Company Registration Indonesia Update: Annual License Renewal is No Longer Needed

Indonesian current government is so consistent in promoting Indonesia as a conducive and reliable country for foreign investment (especially for a company registration). Many efforts have been done by the government, including issuing policies that will make foreign investment more feasible.

The most recent ones are the Regulation Number 07/M-DAG/PER/2/2017 by the Ministry of Trade Republic Indonesia on Trading Business License (SIUP), which is the Third Amendment of the Trade Ministry Regulation Number 37/M-DAG/PER/9/2007 as well as Regulation Number 08/M-DAG/PER/2/2017 on Company Registration Certificate, which is the Second Amendment of the Regulation Number 37/M-DAG/PER/9/2007.

Those regulations are valid from February 22nd, 2017 to all trading companies that have already owned SIUP and TDP.

New Regulations for Companies with SIUP and TDP

Overview of Regulations

In this newest regulation, trading companies are no need to renew their Trading Business License (SIUP), which in the past need to renew every year.

This regulation is applied only if the companies remain active in the business. In addition, the amendment also said that the procedure of obtaining a Company Registration Certificate (TDP) will be simplified and the administration fee to renew the TDP will be eliminated.

It means that trading companies need to renew their TDP after 5 years by submitting a letter of notice.

This procedure can be done manually or online before the TDP is expired. The companies can submit hardcopy or softcopy of the documents needed and fill in the form attached in the regulation. The companies will receive a new TDP. If within 3 working days, PTSP does not issue a new TDP, then the current TDP shall automatically consider as renew and continue to apply.

Another important point in the new amendments is that the registration of a new SIUP, the replacement of the lost or damaged SIUP, and the changing of items in the SIUP are not subject to retributions like in the old regulation Number 36 Year 2017.

Implication of Regulations

The Trading Minister said in the press release made by the Ministry of Trading Republic Indonesia that the government wants to improve its services so that all business practitioners can find it easier to start and run business in Indonesia.

It is expected that there will be more and more companies investing in Indonesia and enjoying easier bureaucracies that often complicate the foreign investors in the past. Not only it can boost foreign investment in Indonesia, but the new regulations will come as the government goodwill to foster healthier and more transparent business climates in Indonesia.

Check also: New Negative Investment List Opens 54 Sectors to Foreigners

Establishing a Trading Company in Indonesia

Before you can apply for a SIUP through the Online Single Submission (OSS) system, you need to establish a trading company in Indonesia. There are two options available regarding trading company establishment.

Company Registration: PT PMA

Many foreign entrepreneurs choose to set up a foreign-owned company, also known as PT PMA in Indonesia. Below are the steps that you need to take, especially if you are looking to set up a trading company with a focus on import and export activities.

In short, the process of setting up a PT PMA is as follows:

1. Approval of company name by the Ministry of Law and Human Rights
2. Approval of Principal License by Indonesia Investment Coordinating Board (BKPM)
3. Preparation of Articles of Association by Notary
4. Obtaining a Deed of Establishment at the Ministry of Law and Human Rights
5. Obtaining a Certificate of Domicile at a local government office (except for Jakarta)
6. Obtain the taxpayer’s registration number (NPWP) at the local tax office
7. Obtain Environmental Monitoring Letter (SPPL)
8. Obtain Company Registration Certificate at a local government office

Company Registration: KP3A

An alternative to PT PMA is the Representative Office of Foreign Trade Company (KP3A). This is the best solution for foreign investors who wish to perform trading activities but have not had the opportunity to establish a company in the country.

The permit for KP3A comes with certain requirements, which can be seen below:

• KP3A can only be applied by the parent company of the products. Therefore, a broker company is not allowed to establish a KP3A.
• KP3A can only be issued for 3 years and should be re-registered or expanded every 3 years.
• When you want to establish a KP3A in Indonesia, you need to assign a local or foreigner to be the Chief Representative Officer. You will need a domicile letter and work permit if you assign a foreigner.

In addition to the requirements, the following documents are required:

• Appointment Letter
• Letter of Intent
• Statement Letter
• Building Rental Agreement Document
• Letter of Domicile signed and stamped by the local government.

SIUP Application through OSS

After completing the company registration process in Indonesia, you need to apply for your SIUP through OSS. OSS is an integrated web-based business permit application. With OSS, your business license application can take as fast as two hours.

Since the implementation of OSS in July 2018, all business entities are required e to register online. After the completion of registration at OSS, each business will automatically get an NIB one day after the registration, provided you submit a complete set of required documents. A Business License (SIUP) will also be granted alongside the NIB if your business does not require other licenses, which depends on the business sector your company is engaged in.

Read also: Super News: 45 Additional Business Fields no Longer Have to Apply for Additional Licenses

How InCorp Can Assist

Because one of our commitments is to help our clients to find the best solution for their business in Indonesia or Vietnam. We assist foreign entities and companies in dealing with company establishment process legally based on the laws and regulations in the country.

You will get comprehensive, practical, and advantageous advice to do business easily and smoothly. Our experiences in many business fields will give you countless applicable lessons learnt that will be beneficial for your companies.

Submit your inquiry through the form below, and get a FREE business consultation with our consultants.