Setting up in Bali - Business Consultancy Advice - PMA

[scooterboysteve]

Hi Guys, Girls,

Having done research in Bali, soul searching, worked in Indonesia (Jakarta) for 2 projects over the last 2 years, and having finally got married in Bali in August this year, my wife and me are 99% ready to move to the island to live and work permanently.

Having been speaking to many different channels with reference to the type of companies etc whilst being here, i'm confused with all the options and wanted to reach out to you guys and hopefully gain some 'much appreciated' advice.

Current state:

We have done our research on consultancy companies (to help set and establish our company in Indonesia) and we have been advised that our best option would be a PMA company with 51% Indonesian shareholder option. The reason for the 51% local shareholder is that i run a successful recruitment business in Hong Kong which i am looking to launch in Bali. Apparently, a recruitment business cannot be 100% owned, hence the 51% shareholder needed.

Now the questions i have are:

The best quote i have received for setting up the PMA is $3200 (includes all government fees) + $865 per year (for nominee shareholder provided by the company that is setting up our PMA) + 4,500,000.00 for my KITAS + 3,500,000.00 for my wife's KITAS. The quote came from a local company that i'm happy to share with the group if needed.

Does the group know of any other companies in this field that i could speak to that may be able to offer a more competitive service?

Is there any other option to have the ownership 100%?

I am also looking to launch another business in Bali which can operate as a 'promotion company' which I've been told can be 100&. I asked why can’t i have the PMA registered under promotions company and run the recruitment business under it. They told me i would get reported to the government in a heartbeat by my competitors and this would cause big issues.

Is this true and what are the group’s thoughts?

Thank you and I look forward to hearing your thoughts and hopefully helping others out reading this.

 

[sakumabali]

I'm no expert but I'm very sure foreigner can hold now 100 % in a "consulting PMA", if I would be you I wouldn't like the idea to give more than 50 % of my company to a local guy I don't very well or at all. If your wife is indonesian fine, if not I would rather find another solution. Maybe your company will not have any assets - for now but this might change....why not try to change the term "recruiting" with "consulting"?

 

[scooterboysteve]

yes, i've been told that we can have the recruitment company 100% owned, but as we will be hiring locals into local companies, it has to have a 51% share ownership. if we were just hiring foreign nationals into Bali, or placing foreign national into other countries (from Bali) then there is no issues.. Can be 100%. But placing Indonesians in Indonesia has to be 51%. So i'm told.

The 51% shareholder has no control over those shares, nor any access to the business, just a 'name' for the books which we pay $800 per year for. changing the name "recruiting" with "consulting" could be done, but i'm worried about being informed on by my competitors...

 

[sakumabali]

well, I'm not so sure about "has no control over those shares, nor any access to the business", when you just new here in bali they are all smiles and happiness, "no problem, all is good, you're my friend", but IF your business runs succesfully one day you will see their real face as they will taking over, it'd be also very easy to blackmail you, as the majority holder this guy has to sign important papers; people who had to find this out in a hard way are countless here on Bali, Man I could tell you stories...
Why not recruit people on behalf of a company who hired you to "consult" them?
Good luck mate, maybe you're lucky but an indonesian having the majority in a PMA means for me that he has indeed control; what if you transfer 100 grand to the company account and he could claim access to it via his legal docs & buddies at the bank?

 

[scooterboysteve]

Thanks for the input.

From my discussions with the company who can set up the PMA, the Indonesian has no signing authority with the bank, nor is he/she named as a official signature, so I'm not sure how the bank would give them access. Are you saying this is common in Indonesia for banks to give away money to a person that has no right to obtain that money, nor is not listed as an official to the account?

I think i will speak to the company i'm dealing with to set up the PMA and see if they will send me a copy of the shareholder agreement.

 

[sakumabali]

I'd contact a lawyer / good notary (don't just believe what the company told you), who will be the general manager, who will be the accountant? In my PMA the guy with the most % is the GM.
It's like you buy a car and 51 % of the car is owned by a guy who signs that only you can drive it, but what if he changes his mind? He's indonesian (or even worse balinese) and you're just a foreigner. He can go to the judge and says "they forced me into signing this, actually I also want to drive this car and most of it is indeed owned by me"

sorry stupid example but that's what COULD happen...

 

[sakumabali]

Are you saying this is common in Indonesia for banks to give away money to a person that has no right to obtain that money, nor is not listed as an official to the account?

No it's not common, actually Banks in Indonesia are imho very trustworthy (as long as you, their client, are alive (but that's another story) but IF a guy enters the bank and he can prove that he's the majority owner of the PMA "xyz" and he has all the legal documents to prove it and he wants access to the company account of the PMA "xyz" I'm not so sure...

 

[SHoggard]

From what I see:- What is being 'sold' is that someone holds 51% shares in the company

• but has no voting rights
• has no executive position or signatory authority
• BUT may have the legal liability if something goes wrong

THEN, somewhere down the line, when business is great & the revenue flow makes it worthwhile your majority shareholder (eg: the company owner ) decides it's time there was a shareholder's meeting and votes you out of your managerial job, probably locking you out of the office & terminating both your housing lease and KITAS at the same time.
While he's at it he passes a company resolution to change the bank signatories... hell technically you don't even have to be present at the 'meeting' since he holds the majority & therefore has the quorum.
Upshot is that before the banks close for the day he's gutted the company account.
And all the staff work for him!

So fast it'll make your head spin and all perfectly legal as long as the company chop is on the resolution & it is in accord with the M&A lodged with the bank when the account was opened.

He doesn't have to convince the bank to do any back-door deal to "to give away money to a person that has no right to obtain that money" - because he will have the right to obtain whatever he wants - it is (and has always been) his company.

I'd think it would require a mountain of paperwork (power of attorney, non-compete... & non-whatever-you-think-might-go-wrong contracts) similar in nature to the paperwork for a HM Nominee set of agreements, but probably involving a lot more time/effort on the part of the lawyer - so you'd be advised not to look for the 'best price' or "a more competitive service" but the most accurate reflection of your wishes translated into a legal document (which will of course be in Bahasa) I'm not confident you'd get that from a "company" that does company set-ups, for peace of mind & security you'd need a lawyer.
NOTE: In Indonesia, like most countries, it is illegal to enter into a contract or agreement which is designed to subvert an existing law....But though you've run a successful business in HK where foreigners can own 100% of businesses, but this isn't HK and Indonesia has specific laws governing what foreigners can and cannot do..... and that's the alternate scenario sakumabali kindly lined out for you "He can go to the judge and says "they forced me into signing this, actually I also want to drive this car and most of it is indeed owned by me"

But you should know all this, you've run projects in Jakarta, surely you heard all the horror stories and scams from expats there... so take them & multiply them by a factor of 10 maybe 50 - not that Balanese are any more or less honest that Javanese/Jakartans, but the rule of law becomes more open to interpretation the further from the capital you get (that goes for Malaysia, Thailand & everywhere in Asia except, Sg, HK & Japan)

Good luck - but get a lawyer

If you're in any doubt see this thread running concurrently to yours: https://balipod.com/forum/threads/mediators.8282/

 

[Roswen]

yes, i've been told that we can have the recruitment company 100% owned, but as we will be hiring locals into local companies, it has to have a 51% share ownership. if we were just hiring foreign nationals into Bali, or placing foreign national into other countries (from Bali) then there is no issues.. Can be 100%. But placing Indonesians in Indonesia has to be 51%. So i'm told.

The 51% shareholder has no control over those shares, nor any access to the business, just a 'name' for the books which we pay $800 per year for. changing the name "recruiting" with "consulting" could be done, but i'm worried about being informed on by my competitors...

agreed with shog, you need to find a lawyer for this matter. For your information, when i started doing business in Indonesia, I use an agency just as you do. It is cheap, only 3000US$ at first i think. However, I realize that it cost a lot of money in the end of the establishment. So I start looking a qualified lawyer to help me with some problem I found during establishment. Yet, it still cost me higher than agent, but I feel more safe and comfortable since if there is any legal problem/dispute arising, then I already have a lawyer to take care off. But if you use an agency?you will spend your money twice.

I have my lawyer contact number if you're interested. PM me, coz I dont want to be considered to promote my lawyer in this forum.

Thanks

 

[Dunaden]

Hi guys, I have a few comments for discussion, I feel like after reading all those posts it was all very useful information but I am still no closer as to which is the best way to go.
-scooterboy-I'd be interested to speak with you if you want PM me, as I run a recruitment/temping agency in Aus an am looking to start something up in Bali next year
-Sakuma-I am still trying to make sense of your Snow white story in the mountains on the other thread!hahaha

But, overall, does anyone have any have any strong oppinions on buying land freehold or leasing-I understand you need to buy it in a locals name, among other options eg. compaines that will do this for a fee. But I'm not keen on leasing, building something awesome and then when the lease is up the owner goes " gues what mate your rent just tripled!Take it or leave it".
If anyone has any contacts re visas/lawyers etc they wish to send , by PM or whatever please do. I am returning in May for 3 weeks of research, research research and hope to be busy as possible, looking into building and company ownership etc....
Thanks everyone