1. Company registration
I would like to expand my business to Indonesia. Should I set up a company?
Yes, it is possible for foreign companies to expand to Indonesia and to set up a company. Depending on the business line you want to pursue, there are regulations for foreigners to follow when establishing a company in Indonesia. Cekindo will check about restrictions connected to each case, provide options on how your business can enter the Indonesian market, and advise on the type of company you should set up.
Is there any option to expand my business without setting up a company?
There are several options that you can choose from, as described below:
- Relocate one of your company’s representatives to work in Indonesia. In this case, you can use our HR Outsourcing Services . HR outsourcing means that the employee can obtain work permit and stay permit under our company. We will also be processing and handling payroll, individual tax, as well as his social security insurance.
- Market your product in Indonesia by cooperating with local distributor . Cekindo can assist with the search for this local distributor. We would shortlist possible distributors and conduct meetings with them and your company. Based on the outcome, you should be able to choose the appropriate local distributor of your preference.
- Expand your business market to distribute your products in Indonesia by using Cekindo as your local distributor . You can register the product under our company using our license holder services, which is explained in detail under the product registration section.
What kind of company will be most suitable for me?
There are 3 company types you can choose from depending on your requirements, preferences, and the nature of your business. You should consider the expected revenue from the business, the business sector it belongs to, whether there are regulations on foreign ownership within your business sector, and paid-up capital, among others.
- Set up Foreign-Owned Company PMA
- Set up Local Company PT.
- Set up Representative Office
Once Cekindo knows what your business needs and requirements are, we can present a number of options that would be most suitable for you. Together with the options we provide a comprehensive explanation on the advantages and requirements on every option and ensure to answer and clarify questions you may have.
You may also want to consider using the services of a local distributor and import your products to Indonesia without setting up company (if this would be suitable for your company). Cekindo can assist with searching for a reliable local distributor or you may appoint Cekindo as your local distributor. This will give you the advantage of using more than one distributor.
What is the difference between foreign-owned company, local company, and representative office?
Foreign- Owned Company PMA: There is a minimum investment plan, which should be 10 000 000 000 IDR ($800 000 USD) for PMA company to obtain a business licence . The PMA company has to have a minimum of 2 shareholders, 1 director, and 1 commissioner. A PMA company has to submit the Investment Activity Report (LKPM) on a bi-annual or quarterly basis. It should be submitted quarterly before obtaining your permanent business licence and should be done bi-annually once you have obtained your permanent business licence. Cekindo can assist your company with the submission of the LKPM. There are regulations on ownership in some business fields; it is important to check whether those restrictions are applicable to your business line.
Local Company PT: The company has to have a minimum of 2 shareholders, 1 director, and 1 commissioner and 100% of shareholders and commissioner have to be local while at least one of the directors should also be Indonesian. In case you would like to set up a local company but do not have the local persons required, Cekindo can offer assistance with that.
Local companies are divided according to the amount of paid-up capital:
- Small: above IDR 50 000 000 – 500 000 000
- Medium: above IDR 500 000 000 – 10 000 000 000
- Large: above IDR 10 000 000 000
It is likewise critical to consider whether you would need to employ a foreign employee because if you do, the minimum size required is a medium company with a paid-up capital above IDR 1 000 000 000.
Representative Office: Some companies decide to establish a representative office as a first step to understand the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and does not have the right to do direct selling and receive income.
Will I be able to hold 100% ownership of PMA?
In general we could say yes, you will be able to hold 100 % ownership of PMA but following Presidential Regulation Number 44 year 2016, there are some sectors that are fully (100%) open, partly (certain percentage) open, or even closed for foreign ownership. As an example, a trading company is 100% opened for foreign ownership while a distributing company is only opened for 67% foreign ownership, and small area retail company (less than 400 m2) is closed for foreign ownership.
Based on your business type, Cekindo will advise you on the restrictions. If there are restrictions on foreign investment, we can provide assistance with finding solutions for your company. For more information on restrictions, you can refer to to the negative investment link.
You should also find more information here.
When do I have to put the money into the bank?
The minimum paid-up capital shall be deposited after the company is established and has set up a bank account. There is also another option that you can look into and that is after the company receives the Article of Association and Deed of Establishment, Cekindo can assist to open the bank account right after.
Will the government check if I have fulfilled the investment plan of IDR 10.000.000.000?
There is regulation for PMA companies according to which the company has to fulfill the minimum investment plan of IDR10 000 000 000 or its equivalent of USD800 000. Twenty-five percent (25%) from this amount is the minimum paid-up capital. We recommend our clients to fulfill the investment plan as this is a legal required by the Indonesian government.
Will foreigner be able to become a director or commissioner?
This will depend on type of company you decide to establish.
- In a local PT company, a foreigner cannot become a commissioner. It is possible to have a foreign director, but there has to be at least 1 local Director in PT.
- In a PMA company, a foreigner can be a director or a commissioner.
I would like to set up company as soon as possible, is there some way to speed up the registration process?
For setting up a local PT company or PT PMA company, the process takes 2 months. If you would like to start doing business as soon as possible, Cekindo has the shelf company option, which means the availability of a ready-made company that allows for the immediate transfer of management control to you. With this option you would have company ready to operate within 5 days.
I would like to set up a local PT Company but I don’t have a reliable local partner to act as the shareholder. What should I do?
Selecting a reliable local partner for your local PT company is key to success and will significantly prevent you from dealing with possible future problems. In case you can’t find any reliable local partner but need to set up a local PT company, Cekindo can offer assistance. Cekindo provides local nominee services and become your local partner who will not interfere with your business.
Is it possible to use business visa to work in Indonesia?
The business visa is type of visa used for business purposes such as attending business meetings, seminars, exhibitions, or trainings. Therefore we do not recommend using business visa for working in Indonesia as this is not the correct type of visa to use for this purpose. If you are planning to work in Indonesia, then you should apply for a work and stay permit . Cekindo can assist you with arranging and processing the appropriate visa that you can use depending on what you are going to need it for in Indonesia.
You can find more information on visa types here
Is it easy to obtain a business visa or working visa?
This will vary depending on your country of origin. Generally talking, there shouldn’t be problem obtaining a visa, but please note that the process for getting working visa can take a while. There are some countries for which the process could be more difficult.
Indonesia has a list of restricted countries, including Afghanistan, Guinea, Israel, Iraq, North Korea, Cameroon, Liberia, NIger, Nigeria, Pakistan, and Somalia. Citizens from those countries who are planning to obtain a stay visa or working visa will find the process complicated and difficult and with a large possibility that their application will be rejected.
Who will be my visa sponsor? Can the sponsor be an individual?
For the business and working visa, the sponsor has to be a company. The sponsor company is the company that either invites you for a business meeting or the company for which you will be working for. In case you don’t have a visa sponsor, Cekindo can provide sponsorship via HR Outsourcing and manage the payroll for the foreigner employee.
How long will the process take? For how long will my visa be valid?
The duration of processing the visa will largely depend on the on type of visa you are applying for:
- Work and stay permit take 2 months to arrange. If the foreigner using this visa is director of company, then it is valid for 1 year. If the foreigner is working on any other position than the visa is valid for 6 months.
- Multiple entry business visa processing will take 1 week and will be valid for 1 year, but there is maximum length of stay in Indonesia of 2 months, meaning that the person has to leave Indonesia every 2 months.
- Single entry visa processing takes 1 week and will be valid for 2 months with the possibility to extend the visa 4 times, each time for an additional 30 days, which means the maximum stay in the country is 6 months.
My company has been established but currently does not have any activities, should I report the company’s taxation?
After your company is established, it is mandatory to submit monthly and annually report even if you do not have any business activities and zero taxes.
My company has a tax ID; however, I never submit tax reporting. Will this cause problems to my company?
There tax office will collect from your business an administrative penalty for delaying or not correctly and promptly filing the tax report. To avoid this, it is best to hire a local third party to handle your taxation matters in Indonesia such as Cekindo.
Is there any obligation regarding company payroll?
All companies currently in Indonesia shall be registered to BPJS as mandatory Indonesian insurance that will affect the employee payroll. There will be a certain percentage that should be borne by the company as well as the employee. Cekindo can help provide the payroll simulation and payslip for your employee.
4. Product registration
My company is planning to distribute products in Indonesia, what are the regulations that we need to consider?
Prior to distributing your product in Indonesia, you will have to register your product with the BPOM ( National Agency of Food and Drugs). Only a Indonesian legal entity can register the product, that means if you decide to distribute your product via a local distributor, the local distributor will register the product under his entity in Indonesia and he becomes the product licence holder. Because of that, it is very important to choose and work with a reliable local distributor. It is also possible to choose Cekindo as your local distributor and register the product under Cekindo. Another option would be to set up company in Indonesia and register the product under your own legal entity in Indonesia.
Is it safe to register the product under a local distributor?
Importing goods to Indonesia means that you have to choose an exclusive local distributor . It is very important to choose a reliable distributor because the local distributor will register the product under his company and become the product licence holder as well as the import licence holder. It is difficult to change the local distributor in case you are not satisfied with the cooperation. Cekindo offers the possibility to register your product under their company name for it to become your trusted local distributor and allow you to have more sub-distributors.
What if my product has been registered under a local distributor and we decide to transfer the license to our company or another distributor?
That will depend on your current local distributor if he agrees with the change or not as the local distributor is the product licence holder. Because it can be very complicated to change the local distributor, we strongly recommend to choose a reliable local partner to avoid possible complications. Cekindo offers the possibility to register your product under their company name so they can be your local distributor and allow you to have more sub-distributors. This way, we can easily transfer the license if you decide to do so.
What requirements are needed if my Indonesian company will register the product?
You need to register the product with the BPOM (National Agency of Food and Drugs). The type of testing and documents requirements will depend on the type of product you want to register. Also the time frame for registration depends on the type of product and could vary from between 3 to 6 months.
Please note that you should have an import license and a NIK (Custom registration certificate) prior to registering your product. The whole process starts with registering your Indonesian company to BPOM for you to be the license holder. Once your company gets the approval, then you can move forward to register each of your products. Once each product gets the number issued by BPOM, you can start the importation by submitting the import notification letter to BPOM.
You can find more relevant information on the product registration here
If my company is HALAL certificated for Europe or Malaysia, does it mean it’s also HALAL certified for Indonesia?
Since there might be differences with the standards used by each of the certification bodies, Indonesian halal certification authority (MUI) will still need to inspect and audit both the procedures and products. However, assuming that the halal certification bodies are already recognized by MUI, the process will be easier and smoother compared to those who have not been certified yet.