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Investment requires you set up a PT PMA - Google that.

Thanks Fred I have had a look at PTA PMA.  Thought there might be another option. Cheers Paula

Watch out!

Other options might well be illegal so leave you open to losses

@peveans

Hi Paula!  The best thing you can do is spend as much time as you can here on Bali and network with as many long term expats as you can find.  You can save yourself a lot of money and heart break by doing that. 

Good luck with your future plans!  I was in your shoes some 25 years ago and took the plunge.  That was the best decision I made in my life.

Cheers!

Hi Paula, as someone who has has set up numerous businesses here in Indonesia (both PT with PMA's and PT's with back to back agreements), I would offering the following:

• Play it straight and go with the PT w/ PMA participation. I know its more expensive and there are more reporting requirements, but it's a much safer option. The government is really watching companies with foreign participation carefully and there are tax and labor law implications. Your local partner will try to talk you out of this (with good intentions) but its not worth the risk for you...
• Related to the last point, make sure you get your KITAS from your PMA once its set up--which gives you the legal ability to live and work in Indonesia.
• When you and your partners are operating your business pay ALL your VAT tax and don't fall behind on this.
• Make sure you pay your employees the local UMR (minimum wage)
• If your business is selling alcohol make sure to get the proper licenses in Bali to do so.

I'm a former Director for S&P and have been living on an off in Indonesia for over 20 years. Its a great experience and I wish you the best of luck!

The above was nicely put.

Perhaps I could add you have to be prepared to pay 13 salaries per year rather than 12.

THR is a bonus paid at religious holidays. This is once per year, mostly at Ramadam.

Times vary based on religion, but it's always paid

@peveans Hi Paula, I did think of one more option--that I'm not recommending, but, it is, nonetheless, an option:

If your Indonesian partner has a PT already set up you could structure your investment as a loan to the PT. While you would have limited recourse to collect this loan if they default, it is a way to avoid having to set up a PT w/ PMA participation. You could structure the loan at the anticipated rate of return your partner has promised you and you could make it as flexible or inflexible as you wish as far as the payback terms. So the total interest payments, over the course of the loan, should equal your expected rate of return. Lastly, you would report this income in Australia so I would consult your local tax advisor about such an arrangement.

The benefit of this approach is you wouldn't have to incur the cost and reporting requirements of the PT w/ PMA participation. Also, your partners PT MIGHT be able to get you your KITAS--which they would sponsor and pay for--which would keep you legally living and 'working' in Indonesia. They would probably designate you as a 'Technical Consultant' on your work permit and have to pay you a nominal salary which you should pay minimal Indonesian taxes on.

But, again, I would underscore the risk and lack of realistic recourse should they default on the loan. So depending on the amount, I would be prepared to potentially forfeit the entire investment. As someone who understands the risk of 'restaurants' and 'hospitality businesses' in Indonesia, I would do your due diligence very carefully and really understand what the purpose of your investment would be for the company. If its to stem cash flow issues --I wouldn't even think about it; if its really an opportunity that needs additional capital, then really evaluate it.  You can also DM if you want to talk more about this.

Again, all the best to you!

Jon