Should You Establish a PT, a PT PMA or a Representative Office in Semarang?

Semarang is strategically nestled in the heart of Java, Indonesia. It is an ideal destination for business investors seeking to establish a company. Its advantageous location provides easy access to neighboring economic powerhouses like Singapore, fostering cross-border trade and investment opportunities. 

Furthermore, Semarang is a vital gateway to major Indonesian cities such as Jakarta and Surabaya. Indonesia’s demographic landscape, with approximately 70% of its population under the age of 39, totaling 122 million potential workers, enables Semarang to offer cost-effective business setup and operations compared to other Southeast Asian cities. 

Consequently, the city has witnessed rapid growth in company registrations, with 31% of the country’s startups choosing Semarang as their base. Additionally, Semarang boasts a unique, serene environment that distinguishes it from other urban centers.

Steps to Establishing a Business in Semarang

Semarang, strategically nestled in the heart of Java, Indonesia, is an ideal destination for business investors seeking to establish a company. Its advantageous location provides easy access to neighboring economic powerhouses like Singapore, fostering cross-border trade and investment opportunities. Furthermore, Semarang is a vital gateway to major Indonesian cities such as Jakarta and Surabaya.

Indonesia’s demographic landscape, with approximately 70% of its population under the age of 39, totaling 122 million potential workers, enables Semarang to offer cost-effective business setup and operations compared to other Southeast Asian cities. Consequently, the city has witnessed rapid growth in company registrations, with 31% of the country’s startups choosing Semarang as their base.

Additionally, Semarang boasts a unique, serene environment that distinguishes it from other urban centers.

How to Establish a Business in Semarang

If you are considering launching your business venture in Semarang, Indonesia, it’s crucial to familiarize yourself with the company registration process. This applies whether you are a local entrepreneur or an international investor.

The initial step in registering a company in Semarang involves determining your preferred business structure. Choices include a Limited Liability Company (PT), a Representative Office, or a Joint Venture. Each option has prerequisites and advantages, necessitating careful selection based on your business objectives.

Familiar Entities Available in Semarang

Semarang offers several types of legal entities for your company registration. Each comes with merits and demerits, depending on your business needs. These include:

1. Foreign-owned Company (PT PMA)
2. Local Company (PT) known as Perseroan Terbatan (PT)
3. Representative Office

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

Foreign-Owned Compan

Also known as Penanaman Modal Asing (PMA), this entity allows foreigners to conduct commercial activities in Semarang and Indonesia under Indonesian Company Law. Foreign ownership percentage is determined by the Negative Investment List, a guideline provided by the Indonesia Investment Coordinating Board (BKPM).

Key characteristics include a minimum investment plan of IDR 10 billion, a minimum paid-up capital of IDR 10 billion, and the possibility of 100% foreign ownership.

Read more: A Complete Guide of Indonesia Company Registry

Local Company (PT)

It is reserved for Indonesian citizens by law with 100% ownership. Therefore, foreign investors won’t be granted incorporation. Minimum capital investment varies based on the size of the company.

• A micro-enterprise: less than IDR 1 billion
• A small enterprise: IDR 1 – 5 billion
• A medium enterprise: IDR 5-10 billion
• A large enterprise: more than IDR 10 billion

Representative Office (KPPA)

A foreign parent company often establishes a KPPA for overseeing their business in Indonesia or when they are preparing to set up a PT PMA in Semarang. A KPPA can do limited activities, and income-related and sales transactions are prohibited.

Read more: Trading  Company Indonesia: Why Open it in Semarang and How

Essential Prerequisites for Company Registration in Semarang

Whether an indigenous entrepreneur or an international investor, a thorough grasp of these prerequisites is indispensable for registering your company in Semarang. Below, we outline the critical requirements for establishing a company in Semarang:

Company Naming

Choose an exclusive and available name for your enterprise that does not infringe upon existing trademarks. Ensure that the name complies with Indonesian language and character requirements.

Document Compilation

Assemble the requisite documents according to your selected business structure. Commonly required documents encompass your company’s Articles of Association, identification papers, a comprehensive business plan, and evidence of initial capital.

Registration Process

Present your documentation to either the Semarang branch of the Indonesia Investment Coordinating Board (BKPM) or the Regional Office of the Ministry of Law and Human Rights. Pay the necessary registration fee and await the approval of your company. This process typically spans from a few weeks to several months, contingent upon the complexity of your business.

Acquisition of Business Licenses

Upon successful registration, secure the obligatory business licenses and permits. These may encompass a business license (SIUP), a taxpayer registration number (NPWP), and a company registration certificate (TDP).

Social Security Enrollment

If applicable, enroll your workforce in social security programs like BPJS Ketenagakerjaan and BPJS Kesehatan.

Bank Account Opening

Conclude the process by establishing a corporate bank account in Semarang to oversee your business finances.

Please remember that the specific prerequisites and procedures may diverge based on your business category and Semarang’s location. It is highly advisable to seek guidance from a local legal or business consultant to ensure a seamless registration experience for your Semarang-based company.

Essential Documentation for Company Registration in Semarang

The process of registering a company in Semarang, Indonesia, necessitates the submission of various documents to the relevant authorities. These documents are crucial as they substantiate the legitimacy of your business and its adherence to Indonesian regulatory standards. Below, we provide a list of the pivotal documents indispensable for the registration of a company in Semarang:

Articles of Association (Akta Pendirian Perseroan Terbatas)

A notarized document outlining the company’s name, objectives, organizational structure, and capital.

Identification Documents

Copies of identification documents for all shareholders and directors, encompassing passports for foreign individuals and national IDs for Indonesian nationals.

Taxpayer Registration Number (NPWP)

Attain an NPWP for your company and ensure all shareholders and directors possess individual NPWP numbers.

Business Plan

A comprehensive business plan delineates your company’s objectives, activities, financial projections, and market analysis.

Proof of Capital

Furnish substantiation of the initial capital injection, including bank statements or correspondence from financial institutions.

Business License (SIUP)

A permit issued by local government authorities or the BKPM authorizing your company to operate within Semarang.

Company Registration Certificate (TDP)

This certificate, conferred by the Ministry of Industry and Trade, attests to your company’s legal existence.

Location Verification

Documents confirming your right to utilize your company’s physical premises, such as a lease agreement or property deed.

It is crucial to remember that the precise document prerequisites can fluctuate depending on your selected business framework and the specific location within Semarang. Seeking guidance from a local business specialist or legal consultant is advisable to ensure you possess all the requisite documents for a successful company registration in Semarang.

Timeframe for Registering a Company in Semarang

When embarking on registering a company in Semarang, Indonesia, one of the most common questions is, “How long does it take?” The timeframe for company registration can vary depending on several factors, including the type of business structure you choose and the complexity of your enterprise. Here’s a general overview of the typical timeframe involved in registering a company in Semarang:

Preparation Phase

Before officially beginning the registration process, you must prepare all the necessary documents and meet the requirements. This phase can vary depending on how quickly you can gather all the required paperwork. It’s essential to have everything in order before proceeding.

Submission of Documents

Once you’ve gathered all the required documents, you’ll submit them to the relevant authorities. This is usually done in Semarang’s Semarang branch of the Indonesia Investment Coordinating Board (BKPM) or the Regional Office of the Ministry of Law and Human Rights. The submission process typically doesn’t take too long, but it depends on the queue and the efficiency of the local offices.

Processing Time

The processing time for company registration can range from a few weeks to a few months. This timeframe can be affected by the complexity of your business structure, the workload of the local authorities, and any potential delays in document verification.

Approval 

Once your company’s registration is approved, you’ll receive the necessary licenses and certificates. This is a significant milestone in the registration process, as it signals that your company is officially recognized and legal to operate in Semarang.

Post-Approval Steps

After obtaining the necessary approvals and licenses, you may need to complete additional steps, such as opening a corporate bank account, registering for social security programs, and fulfilling industry-specific requirements.

Ongoing Compliance

It’s important to note that after registering your company, you must maintain ongoing compliance with Indonesian regulations, including tax reporting and annual reporting requirements.

To navigate the registration process smoothly and minimize delays, it’s advisable to work with local legal or business consultants who are well-versed in the requirements and procedures in Semarang. They can provide valuable guidance and ensure your company registration proceeds efficiently.

Which Legal Entity Should You Choose in Semarang

The best type of legal entity for foreign investors is the PT PMA, which offers investors up to 100% foreign ownership with permission to hire foreign employees. If unsure, you are welcome to consult our professionals at InCorp.

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How InCorp Can Assist You

As an InCorp client, you will get the best of both worlds: the joint expertise of our local legal specialists and international consultants. Together, we will be able to provide you with the specialized and customized assistance that you need for your company registration in Semarang.

You even have the alternative to open a company in Semarang without being in Indonesia. Contact us now for more information. Fill in the form below.