Suppose you are still performing the Indonesian market research and don’t have substantial financial capital dedicated to investments in the Indonesian market. In this scenario, the best course of action is to establish a representative office in Indonesia, which gives 100% control to the parent company abroad. This allows your company to have a presence to learn about the Indonesian market before committing to establishing a foreign-owned company.
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)
In addition to the capabilities of a KPPA, a foreign trade representative office in Indonesia (Kantor Perwakilan Perusahaan Perdagangan Asing, or KP3A) can also act as a buying and selling agent. This being said, a KP3A is still a representative office, so it cannot conduct the sale itself, or issue invoices; that is the responsibility of the parent company abroad.
The process of establishing a KP3A is the same as that of a foreign representative office (KPPA). 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)
A foreign construction representative office in Indonesia (Badan Usaha Jasa Konstruksi Asing, or BUJKA) is suitable only for companies operating in the construction area. To set up a BUJKA companies need to qualify for a Construction Services Permit (Surat Izin Usaha Jasa Konstruksi, or SIUJK), which is needed for operating in the construction area.
In Indonesia, foreign construction representative offices need to cooperate with local companies, with activity distribution below.
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:
- All 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.