Indonesia is known for its bureaucratic environment. This page will explain your possibilities of entering the Indonesian market, mentioning the advantages and disadvantages of each type of company in Indonesia. There are 2 types that foreigners may choose: a foreign-owned PT PMA or Representative Office.
Foreign-Owned Company Registration In Indonesia (PT PMA)
Before starting a business in Indonesia, you need to find out whether your business field is listed on the 2020 Positive Investment List as “fully open to foreign investment”. If it is indeed fully open to foreign investment, you are free to establish the Indonesian version of the Limited Liability Company (LLC): Penanaman Modal Asing (PMA). With this option, you can either have 100% foreign ownership or split the ownership of your company with a local partner through Joint Venture.
Investment Plan for Foreign-Owned Company:
Foreign investors need to invest above IDR 10 billion as their investment plan, with the minimum paid-up capital also being IDR 10 billion. In the investment plan, companies can mention either cash or fixed assets such as machinery. However, it is excluded from land and buildings.
Paid-up capital can be paid after the company is established and has a bank account (stated by notary letter). The company needs to reach an investment of at least IDR 10 billion to obtain a business license as their permanent license, import license, and other licenses specific to the company’s sector.
Representative Office Registration In Indonesia
If you are not yet 100% sure about entering the Indonesian market, you can choose a representative office as a less financially demanding option as there is neither a minimum investment requirement nor the need to have a local shareholder or director. Establishing a representative office means that their entity isn’t fully autonomous; it is dedicated only to working on marketing promotions, supervision, and cooperation on behalf of its parent company abroad.
Representative offices in Indonesia are not permitted to make any business transactions with companies or people in Indonesia (this applies both to export & import or domestic trading), but the representative office can:
- Sponsor work permits for 3 expatriate managers (Chief RO, Assistant Chief RO, one other staff)
- Obtain multiple entry visas for its expatriate personnel as well as exemption from exit-tax (SKFLN).
Cekindo will assist you with setting up the representative office. We can also offer our serviced, co-shared or virtual offices at prestigious business address.