Should You Move Your Production to Semarang in 2023?

Should You Move Your Production to Semarang in 2023?

  • InCorp Editorial Team
  • 18 June 2024
  • 7 minutes reading time

Regarding manufacturing in Indonesia, Jakarta is still the most prominent destination, followed by Bali, Indonesia’s most popular island. However, the property cost might be one of the biggest obstacles to consider before conducting a new manufacturing business in Indonesia.

In 2023, many investors will opt to move their production to Semarang. No wonder because Semarang offers a cost-effective solution to develop manufacturing compared to Jakarta and Bali.

Manufacturing in Indonesia: Semarang’s Investment Opportunities

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Why Semarang?

Semarang has been known for its strategic location to Indonesia’s maritime track as an essential port with access to the Java Sea. No wonder this city has been chosen as one of the most influential trade places connecting Java, other islands, and other countries since Dutch colonization. 

Why in Semarang?

Semarang’s port has also contributed to manufacturing in Indonesia since decades of its strategic location exposed to international markets. Aside from that, Semarang is also located right in the middle of Jakarta and Surabaya; both are the most significant cities on Java Island with substantial domestic markets.

Moreover, based on the research conducted by startupranking.com in 2017, 31% of startups in Indonesia were based in Semarang, and it keeps growing more and more.

On top of that, the Semarang government plays a huge role in supporting the startup’s development in their city by facilitating the startup ecosystem. The Semarang government also believes that the development of startups can boost their city’s economic growth, which is entirely accurate.

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

Prospective Business Opportunities

Central Java is well known for its agricultural, industrial, and trade manufacturing. This was proven by a Letter of Interest (LOI) in the Semarang Business Forum, held in late 2019.

More than 400 international and domestic companies, potential investors, and national figures attended this forum to discuss the potential investment in Semarang.

As a result, 11 companies have initiated LOI with a total of US$ 3.02 trillion, consisting of investments in multiple sectors such as health, trading, property, hospitality, and construction, indicating the prospective investment offered by Semarang. Taizhou Fuling Plastic Co. Ltd. initiated the most significant investment in the industrial sector, US$ 15 million.

Property is the most exciting sector in Semarang, consisting of six companies as investors. Another company that contributes to industrial sectors is Randugarut Plastic. Brantas Abipraya, one of the state-owned enterprises, also contributes to the investment in the construction sector, while Citra Grand Hotel Management is the only contributor toward the hospitality sector.

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

Investment Realisation in Semarang

Aside from its rapid investment, which supports manufacturing in Indonesia, Semarang also offers its potential economic growth of 6,52%, supported by its investment realization reaching 24 trillion rupiahs in late 2019. Investment realization could be one of the most critical factors to achieve 7% economic growth soon, supporting Semarang in manufacturing in Indonesia.

How to Register a Company in Semarang

Are you looking to start your own business in Semarang, Indonesia? Registering a company in Semarang is a straightforward process that involves several steps. Understanding the process is crucial whether you’re a local entrepreneur or a foreign investor. 

The first step in registering a company in Semarang is to decide on your business structure. Standard options include a Limited Liability Company (PT), a Representative Office, or a Joint Venture. Each has its requirements and benefits, so choosing the one that aligns with your business goals is essential.

Requirements for Registering a Company in Semarang

Whether you’re a local entrepreneur or a foreign investor, understanding these requirements is essential to register your company successfully. Here are the critical requirements for registering a company in Semarang:

Name Your Company

Select a unique and available name for your company. The name should not infringe on existing trademarks and adhere to the Indonesian language and character requirements.

Prepare Your Documents

Gather the necessary documents for your chosen business structure. These documents typically include your company’s Articles of Association, identification documents, a business plan, and proof of initial capital.

Register Your Company

Submit your documents to the Semarang branch of the Indonesia Investment Coordinating Board (BKPM) or the Regional Office of the Ministry of Law and Human Rights. Pay the registration fee and wait for your company to be approved. This process usually takes a few weeks to a few months, depending on the complexity of your business.

Obtain Business Licenses

Once your company is registered, you must obtain the necessary business licenses and permits. These may include a business license (SIUP), a taxpayer registration number (NPWP), and a company registration certificate (TDP).

Register for Social Security

If applicable, register your employees for social security programs, such as BPJS Ketenagakerjaan and BPJS Kesehatan.

Open a Bank Account

Finally, open a corporate bank account in Semarang to manage your business finances.

Remember that the specific requirements and procedures may vary based on your business type and location in Semarang. It’s advisable to consult with a local legal or business consultant to ensure a smooth registration process for your company in Semarang.

Documents Required for Registering a Company in Semarang

Registering a company in Semarang, Indonesia involves submitting various documents to the relevant authorities. These documents serve as essential proof of your business’s legitimacy and compliance with Indonesian regulations. Here’s a list of the critical documents required for registering a company in Semarang:

1. Articles of Association (Akta Pendirian Perseroan Terbatas)

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

2. Identification Documents

Copies of identification documents for all shareholders and directors, including passports for foreign individuals and national IDs for Indonesians.

3. Taxpayer Registration Number (NPWP)

Obtain NPWP for your company and ensure all shareholders and directors have individual NPWP.

4. Business Plan

A detailed business plan outlining your company’s goals, activities, financial projections, and market analysis.

5. Proof of Capital

Provide evidence of the initial capital injection, such as bank statements or letters from financial institutions.

6. Business License (SIUP)

A local government or BKPM permit authorizing your company to operate in Semarang.

7. Company Registration Certificate (TDP)

This certificate, issued by the Ministry of Industry and Trade, proves your company’s legal existence.

8. Location Evidence

Documents proving your right to use the company’s physical location, such as a lease agreement or property deed.

9. Social Security Registration (if applicable)

Register your employees for social security programs like BPJS Ketenagakerjaan (workers’ compensation) and BPJS Kesehatan (health insurance).

10. Bank Account Confirmation

Proof of your corporate bank account’s existence, including the bank account number and official bank documentation.

11. Other Permits (if applicable)

Depending on your business type and industry, you may need additional permits or licenses, such as environmental permits or specific industry certifications.

Please note that these document requirements can vary based on your chosen business structure and the location within Semarang. Consulting with a local business expert or legal advisor can help ensure you have all the necessary documents to register your company in Semarang successfully.

Guide to Doing Business in Semarang​

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InCorp’s One-Stop Services Make Your Business Setup in Semarang Easier and Faster

Starting a business in Indonesia can be challenging, especially if you’re unfamiliar with its target market, regulations, and requirements. InCorp can support the entire aspects of your business setup with services such as company registration, work permit, and business licenses.

Contact us by filling in the form below to discuss the best way to set up your manufacturing business in Semarang.

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Frequently Asked Questions

    Limited liability company with 100% local/domestic direct investment

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.

      • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

    A foreigner is not allowed to form a CV in Indonesia

    Dividends can be distributed from company net profits after allocating reserves, depending on a positive profit balance. Approval from the general meeting of shareholders is necessary. Interim dividends may be distributed if specific requirements are met.

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Disclaimer

The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

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