Relocating to Indonesia: A Guide for Taiwanese Companies

Relocating to Indonesia: A Guide for Taiwanese Business

  • InCorp Editorial Team
  • 16 December 2024
  • 5 minutes reading time

Relocating to Indonesia presents an incredible opportunity for Taiwanese businesses seeking to tap into one of Southeast Asia’s fastest-growing economies. With its strategic location, abundant resources, and a population of over 270 million, Indonesia offers a dynamic market with potential. 

This guide will help Taiwanese entrepreneurs and companies navigate the essentials of entering the Indonesian market. Addressing legal structures, compliance, and local opportunities will ensure a smooth relocation to Indonesia.

Why Should Foreign Companies Relocate to Indonesia

Indonesia has become an increasingly attractive destination for foreign companies due to its dynamic economy, large market potential, and strategic advantages. Below are the key reasons businesses choose relocation to Indonesia for investment and growth:

Strategic Alternative

Businesses consider Indonesia a competitive alternative to China for retail, healthcare, and financial services. Rising labor costs in China and global trade disruptions have prompted companies to relocate foreign companies to Indonesia to leverage its young workforce, abundant resources, and growing middle class.

Strong Free Trade and Tax Incentives

Indonesia’s involvement in FTAs like AFTA and RCEP boosts trade by offering low tariffs. Double taxation agreements with countries like the US and Australia further enhance the business environment for those planning a business relocation.

Competitive Tax Rates and Incentives

Foreign investors benefit from tax holidays, reductions, and exemptions in Special Economic Zones (SEZs). These incentives make it easier for companies to move to Indonesia and establish operations in key sectors like manufacturing and R&D.

Resilient Economy

Indonesia’s economy grew by 5.31% in 2022, its highest in nine years. With strong domestic demand and an expanding middle class, it is a top choice for businesses seeking relocation to Indonesia to capitalize on long-term economic resilience.

Large Workforce and Market Liberalization

The government’s positive investment list enables 100% foreign ownership in many sectors, simplifying the relocation of foreign companies to Indonesia. Additionally, Indonesia’s large population drives consumer demand, making it an attractive market for expansion.

Emerging Digital Economy

Indonesia’s digital economy, expected to reach USD 124 billion by 2025, offers opportunities in e-commerce, fintech, and digital media. The government’s supportive regulations and a thriving startup ecosystem underline its growth potential.

Fintech Opportunities

Fintech is thriving and driven by peer-to-peer lending and e-payments. With a sizeable underbanked population, foreign fintech companies can innovate and grow in this high-demand market.

Cloud Technology and Big Data

Indonesia’s cloud market is among Asia-Pacific’s fastest-growing, with the adoption of big data analytics increasing. Improved digital infrastructure attracts global tech companies, creating innovation opportunities.

READ MORE:

Choosing the proper legal structure is essential for foreign companies moving to Indonesia to ensure smooth operations and compliance. Key options include:

PT PMA

Key characteristics of a PT PMA, a limited liability company equivalent in Indonesia, include:

  • It can be 100% foreign-owned in many sectors.
  • Requires a minimum capital of IDR 10 billion
  • Must have at least one resident director

Branch Office

Key characteristics of a branch office include:

  • The parent company fully controls it.
  • It is limited to specific business activities.
  • The parent company assumes entire liability.

Representative Office (KPPA)

Key characteristics of a representative office include:

  • It is suitable for market research and promotional activities.
  • It cannot conduct commercial transactions.
  • It typically has a limited duration of 3 years, with the possibility of renewal.

What are the Requirements for Foreign Companies Relocating to Indonesia?

After considering the specific legal entities for your business, it is crucial to understand the requirements for each entity type for relocating foreign companies to Indonesia effectively: 

Relocating to Indonesia: A Guide for Taiwanese Companies

Special Considerations for Taiwanese Companies

The Coordinating Minister for Economic Affairs announced on November 1, 2024, that 15 Taiwanese companies plan to relocate to Indonesia but emphasized the need for key measures to maximize the economic impact. Those measures are:

  • Simplify Land Acquisition: Encourage investment in industrial zones, where land and Environmental Impact Assessments (Amdal) are pre-approved.
  • Ensure Green Energy Availability: Provide access to green energy sources, such as gas, hydro, or solar power, especially in West Java.
  • Competitive Gas Supply: Perusahaan Gas Negara (PGN) should ensure prices stay competitive to address high gas prices.
  • Access to Profitable Markets: To improve investor access to markets, trade agreements similar to the EU CEPA and CPTPP should be finalized.

What are the Processes for Foreign Companies’ Relocation to Indonesia?

Relocating to Indonesia for a foreign company involves ensuring compliance with local laws. Below is a brief explanation:

Reserving and Approving the Company Name

Choose a unique company name and reserve it with the Ministry of Law and Human Rights. It must comply with Indonesian regulations and be distinct from existing names.

Preparing Required Documents

After name approval, prepare and notarize the Deed of Establishment, including Articles of Association. Required documents include shareholder IDs, NPWP, proof of domicile, capital statement, and registration forms.

Meeting Post-Establishment Requirements

You can apply for a Business Identification Number (NIB), secure business licenses, and register for taxes and social security.

Securing Visas and Work Permits

You should apply for the following:

  • RPTKA (Expatriate Placement Plan) approval from the Ministry of Manpower
  • Obtaining IMTA (Work Permit) for foreign employees
  • Applying for VITAS (Limited Stay Visa) and KITAS (Temporary Stay Permit) for foreign workers

Guide to Doing Business in Jakarta

Mailchimp Free eBook Indonesia Business Insight

Relocating to Indonesia with InCorp’s Assistance

Are you planning to relocate your business to Indonesia? Navigating the country’s regulations and processes can be challenging, but that’s where we come in. Let InCorp take the complexity out of the process. We specialize in:

Our expert team will guide you through every step, from securing permits to ensuring compliance with local regulations. With InCorp, you can confidently establish and grow your business in Indonesia.

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

    You can transfer the license if your local distributor agrees to change the product license holder.

    In Indonesia, the necessity of hiring Indonesian employees by foreign companies typically arises from commercial requirements, regulatory mandates in specific sectors like construction or shipping, or as part of employing foreigners to fulfill knowledge transfer obligations.

    The minimum number of shareholders to incorporate a PT is two

    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.

Get in touch with us.

Lead Form

What you’ll get

A prompt response to your inquiry

Knowledge for doing business from local experts

Ongoing support for your business

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.

More on Business Licenses

KITE Indonesia: How It Helps Manufacturers & Exporters

A Complete Guide to KITE (Kemudahan Impor Tujuan Ekspor) in Indonesia

Read more
The Biggest Mergers and Acquisitions in Indonesia

The Biggest Mergers and Acquisitions in Indonesia Throughout 2021

Read more
a regulatory guide for cryptocurrency in indonesia

A Regulatory Guide to Cryptocurrency in Indonesia

Read more