DOES THE PROCESS OF ESTABLISH COMPANY IN INDONESIA WOULD BE DIFFICULT?
HERE IS THE ANSWER: NOT AT ALL.
Finding the right party to assist you in all process of registering company in Indonesia would be the exact first step. We will explain many important points you may want to understand; the establishing of a trading company in Indonesia, how to set an import company, what the regulations concerning the import-export activities, as well as how to establish a representative office in Indonesia.
WHAT ARE NEEDED AND HOW LONG IT TAKES TO ESTABLISHING A TRADING COMPANY IN INDONESIA? HERE WE HAVE THE ANSWERS.
Suitable with the rules from Indonesia’s government, there will be many documents every foreigner need to prepare. To ensure you prepare the right requirements, you can trust in third party that is legal and also can guarantee you to fulfil all the requirements. Let the third party helps you while you can focus on the main matter once you’ve run your company in Indonesia.
HERE ARE SOME STEPS YOU NEED TO HIGHLIGHT TO ESTABLISH FOREIGN DIRECT INVESTMENT LIABILITY COMPANY IN INDONESIA (PT PMA), ESPECIALLY FOR ESTABLISH TRADING COMPANY FOCUSING IN THE IMPORT AND EXPORT ACTIVITIES IN INDONESIA:
- Doing researches on Indonesia Company Law could be an ammunition in order you can through the process well. You also need to have good understanding whether your company and business location are suitable with the local law.
- Feeling certain that your future business in Indonesia is suitable with the law and regulation apply in this country, then the next step could be finding the best consultancy agency. This is very important to help you get along with the registration process.
- In the registration process, you need to prepare some documents;
- A license from Investment Coordination Board Principle, which approve your investment in Indonesia,
- Article of Association issued by a Public Notary,
- Ratification from the Minister of Justice,
- Domicile Letter from the local government (signed and stamped by the district, sub-district, and village/local community government where your company office will be located),
- Tax Registry Number (NPWP) and Tax Card, and
- TDP (business registry to local trade department).
After that, you also need to get a permanent business permit. The application of this permit can only be done once your company is ready to operate. This permit is issued by Investment Coordinating Board.
You need to prepare several documents for establish company, including:
- Notary Deed of Establishment.
- Investment Coordination Board Principal License
- A copy of office and warehouse agreement
- A document stating the location of your head office
- If option “d” is not available, you can use a virtual office. In this case, consult this with your consultant.
- All of those documents above are prerequisites to apply for a General Importer Identification Number (API-U) or Producer-Importer Identification Number (API-P). The application is addressed to the Investment Coordinating Board. In Indonesia, it is possible to import goods without the availability of API-u or API-P. However, it is restricted for only certain goods which are infrequently imported, such as promotional goods, and things used for research and developmental purposes. In addition, this activity can only be done if the Director of Import in the Indonesian Minister of Trade gives approval.
- Certain business field may require you to have a specific import license, such as traditional and herbal medicines, children toys, cosmetics, food and beverages, etc.
SOME IMPORTANT CONSIDERATIONS FOR A TRADING COMPANY:
- Negative Investment List. It is crucial to understand about this Negative Investment List. Some cores of business in Indonesia are forbidden for foreign investment, such as casino businesses, certain chemical industries, etc. There are also some other fields of businesses that is open for foreign investment, but with restrictions, such as some agricultural, state crops and forestry businesses, energy and natural resources industries, etc. Consult your business activities openly with your consultancy agent to make sure that you are not violating the rule and regulation apply in Indonesia.
- One license for one product section. Your business must only have one product section and you cannot run several product sections under one business entity. When you, for example, would like to trade certain agricultural products you cannot have a side business of trading marine products under the same legal entity. You must have two licenses for those two activities.
- One API-P or API-U can only valid for one certain type of product. It means that to import different products, you need to register different API-U or API-P.
- An import company must also have Customs Identification Number. This document is issued by the Directorate General of Customs and Excise (DGCE). It is part of the custom regulation in Indonesia. This number is valid as long as the company is still active in performing the business for the last 12 months and does not violate any custom regulations.
SOME ISSUES YOU NEED TO PAY ATTENTION CAREFULLY:
- Make sure that you follow every procedure when shipping your cargo to Indonesia. Otherwise, you will get storage charges, or worse, fines for any cargo that cannot be imported to this country.
- When you are using the service of an undername importer, deal with the one that really have the import license for the product you are importing. It is best to ask your customer in Indonesia regarding about this matter, as they may have a good solution in case you want to import some goods but you haven’t got any license, yet. You can also consult you consultant for this issue.
ESTABLISHING A REPRESENTATIVE OFFICE OF FOREIGN TRADE COMPANY (K3PA)
This maybe is the best solution for any investor who wants to perform some trading activities in Indonesia, but hasn’t got a chance to establish a company here. K3PA is dedicated for foreign company that wants to open a representative in Indonesia.
THE PERMIT CAN BE ISSUED UNDER THESE CONDITIONS:
- K3PA can only be applied by the parent company of the products. Therefore, a broker companies are not allowed to establish a K3PA.
- K3PA can only be issued for 3 years and should be re-registered or expanded every 3 years.
When you want to open a K3PA in Indonesia, you need to assign a local or foreigner to sit as the Chief Representative Officer. Especially for foreign officer, domicile letter and working permit are needed.
SOME OTHER DOCUMENTS NEEDED TO APPLY FOR A K3PA ARE:
- Letter of Appointment.
- Letter of Intent.
- Letter of Statement.
- Building Rental Agreement Document.
- Letter of Domicile signed and stamped by the local government.
From the explanation, there are two ways of doing a trading activities in Indonesia. The first one is to establish a trading company, which requires a more complex process, documents, as well as budget. The second one is to open a K3PA or Representative Office in Indonesia, which is simpler and relatively lower in cost. Every option has its of advantages and disadvantages. Consulting everything to your agent is the best way to be able to meet the entire legal requirements in Indonesia.