Indonesia is well known to the world for its large population, strategic location, and rich natural resources with surging economy. In addition, vibrant investment climate and government-backed business environment make Indonesia an extremely popular location for foreigners to start businesses.
The Indonesian government has always adopted a pro-business policy through its reform initiatives with the purpose to ease doing business in Indonesia. These initiatives include tax rates reduction as well as tax incentives introduction to boost the country’s performance.
Foreigners must understand the options they have before starting any businesses in Indonesia, such as establishing a foreign-owned limited liability (PT PMA), setting up a representative office and using a special purpose vehicle company.
This guide provides information on special purpose vehicle company and the top reasons to go for this option.
WHAT IS A SPECIAL PURPOSE VEHICLE
A special purpose vehicle in Indonesia is an Indonesian individual or an organisation acting as a director or a shareholder (registered owner) of a company on behalf of the real director or shareholder (beneficiary). The pointed Indonesian partner only holds the shares for your benefit.
TOP REASONS TO USE A SPECIAL PURPOSE VEHICLE COMPANY
Running A Business Restricted under Negative Investment List
Negative Investment List (NIL) details that Indonesia has closed some business sectors for foreign investments, either partially or entirely. Even with some policy changes and frequent updates on the list from time to time, some sectors are still limited to Indonesian nationals only.
By engaging a special purpose vehicle company, you will be able to do business in Indonesia even though certain sectors are closed to foreigners.
No Investment Amount Required
It might come as a shocker for some foreigners, but some business sectors require foreigners to have a minimum foreign investment plan of IDR 10 billion. Not only that, you will also need to pay an initial amount of IDR 2.5 billion in the investment plan right away.
Owing to that limitation, most foreigners opt for a less financially demanding choice, which is a special purpose vehicle company with no minimum investment amount.
Faster and Less Complicated Process
In order to set up a PT PMA, foreigners will need to go through a series of complex process with certain requirements, as compared to setting up a local company.
For instance, a foreign-owned company is required to have audited financial reports in order to receive a permanent business license. Without it, it is impossible for companies to get other necessary licenses, such as an import license.
What is more, the set up time for a special purpose vehicle company takes approximately 2 months only.
GET ASSISTANCE WITH USING A SPECIAL PURPOSE VEHICLE COMPANY IN INDONESIA
It is highly likely that your special purpose vehicle arrangement will not be safe if you do this through an Indonesian citizen or a company without a proper legal agreement.
To avoid this, as a credible and trustworthy special purpose vehicle service provider, Cekindo’s authorised lawyers and experts can help you prepare a legal set of agreements.
This allows you to start a business in Indonesia without hassles, and helps you to own, control, and manage your company’s assets and operations even with an Indonesian partner that has been assigned.
Cekindo offers several common special purpose agreements to help you start a business in Indonesia in a prohibited sector but without breaking the law. These agreements include:
- Loan agreement
- Pledge of shares arrangement
- Indemnity agreement
- Dividend assignment
- Corporation agreement
- Pre-signed share transfer agreement
Get in touch with us today to know more about our special purpose vehicle company service and how it can help you start your business in Indonesia in no time.
