Home Blog International Expansion to Indonesia: Company Set Up Business Setup | Company Registration | Indonesia International Expansion to Indonesia: Company Set Up InCorp Editorial Team 8 March 2019 5 minutes reading time Table of Contents Company Setup: Registering an International Company in Indonesia Difference between RO and PT PMA Cekindo can Help with Company Setup in Indonesia Indonesia is the largest economy in Southeast Asia and undoubtedly offers extraordinary business opportunities for both foreign investors and local citizens. Expanding your business through international company setup in Indonesia is something that can be done easily as long as you know the process, and seek third-party assistance when necessary. There are many legalities you need to deal with to incorporate an international company in the country, but ultimately it is all worth it. In this article, we will take a look at how you can set up an international company in Indonesia in the forms of a foreign-owned company and representative office (RO). Company Setup: Registering an International Company in Indonesia For many foreign investors, Indonesia represents a dynamic economy opening to the international marketplace – thanks to its large and young population, rapidly growing middle-class and abundant natural resources. According to PwC, Indonesia is forecast to reach a GDP of US$5.42 trillion by 2030. Foreign-Owned Company There are several types of legal entities in Indonesia. Foreign investors often wonder which legal entity is the most compatible for their business sector and activities. While each of them has its disadvantages and advantages, a foreign-owned company is the most common type for international company’s business activities in Indonesia. A foreign-owned company, also known as Perseroan Terbatas Penanaman Modal Asing (PT PMA) or foreign limited liability company, is the only form of legal entity that allows foreign entities or individuals to register as shareholders and to generate income. How to Set Up a PT PMA You will need to go through a three-stage process to incorporate a PT PMA. The process includes preparation, pre-operation and commercial operation. Each stage of the process contains several other steps as well, involving multiple authorities and agencies such as the Indonesian Investment Coordinating Board (BKPM). Preparation Before the incorporation of the international company, investors are obliged to review the updated version of the Negative Investment List (NIL) to make sure that their business sectors are open for foreign investment. Once the particular sector is determined to be available for foreign ownership, you will need the assistance of a public notary to establish your PT PMA through the Ministry of Law in Indonesia. Pre-operation Once the Deed of Establishment has been signed, you will have to go through the following steps to acquire necessary permits and licenses for your business operation. If you are a manufacturing company, an import identification number is necessary and can be obtained from BKPM Submission of a quarterly investment activities report to the BKPM Obtain licenses and permits such as domicile certificate, building permits, plantation permit, etc. from local government and sectoral ministries Through the Ministry of Finance, apply for approval of tax facilities and machinery import duty exemption. Commercial Operation Before you can do anything with your business, you shall obtain a business license for the commercial operation. Other than the business licenses, you should also get a material import duty exemption and a general import identification number via Online Single Submission (OSS) System. During the operation of your company, you will also have to submit an investment activities report twice a year to BKPM. Once your business is in full operation, you might also need to obtain additional periodical permits such as construction services permit. Related article: Company Establishment in Indonesia: Mandatory Organisational Structure Representative Office On the contrary to a foreign-owned company, representative offices in Indonesia are not permitted to involve in any activities that result in financial income. While generating profit is not allowed, international companies that establish representative offices can still conduct market research and activities that build their market presence in the country. How to Set Up a Representative Office The process of incorporating a representative office in Indonesia is often less cumbersome than of a foreign-owned company. Even though the procedure and licences are based on a specific type of a representative office, the general process includes a request for approval from BKPM, obtaining a domicile letter, attorney signature and licences issued through Online Single Submission (OSS) System. Currently, investors can choose one from the following four types of RO: KPPA: General Representative Office of a Foreign Company KP3A/K3PA: Representative Office of a Foreign Trading Company BUJKA: Representative Office of a Foreign Construction Service Company KPPA MIGAS: Representative Office of a Foreign Oil and Gas Company Difference between RO and PT PMA Contrary to a foreign-owned company, incorporation of RO requires minimum expenses as there is no mandatory investment. The simple company structure (shareholders as well as directors are not necessary) comes at the cost of limited business activities to market research and building the position on the market. On the flip side, both types of legal entities in Indonesia are entitled to issue work permits and short stay permits (KITAS) for their foreign executives. Cekindo can Help with Company Setup in Indonesia Do you have more questions regarding international company setup in Indonesia? Let Cekindo guide you further during your expansion. Contact us now to receive a free quotation. You can also reach our teams located in Jakarta, Semarang or Bali. Read Full Bio Verified by Ales Cina Consulting Manager at InCorp Indonesia Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights. 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 is the difference between PT and CV? You can find the difference below: PT: limited liability company (shareholders are not legally liable for company liabilities) CV: a proprietary company where liability falls on the shareholders 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. What are the functions and responsibilities of a PMA company’s board and management? Indonesian Company Law establishes a two-tier governance system with Directors managing day-to-day operations and representing the company, while the Board of Commissioners supervises and advises them. The articles of association may empower board of Commissioners to provide consent or assistance to Directors for specific legal acts. Get in touch with us. 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