Indonesia is consistently ranked as one of the world’s leading foreign investment destinations for so many years. The reasons are many, one of them being the country’s attempt to create a business-friendly environment for foreign investors.
In recent years, the Indonesian government has been working hard to simplify and ease business procedures. This significant reform, especially the introduction of the Online Single Submission (OSS) system, has allowed investors to save a lot of time and money when establishing their companies.
Challenges of Doing Business in Indonesia
Before you decide to enter the market by starting a company in Indonesia, you must identify the challenges and hurdles.
Below is an overview of the main challenges foreign investors face in Indonesia:
1. You are not familiar with the restrictions on business activities and industry
Some industries or sectors are only partially open to foreign ownership while some are entirely close to foreign ownership, according to the Negative Investment List that is updated regularly.
2. The required capital is not the same as what it is stated
The Indonesian Law states that a foreign-owned company must have a minimum of IDR 10 billion capital, which is equivalent to US$ 620 thousand.
However, the Indonesian government set the capital amount for the foreign-owned company at no less than US$ 1 million, much higher than the amount indicated in the national law.
3. You are not certain of the company location
Changing your company location after your company is registered can be extremely troublesome. Therefore, it is essential to decide your head office located at the very beginning to save you money, resources, and effort.
4. You underestimate the complex tax issues in Indonesia
Tax issues can bring disastrous consequences if you don’t have the right tools and qualified people. A surefire way to get your tax matters sorted timely and properly is to hire a professional outsourced accounting partner.
5. You think too little of Indonesia’s bureaucracy system and red tape
All official business and registration processes can be time-consuming and there is no shortcut to it. You need to comply with every requirement set out by the government. Don’t try to fool the system as the costs of legal violations can be substantial.
Challenges Tackled Easily by Leveraging Professional Assistance from a Specialist
Getting professional assistance from a specialist in Indonesia is highly recommended as the specialist is someone who knows the in and out of the local complex regulations and bureaucracy.
Here are some of the telltale sign of an ideal specialist from a professional consultancy who can help you out tremendously:
- The professional consulting firm is BKPM-certified
- The agency you engaged with is owned by Indonesians. This is because only locally-owned consultancy can assist with the PT PMA registration process
- The firm has a professional website and you can find out some of their previous clients
- You get references from other local consulting firms
- Your agent or specialist requests you to sign the Power of Attorney since they are the ones who can help you with the PT PMA registration. You can’t register the PT PMA yourself
Starting a Company in Indonesia with Cekindo
Indonesia’s investor-friendly environment and greatly improved infrastructure present a tremendous opportunity for foreign organisations and entrepreneurs.
With Cekindo’s vast experience, we can provide you with cost-effective business solutions for starting a company in Indonesia. We will work with you side by side and understand your requirements to ensure your business and operational efficiency throughout the entire business incorporation journey.
Forming a new company comes with its own set of calculated risks, extensive research, planning, and a well thought out execution.
To help you start a company in Indonesia with a 360-degree approach, our team of legal experts and business consultants will perform extensive research and planning, take in all calculated risks, and finally carry out the well-thought-out execution.
Request a proposal from Cekindo and we have a way to get you there. Fill in the form below.