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Starting a Business in Indonesia, A Guide to Company Registration in Padang

Company Registration in Padang, Indonesia: A Handy Guide

Padang is no longer just a getaway for vacation seekers. It is now a dynamic business hub where global investors have gathered for starting a business in Indonesia.

Many investment opportunities have emerged in Padang and the most prominent ones are in the tourism and hospitality sector.

Recently, the Indonesian government even cut the BI 7-Day Reverse Repo Rate from 4.75% to 4.5%, directly reducing the capital cost for foreigners to invest in Padang.

This article discusses the company registration options available in Padang for you to explore your business opportunities.

Options of Company Registration in Padang

Starting a business in Indonesian means that you have to satisfy several requirements and select the right entity.

You can incorporate your company in Indonesia by choosing one of the legal entities below:

  • Local Company (PT)
  • Foreign Company (PT PMA)
  • Representative Office (RO)

Local Company (PT)

Only locals or Indonesian citizens can establish and own a local company in Indonesia. Although this type of legal entity is closed to foreigners, foreigners can start a local company by making use of a Special Purpose Vehicle arrangement.

A secure and legal Special Purpose Vehicle arrangement that appoints either professional directors, shareholders or commissioners can be done through the assistance of a legal professional.

The reason foreign business owners want to open a local company is mainly they wish to invest in business sectors that are not available to foreign investments.

The main characteristics of an Indonesian PT are 100% local ownership and a minimum capital investment of IDR 600 million to IDR 10 billion depending on the company size.

According to the latest changes laid out in  Job Creation Law, the classification of Local PT in Indonesia based on paid-up capital as follows:

  • A micro-enterprise: less than IDR 1 billion
  • A small enterprise: IDR 1 – 5 billion
  • A medium enterprise: IDR 5-10 billion
  • A large enterprise: more than IDR 10 billion

Foreign Company (PT PMA)

A foreign company is another form of legal structure that is available for foreign investors. This company type is considered to be the most common for foreigners. Foreigners are allowed to carry out commercial business activities in Padang with a PT PMA.

However, before starting a PT PMA in Padang, investors must verify if their business categories are prohibited for setting up a foreign company, or they can only own a certain percentage of share of their PT PMA in a specific sector.

This information is available under the BKPM’s Negative Investment List that is updated from time to time. BKPM stands for Badan Koordinasi Penanaman Modal or Indonesia Investment Coordinating Board.

A PT PMA in Indonesia features the following characteristics:

  • Foreigners are permitted to be shareholders
  • Minimum number of shareholders: Two
  • Minimum paid-up capital: IDR 10 billion
  • Minimum investment plan: IDR 10 billion
  • Maximum foreign ownership: 100%
  • May need an Indonesian shareholder, depending on the Negative Investment List
  • Minimum requirement: one director and one commissioner
  • Foreign employee sponsorship is permitted
  • Tax reports and investment activity report must be submitted every month

Representative Office (RO)

A foreign parent company often establishes a representative office in Indonesia to manage its business in the country. It also serves as a stepping stone when the foreign company is getting ready to set up a PT PMA in Indonesia. However, a representative office can’t carry out sales transactions and profit-related activities.

Starting a Business in Indonesia with Cekindo

Nowadays, you face more and more government regulations and tax laws when starting a business in Indonesia.

Over the years, Cekindo has been a supportive factor in the growth of companies from the very beginning. We can liberate you from all the rules and taxes legally possible and establish your company in Indonesia, including in Padang.

Cekindo offers diversified and customised solutions for starting a business in Indonesia with a quick, easy, and clear process. We also help you process the paperwork and open your corporate bank account.

Our professional team of experts will guide you through every step, to get your business up and running and make your goals a reality.

Get in touch with Cekindo if you want to discover the best solution for your company establishment in Padang. Fill in the form below.

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