If you are still performing the Indonesian market research and you don’t have huge financial capital dedicated to investments in the Indonesian market, you can choose the Representative office, which gives 100% control to the mother company, abroad. Nevertheless, the Representative office in Indonesia cannot perform any business transactions.
FOREIGN REPRESENTATIVE OFFICE (KPPA)
Establishing a foreign representative office in Indonesia (Kantor Perwakilan Perusahaan Asing – KPPA) is a market entry, allowing you to create a market presence with almost no finances. KPPA is more general than a Foreign Trade Representative office in Indonesia (KP3A) and is usually set up for management purposes. The role is limited to: supervising, liaising, coordinating, managing and representing the parent company.
Cekindo will need the following documents to help you set up the company:
- Notarized letter of intent
- Notarized letter of appointment
- Letters of reference
- Resume and work permit of the company representative
FOREIGN TRADE REPRESENTATIVE OFFICE (KP3A)
Apart from the activities, which the KPPA can perform on Indonesian market, this representative office can also act as buying and/or selling agent. Nevertheless, it is still only representative office, therefore it cannot conduct the sale itself, or issue invoices, that’s a role of the parent company abroad.
The process of establishing a KP3A is same as the set-up process of the Foreign Representative Office (KPPA). The difference is that in this case, all documents such as the Letter of Intent or Letter of Appointment must be signed by a notary in the country of origin and legalized by the Indonesian Ministry of Foreign Affairs.
FOREIGN CONSTRUCTION REPRESENTATIVE OFFICE (BUJKA)
The BUJKA Representative office is a bit different from the KPPA and KP3A and it is suitable only for companies operating in the construction area. To set up the Representative Office for Construction (BUJKA), companies need to qualify for a license SIUJK, which is needed for operating in the construction area in Indonesia and is valid for 3 years, with the possibility of extension.
Foreign Construction Representative Offices in Indonesia also need to cooperate with local companies:
The distribution of work for the construction activities is as follows:
- At least 50 percent of the value of construction work is performed in Indonesia
- At least 30 percent of the value of construction work is performed by the Indonesian construction company.
The distribution of work for planning activities is as follows:
- The entire technical planning work is performed inside Indonesia
- At least 50 percent of the value of construction planning work is performed by the Indonesian construction company.
Frequently Asked Questions:
What is a representative office in Indonesia?
It is the easiest form of a market entry in Indonesia. There is no minimum investment required, nor a need for local shareholder & director. On the other hand, its business activities are limited only to market research, marketing promotions, supervising and coordinating, since the representative office cannot have any business transaction, those need to be done through the parent company.
How much capital is needed to set up a representative office in Indonesia?
There is no capital requirement, to set up the representative office in Indonesia.
How long does it take to establish RO in Indonesia?
It takes 2 months to establish the representative office in Indonesia.
How many types of representative offices there are in Indonesia?
There are three types of representative offices: Foreign Representative Office (KPPA), Foreign Trade Representative Office (KP3A) and Foreign Construction Representative Office (BUJKA).
What activities are allowed within RO form?
- Foreign Representative Office (KPPA) is allowed to perform only market research, supervising, liaising, coordinating and representing the parent company on Indonesian market.
- Foreign Trade Representative Office (KP3A) is allowed to perform the same tasks as KPPA, plus it can act as a trading liaison. Nevertheless, all the financial transaction need to be handled by parent company.
- Foreign Construction Representative Office (BUJKA) can perform construction activity in joint cooperation with a local company.
What is the minimum structure of and RO?
1 Chief RO, 1 Vice Chief, Staffs.
Is representative office in Indonesia able to sponsor for work permit (KITAS)?
Yes, but it is limited to maximum 3 persons (1 director KITAS and 2 employee KITAS).
How long is the license of the representative office in Indonesia valid?
KPPA 3 year, KP3A 1 year, BUJKA 3 years
Can representative office open a Bank account?
Yes, for internal operations eg. salary, paying domestic services etc.
Can RO conduct sales/issue invoice?
Absolutely NOT, even with KP3A, it’s limited only to liaise the mother company trading with local customers.