Home Blog Your Guide to Foreign Company Relocation to Semarang, Indonesia Business Setup | Semarang Your Guide to Foreign Company Relocation to Semarang, Indonesia InCorp Editorial Team 30 April 2020 4 minutes reading time Table of Contents Semarang: An Ideal Location for Starting a Business in Indonesia & Foreign Company Relocation How to Relocate a Foreign Company to Semarang, Indonesia Next Steps after Relocation Starting a Business in Indonesia with Cekindo As the tenth most populated city in Indonesia and the capital city of Central Java, Semarang has always been a popular destination for international investors for starting a business in Indonesia. Lately, an increasing number of businesses from different countries have relocated to Semarang, especially those from China, Singapore, Japan, and South Korea. Over the past few years, the economy in Semarang has been growing, evidenced by the appearance of many high-rise buildings, industrial parks, and infrastructure. Indonesian President, Joko Widodo, also announced the opening of 35 business sectors in Indonesia for full foreign ownership, and Semarang received the Pro-Investment Reward — all in all indicating the significant growth of the economy and increase of foreign investments in this dynamic business atmosphere. With the Indonesian government’s implementation of new tax rates of attracting more foreign investments for starting a business in Indonesia, foreign company relocation to Semarang has become even more prominent. Semarang: An Ideal Location for Starting a Business in Indonesia & Foreign Company Relocation There are reasons that make business owners decide to relocate their companies to Semarang. These reasons are often beneficial to the operation and growth of their businesses: Operational, infrastructure and labour costs are lower in Semarang The increasingly vibrant economic conditions that boost profits More business opportunities especially when the government opened up more business sectors for foreign ownership Large workforce due to the huge population in the country Large consumer population and increasing middle-income population Rising labour wages in neighbouring countries such as China also leads to more relocation of companies from China to Indonesia, especially in the wake of the trade war effect Rapidly improving infrastructure and technology How to Relocate a Foreign Company to Semarang, Indonesia Relocating a foreign company to Semarang doesn’t have to be complicated if all the legal requirements are fulfilled. Though the process may not be complicated, it could take up a business owner’s tremendous amount of time to do so. On average, the relocation process of a foreign company takes approximately six months to complete. Also, one thing to take note of is that the foreign company relocation is only possible when the business owner possesses a work permit, related visa, business licenses, and other registration documents. A business owner who has relocated its business to Semarang doesn’t have to live in Indonesia even though they need to have the said documents, permits, licenses and visas. The business owner can hire somebody else to manage the company and handle the operations, and they will only have to visit the country at the beginning of the setup or when necessary. Next Steps after Relocation There are still things to be done after the relocation: Business registration and licensing Compliance with legal requirements and regulatory The resident place for the person living in Indonesia and managing the company Starting a Business in Indonesia with Cekindo Starting a business in Indonesia can be an exciting but challenging undertaking. As always, getting everything right from the beginning is the key to business success. Therefore, the right guidance and advice are critical. At Cekindo, we have the expertise and experience to take you through the whole complex of relocating your business to Semarang. Our specialists can advise you on the legal and financial obligations of your company and how to adequately set up and structure your new business in Semarang. Whether you are opening up new branches, buying another company or franchise, or setting up a new company in Indonesia, our expert business consultants understand all the key aspects of the Indonesian business environment and regulations. Now, all you need for your business to be up and running in Semarang is in one place – Cekindo. Get in touch with us now to ensure that you’re set up for success. Fill in the form below. Read Full Bio Verified by 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. Frequently Asked Questions What is a PT PMDN? Limited liability company with 100% local/domestic direct investment What are the functions and responsibilities of a PMA company’s board and management? Indonesian Company Law establishes a two-tier governance system with Directors managing day-to-day operations and representing the company, while the Board of Commissioners supervises and advises them. The articles of association may empower board of Commissioners to provide consent or assistance to Directors for specific legal acts. Is it required to hire Indonesian staff in the PMA company? 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. Are there investment facilities provided for foreign investors in Indonesia? 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. 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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 Setup ESG Integration in the Extractive Industry Read more Company Registration Indonesia Update: Annual License Renewal is No Longer Needed Read more Indonesia Real Estate in 2024: Trends and Insights Read more