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.

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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

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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.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.