The Basics of Starting a Business in Indonesia

Indonesia is bent on competing in the global market more aggressively. This will then explain how it tries to make starting the business in the country as convenient and as quick as possible with stronger and better policies as well as governance.

But how do you actually start a business in Indonesia? The real process depends on many factors including your industry, the size of your company, purpose, and place you’re planning to set up, among others. Thus, we’re going to go for the basics.

1. Negative Investment List

Anyone who wants to set up a business in the country should refer to the Negative Investment List first. This outlines the various industries in the country, which ones are open to the foreign investors, and how much you can own. Over the past few years, provisions have become more relaxed. It means what could be 50 percent cap to foreigners may already be 95 percent. Some may already be 100 percent open to foreign investments.

However, Indonesia remains very protective of its local businesses, especially the small- and medium-scale economy. Because of this, there are still categories that cannot be open to foreign companies.

2. Form of Business Entity

Here’s a question: what if you want to invest in industries that are limited to foreigners? Fortunately, Indonesia gives you a lot of options. One is through a local nominee, which can allow you to invest in a wholly owned local business. This one though can be very tricky, and one wrong move can mean losing everything you put in. It can also land you in a serious trouble with the law. Cekindo can help you find and partner with a local nominee the safest and most legal way possible.

Most foreigners establish a PT PMA, which is a limited liability company. In this business, you become a shareholder, along with local shareholders. It’s a great idea to gain a lot of control over the enterprise.

Then there’s a representative office that is usually the quickest and most straightforward manner of entering the market. The downside of this one is you cannot use it to generate a profit.

Whatever business entity you wish to use, the overall process can still be challenging when you don’t have enough local legal knowledge and experience. Cekindo has the team you need to guide you through all the steps from beginning to end. Book a free consultation with us today to learn more.

3. Minimum Capital Requirements

Foreign investors need to present their plan to BKPM (Indonesia Investment Coordinating Board), including how much they can put up as a capital.

Presently, to set up a PT PMA you need a minimal capital of above IDR 10 billion with 25 percent of it as paid up. Note, though, this is usually just in paper and only meant to show you’re capable of funding and sustaining your business in the country.

4. Hiring Foreigners

You have the option to hire or not people for the business. Some prefer to just look for local partners. Cekindo can help find you the best local distributors fast.

But if you want to hire an employee, then you need to know the laws. For example, you need to show proof you need to bring in foreign workers. You also have to hire local workers for every foreign employee you get.

Hiring therefore takes some time, yet many business processes can already be ongoing before you have the right person to do the job. Cekindo can help you through our list of outsourcing services from human recruitment to taxation, accounting, and payroll processing. We also provide processing of Indonesia business visa and work permit fast.

There’s more to learn on how to start a business here, so call us today at +6221 806 60999 for more information.

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