and 99 outline the directors’ obligations, including:
- Carrying out their duties in good faith and with full responsibility for the benefit of the company.
- Maintaining shareholder lists, special registers, minutes of directors’ meetings, and annual reports.
- Safeguarding and maintaining all company assets.
- Reporting share ownership in the company or in other companies.
- Submitting annual reports to the RUPS for approval.
From this explaination, it is clear that under Law № 40 of 2007, directors are considered working individuals and are entitled to receive compensation for their services.
PT PMA by the Immigration Perspective
However, things become more complicated when discussing PT PMA (Foreign Investment Companies). Why? Because another body of law — Immigration Law — takes a different stance when applied to the functions of company directors.
This primarily concerns Law № 6 of 2011 on Immigration, which regulates work permits for foreign workers (TKA).
In practice, the definition of “working” under this law differs significantly. Any foreign national performing operational activities in Indonesia — including active directors — is considered to be “working” and therefore must possess a work permit (IMTA).
While under Company Law, the term “working” simply refers to performing managerial duties (without regard to citizenship or residency status), Immigration Law prohibits this without proper authorization.
Thus, when a director is a foreign nationality, they are required to obtain a foreign worker permit (IMTA) or an investor visa, depending on their role.
Overlapping Rules: Company Law, Immigration, and the Manpower Regulation
Personally, I find this situation rather confusing, as the two legal frameworks assign different interpretations to the director’s position and authority. This is further complicated by Minister of Manpower Regulation (Permenaker) № 8 of 2021 on the Employment of Foreign Workers.
Under Immigration Law, a foreign investor (holder of an Investor ITAS) is normally appointed as a director or commissioner in a PT PMA. This is standard practice — the company’s deed of establishment clearly defines their authority as per the Company Law.
However, in the actual execution of their duties, such directors are restricted by Immigration Law and Permenaker №8/2021. A foreign investor acting as a director cannot perform their duties without holding both a work permit (IMTA) and a work KITAS, which are valid for 1–2 years and renewable.
In simple terms, the legal framework lacks synchronization, creating ambiguity and confusion — not just for business owners, but also for legal consultants, immigration officers, and labor officials. The Company Law, Immigration Law, and Permenaker №8/2021 clearly overlap in their scope.
The issue becomes even clearer when we realize that there is no unified definition of “work” across the relevant ministries (Immigration, Manpower, and Investment/BKPM). Moreover, while Company Law makes no distinction between active and passive directors, the immigration system does — depending on whether an activity produces remuneration or not.
To make matters worse, Permenaker №8/2021 provides exceptions for investors, but does not define to what extent they may act without a work permit.
The result?
- In BKPM/OSS documents, a foreign investor is legally recognized as a director.
- In immigration practice, if the same person actively participates in operations without a work permit, they may be considered in violation of their stay permit.
- In manpower regulation, if no RPTKA (Foreign Worker Utilization Plan) is in place, the company may be accused of employing illegal foreign workers.
Proposed Solutions
Several steps can be taken to harmonize these overlapping regulations. The government could:
- Align the definition of “work” in the Immigration Law, Company Law, and Permenaker.
- Establish clear boundaries for what activities investors/directors may perform without a work permit.
- Develop a cross-ministerial guideline (joint regulation) among the Ministry of Manpower, Ministry of Law and Human Rights, and BKPM.
Ultimately, I hope that through discussions like this, the government and relevant institutions will coordinate and improve regulatory alignment.
After all, even though these agencies have different mandates, shouldn’t they be able to collaborate and synergize in the spirit of legal certainty and investment facilitation?
