For foreign investors planning to establish a business presence in Indonesia, the director position is often a key starting point in strategic decision making. At the same time, this is also where confusion frequently arises. One of the most common questions is whether a foreign director must already hold a KITAS or Limited Stay Permit before being formally appointed in a PT PMA or Foreign Owned Company.
This question is understandable. Indonesia applies two separate legal regimes that operate in parallel, namely corporate law and immigration law. The issue occurs when these two regimes are treated as one. As a result, the legal sequence is often misunderstood, leading to unnecessary risks at an early stage of company establishment.
To properly understand the position of a foreign director in a PT PMA, it is important to clearly distinguish between corporate appointment requirements and immigration obligations.
Foreign Nationals Are Legally Allowed to Become Directors of a PT PMA
From a corporate law perspective, there is no restriction preventing foreign nationals from serving as directors of a Foreign Investment Company (PT Penanaman Modal Asing/PT PMA).
Indonesian Company Law explicitly states that directors are appointed through the General Meeting of Shareholders (Rapat Umum Pemegang Saham/RUPS) and must be individuals who are legally capable of performing legal acts.
There is no provision requiring directors to be Indonesian citizens. Citizenship is therefore not a limiting factor in director appointments. As long as the appointment is approved through an RUPS and recorded in a valid notarial deed, a foreign national may legally serve as a director of a PT PMA.
At this stage, the foreign director of a PT PMA is already valid under corporate law, even if the individual does not yet hold a stay permit in Indonesia.
The Correct Legal Sequence: RUPS Comes Before KITAS
One of the most common misconceptions is the assumption that a visa or KITAS must be obtained before a person can be appointed as a director. In practice, the correct legal order is the opposite.
The appointment of a director must first be approved through an RUPS. The resolution is then formalized in a notarial deed reflecting the change in the company management structure. This deed must subsequently receive approval from the Ministry of Law and Human Rights through the AHU (Administrasi Hukum Umum).
These documents serve as the legal foundation confirming that the individual has officially been appointed as a director. Without this status, the company has no legal basis to apply for work authorization or immigration permits. In fact, Indonesian immigration authorities require proof of directorship before issuing a visa or KITAS.
Only after the notarial deed and ministerial approval are completed can the company submit the Foreign Manpower Utilization Plan(Rencana Penggunaan Tenaga Kerja Asing/RPTKA). The RPTKA is filed based on the specific position being filled, including a director role. This process then becomes the formal gateway for visa and KITAS applications.
Understanding this sequence is critical, as it determines the validity of all subsequent documentation.
When Does KITAS Become Mandatory for a Foreign Director in a PT PMA?
Although a KITAS is not required prior to appointment, it becomes mandatory under certain conditions. The determining factor is the director’s activities and physical presence in Indonesia.
If a foreign director resides in Indonesia and actively participates in company operations, holding a KITAS is mandatory. Activities such as attending internal meetings, making operational decisions, executing managerial duties, or working from within Indonesia without a valid stay permit may constitute immigration violations.
On the other hand, if the director is domiciled outside Indonesia and does not enter the country to perform work activities, the KITAS requirement does not technically apply. However, this arrangement often proves impractical in daily operations.
Without a KITAS, a foreign director is unable to open a corporate bank account in Indonesia, cannot be registered as an authorized tax signatory, and will face significant administrative limitations. In practice, many companies ultimately proceed with a KITAS application even when the director is initially non resident.
This is where a clear understanding of the foreign director role in a PT PMA becomes essential, as the choice between resident and non resident status carries distinct legal and operational implications.
Legal Risks of Active Work Without a KITAS
Ignoring the KITAS requirement once a foreign director begins active work in Indonesia is more than a minor administrative oversight. Indonesian Immigration Law requires all foreign nationals present in Indonesia to hold a stay permit that matches their activities.
Non compliance may result in immigration sanctions, administrative fines, or deportation. These consequences affect not only the individual but also the credibility and continuity of the PT PMA itself.
In addition, signing banking or tax documents without a valid stay permit can lead to compliance issues that surface at a later stage. For this reason, understanding the boundary between corporate appointment and immigration obligations is essential from the outset.
Important Exception: Directors Who Are Also Investors
There is a specific scheme frequently utilized by foreign investors where the director also holds shares in the company. In such cases, the individual may apply for an Investor KITAS.
One key advantage of this scheme is the exemption from the Foreign Manpower Compensation Fund (Dana Kompensasi Penggunaan Tenaga Kerja Asing/DKPTKA). The licensing process is also generally more straightforward because the individual is classified as an investor rather than a standard foreign employee.
This option is subject to specific requirements, including a minimum shareholding value of IDR 2.5 billion. For many PT PMA founders, this approach offers a strategic solution to streamline immigration matters while strengthening the director’s legal position within the company.
A Strategic Approach to Aligning Director Status and Administrative Obligations
In practice, appointing a foreign director and fulfilling administrative obligations in Indonesia rarely follow a perfectly linear path. Many companies assume that once the corporate structure is legally established, immigration and supporting administrative matters can be addressed later.
In reality, timing differences between director appointment and operational activities often become hidden bottlenecks.
These issues typically surface during operational stages such as corporate bank account opening, tax signatory registration, or internal compliance processes with financial institutions. At this point, misalignment between director status and immigration requirements can lead to additional document requests, approval delays, or avoidable structural changes.
A structured approach from the beginning allows companies to better understand the practical implications of appointing a foreign director in a PT PMA. This includes determining when a stay permit becomes an operational necessity rather than a formal requirement. With proper planning, companies can align administrative pathways with the director’s profile, physical presence in Indonesia, and both short term and long term business objectives.
As a strategic partner for foreign owned companies, XPND supports clients in navigating current practices applied by financial institutions and relevant authorities. This support is proactive in nature, focusing on aligning corporate structure, director status, and administrative readiness before risks arise.
Support typically includes:
- Evaluation of PT PMA readiness based on the role and position of the foreign director
- Alignment of corporate documentation with institutional expectations
- Development of transitional administrative strategies for non resident directors
- Identification of frequently overlooked supporting documents
- Assistance in communication to minimize repeated revisions during the process
Through a strategy driven and practical approach, companies can ensure that appointing a foreign director goes beyond formal compliance and genuinely supports smooth business operations.
An early discussion with a partner familiar with the Indonesian PT PMA landscape often becomes the most effective step to prevent obstacles that could otherwise have been anticipated from the start.
