Company Incorporation Differences Between Indonesia and Singapore

Company Incorporation Differences Between Indonesia and Singapore

  • InCorp Editorial Team
  • 25 May 2023
  • 4 minute reading time

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. These dynamic countries attract foreign investors worldwide to establish a business. Ever wondered how different countries handle company incorporation in Southeast Asia? This article is for you.

Company Incorporation Difference Between Indonesia and Singapore

Company Incorporation in Southeast Asia: Indonesia vs Singapore

The following table summarises all the important information you need regarding company incorporation in both countries before going deeper into each most relevant topic.

Singapore Indonesia
Common Business Structure
  • Private Limited Company (Pte. Ltd)
  • Sole Proprietorship
  • Ordinary Business Partnership
  • Limited Partnership (LP)
  • Limited Liability Partnership (LLP)
  • Private Company Limited By Shares
  • Foreign Company (PT PMA)
  • Local Company (PT)
  • Representative Office
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 10 million a paid up capital for PT PMA 

1. Foreign Ownership

Regarding the company incorporation, the Singapore government permits foreign ownership of 100% for private limited companies. In other words, a local partner is optional if you want to establish a company in Singapore. You just need to appoint a shareholder and a resident company director.

Indonesia offers a different scheme than 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, foreign investors must look at Positive Investment List to conduct business accordingly.

2. Requirements

The Singaporean government requires foreign investors to meet minimum requirements before they set up company incorporation and run their businesses.

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.

3. Company Incorporation Procedure

Due to its effective process and system, you can go through company registration in Singapore quickly and efficiently. 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.

However, the company registration process in Indonesia can take up to 1.5 months. This tedious and complex process sometimes poses a great challenge for foreigners intending to establish a business in Indonesia.

Therefore, company incorporation should not be done without advice from a professional advisor, as they can ensure you have all the necessary paperwork and comply with all the requirements.

4. Employment

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. There are many steps and costs involved. Hence it is crucial for businesses to fully understand the application process.

As for Indonesia, the local workforce is less qualified or highly educated than 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.

5. Tax Obligations

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 worldwide, allowing companies to enjoy even more tax benefits. 

Singapore doesn’t have a VAT and uses Goods & Services Tax (GST) at 8%, which will increase to 9% on 2024

In Indonesia, the corporate tax rate is between 1% and 25%. Your corporate tax rate percentage depends on your profit level and industry. Indonesia has tax treaties with over 64 countries worldwide, benefiting foreign investors. The value-added tax (VAT) in Indonesia is 11%.

Company Registration in Indonesia from Singapore with InCorp Indonesia

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 handle 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 gladly assist with company incorporation in Indonesia. Complete the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.