Home Blog Investing in Balikpapan: Capitalize on Business Opportunities in Indonesia Business Licenses | Company Registration | Indonesia Investing in Balikpapan: Capitalize on Business Opportunities in Indonesia InCorp Editorial Team 19 September 2023 5 minutes reading time Table of Contents Business potential in Balikpapan Why invest in Balikpapan? What are the types of legal entities in Balikpapan? How to set up your business in Balikpapan In the heart of East Kalimantan lies a thriving business opportunity Indonesia is eager to embrace. Balikpapan, a city teeming with potential, offers an enticing landscape for entrepreneurs. In this article, we’ll navigate the steps, strategies, and secrets to setting up a successful enterprise in this dynamic hub. Whether you’re an established entrepreneur or a budding business enthusiast, prepare to embark on a journey filled with boundless potential and growth. Business potential in Balikpapan Located on the southeastern coast of East Kalimantan in Indonesia, Balikpapan is a seaport city facing the Makassar Straits. One of Indonesia’s most bustling cities with abundant natural resources, Balikpapan is well-known for its oil, coal, and mining industries. The dynamic oil, coal, mining, and other emerging industries are why almost all domestic flights go to Balikpapan instead of Samarinda. With a population of over 736,000 and the rapid development of infrastructure and digital scene, Balikpapan is an intriguing mix of business hub and stopover destination. Why invest in Balikpapan? There is a bright prospect for business opportunities in Balikpapan. Big plans are going on, such as infrastructure development, refinery expansion, and digital-based business evolution. Here are the reasons, in elaboration, that you should invest in Balikpapan: Infrastructure development The construction of the Balikpapan-Samarinda toll road is one of the most significant projects in Balikpapan. This project is currently underway and is part of the Indonesian government’s plan to create 1,000 kilometers of additional toll roads by the end of 2019. The toll road network in Indonesia spans 950 kilometers across the country. The Indonesian government and loans from China fund the construction of the 99-kilometer-long Balikpapan-Samarinda toll road. This project has an estimated investment of US$985 million (IDR13.1 trillion). Private-sector investments are also involved in certain aspects of the project. Upon completion, this toll road is anticipated to reduce travel time between Samarinda and Balikpapan from three hours to one hour. Refinery Development Master Plan (RDMP) To enhance the product and boost the competitive edge of refineries in Indonesia, RDMP was created to revamp the five existing refineries in Balikpapan (East Kalimantan), Cilacap (Central Java), Balongan (West Java), Dumai (Riau), and Plaju (South Sumatra). The RDMP also aims to meet the fuel demand in cities in Indonesia, including Balikpapan. Only by growing the refinery industry will be able to achieve the energy security goal in the country. By coinciding with the newly introduced Grass Root Refinery project, the completion of RDMP is expected to boost fuel production by 150%. Digital-based business expansion Balikpapan is now one of Indonesia’s most active digital application user cities. As a result, this promotes the expansion of digital businesses in the city. One of Indonesia’s most prominent digital applications, Go-Jek, plans to expand its services to Balikpapan, including online transportation, food delivery, logistics, and digital payment. Therefore, it is not surprising to see that with the massive use of digital applications in Balikpapan, more and more businesses will leverage this trend and emerge. The digital evolution in Balikpapan is particularly advantageous for micro, small, and medium businesses. What are the types of legal entities in Balikpapan? As a general guideline, foreign investors should acquaint themselves with Balikpapan’s three types of legal entities, as outlined below. Foreign-Owned Company (PT PMA) Foreign investors can own a foreign-owned company in Balikpapan. Only PT PMA allows 100% foreign ownership. The percentage of ownership, however, is based on the business sector you’re in. You can refer to the restrictions in the Negative Investment List. A foreign investor must meet the below requirements to set up a PT PMA in Balikpapan: IDR 10 billion as the minimum investment IDR 10 billion as the minimum paid-up capital Use Online Single Submission System (OSS) to apply for business permits and licenses Local Company (PT) Setting up a local company is the easiest option, but foreigners need help to own one. However, you don’t need to worry if you’re interested in establishing a PT. You can start doing business in Balikpapan through a special-purpose vehicle arrangement that provides professional shareholders/commissioners/directors with 100% of the company ownership. Representative Office Overseas parent companies often use a representative office to test the market and establish its presence in Indonesia. The primary purpose of this entity is to do market research, not to perform any profit-generating business activities. Once your brand has established its presence in the country, you can opt to develop either a local or foreign company, PT PMA. How to set up your business in Balikpapan With a wealth of experience in aiding clients with business incorporation and licensing, InCorp Indonesia stands prepared to facilitate your entry into the Indonesian market. Whether you’re in the process of selecting the ideal legal entity for your business or seeking additional guidance on establishing your enterprise in Balikpapan or any other Indonesian city, don’t hesitate to reach out. Complete the form below, and we’ll promptly respond to your inquiries. Read Full Bio Verified by Hotdo Nauli Senior Legal & Delivery Manager at InCorp Indonesia Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). Frequently Asked Questions How much is the minimum fund required to establish a PT PMA business in Indonesia? The investment requirement for PMA companies in Indonesia varies based on their classification under the Indonesia Industrial Standard Classification (KBLI). Generally, a minimum investment of IDR 10,000,000,000 (ten billion Indonesian Rupiah), excluding investment in land and buildings, is needed to conduct one business activity in one location. What kind of license does a PMA company need to get? In Indonesia, the licensing system has been updated with the implementation of the Omnibus Law. Businesses are categorized into four risk levels based on the PMA company classification. Licensing requirements vary accordingly, with three main types: Business Identification Number (NIB) Low-risk businesses needing only an NIB Standard Certification Standard Certification is necessary for medium-low and medium-high-risk businesses Licenses/Permits High-risk businesses require licenses/permits Additionally, basic requirements, including business location, must be met. Many licensing processes are facilitated through the Online Single Submission (OSS) platform managed by the Investment Coordinating Board (BKPM). What requirements are needed if my Indonesian company registers the product? Register the product with BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). The type of testing and document requirements depend on the type of product you want to register. Also, the time frame for registration could vary between 3 to 15 months. Is there limited responsibility for shareholders in a PMA company? In a PMA Company in Indonesia, shareholders typically have limited liability, meaning they’re not personally liable for agreements or losses beyond their shareholding, except in certain circumstances. Liability may extend if the company isn’t properly established or if shareholders exploit the company in bad faith, engage in unlawful acts, or deplete company assets to the detriment of creditors. Get in touch with us. 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