setting up a company

4 Mistakes You Need to Avoid When Going Through Company Set Up in Indonesia

  • InCorp Editorial Team
  • 2 October 2017
  • 3 minute reading time

Running a business means treading the wrong paths. In some cases, that’s fine – that’s how you learn and become a more effective leader. However, a lot of them are not only costly but also ruin your business and personal reputation. They can even land you in hot legal water. When you’re going through a company set up in Indonesia, make sure you step away from these five common and outrageously dangerous mistakes.

Company Set Up in Indonesia in Indonesia: 5 Most Common Mistakes

1. No Business Office

setting up a company in Indonesia - Cekindo

One of the main requirements in company registration is a domicile letter, and the law says you cannot set up an office in a residence. In other words, you need to have a legitimate corporate office.

Although the cost of office rent in Indonesia is lower than in some Asian countries such as Singapore and Hong Kong, it may still be impractical to certain businesses, such as startups or small teams.

Cekindo offers various office setups for your business from virtual office to shared office space. Our packages are reasonably priced and flexible to accommodate your present needs and budget. Regardless of which one you choose, we will provide you with a domicile letter. Furthermore, one of our specialists will provide you with a FREE business consultation particularly on registering a company in Indonesia. Check the top 8 FAQs on Virtual Offices in Indonesia.

2. Failure to Hire a Local Worker

While Indonesia doesn’t restrict you from hiring foreign workers, it has set conditions. In an effort to provide more jobs for its local citizens, the country imposes foreign companies to hire one Indonesian for every foreign worker hired. You will also need to pay certain fees and make sure expatriates have the correct visa and work permit.

3. Very Short Lead Time

setting up a company in Indonesia - Cekindo

Indonesia is improving in terms of Ease of Doing Business, but that doesn’t mean red tape and bureaucracy are over. It can take as long as 10 weeks to process your company registration, and you need even more time for market analysis, selection of industry and business category, etc.

Cekindo has a wide variety of business services, and we can support you by setting up a company to fill in the outsourcing of business functions. You can also look into buying a shelf company from us.

4. Very Small Capital

The minimum capital for foreign companies (PT PMA) is IDR 10 billion, with a minimum of also IDR 10 billion in paid-up capital.  It’s separate from all the other expenses you will incur while setting up and running your business at least within the next 6 months to a year.

Company Set Up in Indonesia with Cekindo

Indonesia has a fast-growing economy foreign investors can maximize. But first, you need to learn to follow the rules first and avoid committing errors that will force you to fold.

With a team of experienced business incorporation specialists with the right knowledge and skills, Cekindo can provide professional guidance and assistance in setting up a company in Indonesia.

Contact us now for a free consultation via the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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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.

Frequent Asked Questions

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

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.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.