Recently, the Indonesian government adopted several business-friendly policies to make it simpler for foreign investors to jumpstart their businesses in the archipelago. The results are, however, questionable.
This article introduces a newly established system of company registration in Indonesia through so-called Online Single Submission System and provides a general overview of the most important facts at the time of its release.
To address specific requirements and procedures of company incorporation in your business field, contact Cekindo to get FREE consultation.
Entrepreneurs willing to open or expand their business activities are now obliged to use the Online Single Submission (OSS) System. Even though the system started to operate in June 2018, it will be fully implemented during the upcoming months or years.
The potential of OSS for foreign entrepreneurs is enormous. Once adopted, investors would apply and receive most of their business licenses online without the need to visit several government offices as previously.
However, at the current state of its implementation, this sounds more like a far-fetched dream.
Nowadays, foreigners are not able to start their business without legal assistance.
Why?
Even though the system might make it easier to proceed with applications for licences, foreigners must first understand what licences they need to acquire and know the requirements. This is what the current system lacks.
Currently, the company registration for most sectors is conducted as follows:
NIB replaces Company Registration Certificate (TDP) and serves as several other licences
Furthermore, NIB serves as registration under Health and Social Security Systems, known as BPJS Kesehatan and BPJS Ketenagakerjaan.
Businesses operating in sectors such as healthcare, medical devices production and distribution, and cosmetics are obliged to apply for additional licences before starting their operations in Indonesia.
To begin the application process, businesses are required to comply with mandatory standards, licences, certifications and other registrations of their specific business field.
To start a foreign-owned company, at least two shareholders are required. They can be both individuals or corporations, foreigners or Indonesians or a combination of both.
Noticeably, the minimum amount of shares is IDR 10 million per one shareholder.
Based on the latest update, the Indonesian government now requires at least one local individual to act as a Local Director or a Local Commissioner.
Further reading: Company Establishment in Indonesia: Mandatory Organisational Structure
The Negative Investment List serves as a limitation to foreign shares in foreign-owned companies in Indonesia. The restricted percentage, which was updated recently, is based on the business sector in which a company should operate.
Investors who want to start a business in fully open sectors such as restaurants, management consultancy or trading companies have a great advantage over those who choose to incorporate partly open or fully closed businesses.
In this case, establishing a local company or signing a nominee agreement with a trustworthy Indonesian partner are the recommended solutions. Last year, however, a remarkable number of ‘local gangs’ acting as local partners appeared.
In order to protect you and your business from fraudulent behaviour, remember to conduct proper due diligence before you sign any agreement with local nominees. The nominee agreement is a legally binding document which cannot be changed easily.
Contact us to get the latest information about company registration in Indonesia. Our teams of lawyers and legal consultants in Jakarta, Semarang and Bali are ready to assist you and guide you throughout the whole process.
