Aceh as Your New Investment Destination in Indonesia: Why and How

If you have decided to invest in Indonesia, but are still thinking about the investment destination, think no more. Aceh should be your new investment destination.

Located on the island of Sumatra, every year, many foreigners visit Aceh to pursue their dreams of starting and running their company. This is because Aceh is one of the most competitive and versatile markets in Indonesia for investment.

The factors for the province’s competitiveness and versatility are its abundant natural resources, strategic geographical location close to most ASEAN members, developed infrastructure, young and talented population, and business-friendly investment and company set up laws.

The Banda Aceh City Government has been putting in the effort to create an investor-friendly environment through the simplification of investment permits, prompting foreigners to invest in Indonesia.

The inflow of foreign investments can not only reduce poverty in the area, but it also opens up many employment opportunities for the locals. In 2019, the foreign direct investment (FDI) realisation in Aceh was recorded with an astonishing figure – US$6.16 million with a total of 58 projects.

Top Investment Sectors in Aceh

For foreigners planning to invest in Indonesia, you can consider the following top investment sectors in Aceh:

• Energy and infrastructure
• Tourism
• Agroindustry
• Aceh Industrial Development Zones

In addition to the top four investment sectors, Aceh has good foundations in fishery and sectors related to coffee, coconut, palm oil, cacao, and patchouli.

Company Incorporation Options in Aceh

Since every business requires its type of structure to incorporate, Indonesia facilitates different legal entities to help local and foreign companies establish and grow.

Below are the three common types of legal structures you will see in Indonesia.

1. Locally Owned Company, PT

A locally owned company or Perseroan Terbatas (its acronym is PT) is the simplest and most common type of legal entity in Indonesia.

However, this type of structure is only intended for Indonesian nationals. In other words, only 100% local ownership is allowed.

However, foreigners who would like to invest in Indonesia with a local PT should not despair, because a local PT establishment can be achieved by foreigners through a company that provides professional shareholder/director/commissioner services, also known as a Special Purpose Vehicle Company, or a shelf company.

2. Foreign Owned Company, PT PMA

A PT PMA, or a foreign owned company, is a company established with foreign investments.

Therefore, it is also the favorite type of business entity chosen by foreigners. The foreign shares or foreign ownership that is permitted for a PT PMA under the Indonesian Law is between 1% and 100%.

How much the percentage is depends on the type of business category that is specified under the Negative Investment List.

3. Representative Office

Compared to PT and PT PMA, a representative office is often the cheapest, easiest, fastest and simplest to establish. No capital is required for this type of entity.

A representative office can be further categorised into three types: foreign construction representative office, general representative office, and foreign trade representative office.

Setting up a representative office in Aceh is relatively straightforward – the only limitation is that a representative office must not participate in any business activities that will bring in profits or income.

Company Registration in Aceh, for Your Investment in Indonesia, with Cekindo

Need help to invest in Indonesia? Here at Cekindo, we are dedicated to helping you with any questions you may have about company registration in Aceh.

Whether you are looking to open a foreign company or a representative office or looking to participate in a meaningful joint venture, Cekindo is here to guide you throughout the whole process.

Cekindo can offer legal assistance with regard to your business setup, for instance, registering or selling your company, and purchasing a ready-made shelf company.

We will prepare all the necessary documents for your new company establishment on your behalf to save you time and effort.

Let us know your business plan by filling in the form below.