With some of the employment and business opportunities, it’s no surprise both Indonesia and Singapore are among the top investment destinations in Southeast Asia. Both of these dynamic countries attract foreign investors from all corners of the world to establish a business. Ever wondered how different countries handle company incorporation in Southeast Asia? This article is for you.
The following table summarises all important information that you need to know regarding business incorporation in both countries, before going deeper into each most relevant topic.
|Common Business Structure||
|Time Required||1 to 3 days||4 to 6 weeks|
|Foreign Ownership||No restrictions||Negative Investment List|
|Shareholder||Min. 1||Min. 2|
|Capital Contribution||SGD 1||Min. IDR 50 million (depending on type and size)|
The government of Singapore permits foreign ownership of 100% for private limited companies. In other words, a local partner is not required if you want to establish a company in Singapore. You just need to appoint a shareholder and a resident company director.
Indonesia does not offer the same freedom as Singapore in this regard. A foreigner can have a 100% foreign limited liability company or a joint-venture limited liability company that requires at least 5% of local shares. Furthermore, there are business sectors that are prohibited from foreign ownership in Indonesia under the Negative Investment List.
The Singaporean government requires foreign investors to meet minimum requirements before they can set up and run their business in the country. These requirements include appointing a resident company secretary and a director with an employment pass certificate, having between 1 and 50 shareholders, and showing S$1 paid-up capital.
The requirements for company incorporation in Indonesia are stricter. You need to set up a commissioner and have paid-up capital of IDR 10 billion.
You can go through company registration in Singapore rather quickly and efficiently due to its effective process and system. There are also fewer red tapes that you need to deal with, making an even more hassle-free incorporation procedure. A 24-hour incorporation process is normal in Singapore.
The company registration process in Indonesia, however, can take up to 1.5 months. This tedious and complex process sometimes poses a great challenge for foreigners intending to set up a business in Indonesia.
Therefore, it should be emphasized that company incorporation shall not be done without advice from a professional advisor as they can make sure that you have all the paperwork you need and comply with all the requirements.
Singapore’s workforce is mostly highly skilled with good command of English and that’s why Singaporeans are preferable for foreign companies’ employment in the country. For foreigners working in Singapore, they must first acquire a work permit.
As for Indonesia, the local workforce is not as qualified or highly educated as those in Singapore. Therefore, many foreign companies are still seeking foreign talent from outside Indonesia. Work permits are also required for foreigners with more restrictive quotas.
In Singapore, companies can enjoy low corporate tax between 0 and 17%. Furthermore, Singapore has a wide range of tax treaties with more than 60 countries in the world, allowing companies to enjoy even more tax benefits. Singapore has a lower VAT as well: 7%.
In Indonesia, the corporate tax rate is between 1% and 25%. The percentage of your corporate tax rate depends on your profit level and industry. Indonesia has tax treaties with over 64 countries around the world and it greatly benefits foreign investors doing business in the country. The value-added tax (VAT) in Indonesia is 10%.
Even though it is easier to set up a company in Singapore, Indonesia makes an enticing investment destination because of its huge population, growing middle class, low operational and labor costs, and diverse landscape, among others.
As a business owner in Singapore interested in expanding to Indonesia, you may be concerned about having to fly to Indonesia to take care of the company registration process.
You do not have to visit Indonesia if you choose Cekindo as your business incorporation specialist in Singapore.
As part of In.Corp Group in Singapore, one of the largest Asian-based corporate service providers, Cekindo has assisted with 20,000+ entity incorporations in the last decade and successfully completed 12,000+ compliance transactions every year.
Our expert advisors in Singapore will take care of the entire company registration process. We can also assist you in business licensing, visas and permits, banking, and other legal and business formalities per Indonesian law.
Reach out to us and we’ll be more than happy to assist with company incorporation in Indonesia. Complete the form below.