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Doing Business in Indonesia: Institutions You Should Know

Posted 15.02. 2018 by Cekindo / Last update on 7.08. 2018

Doing Business in Indonesia: Institutions You Should Know Review by Michal Wasserbauer on 15. 2. 2018 Company Registration in Indonesia, Market Research in Indonesia, Work Permit in Indonesia, Product Registration in Indonesia, Local Partner Selection in Indonesia, Trade Mission in Indonesia, Company Formation in Indonesia, Company Establishment in Indonesia, Company Set Up in Indonesia, Payroll Outsourcing in Indonesia, Tax Reporting in Indonesia, Medical Product Registration in Indonesia, Medical Device Registration in Indonesia, Cosmetic Registration in Indonesia, Food Supplement Registration in Indonesia.
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Doing business in Indonesia can be complicated for foreigners. Not only you have to deal with a different culture, but you also need to work with various institutions. To get you one step ahead, we are listing here some of the popular agencies. These are going to play big roles in the following processes:

  • Company Registration
  • Business and Working Visas
  • Accounting and Taxation
  • Business Licenses and Product Registrations

1. Halal Product Assurance Organizing Agency (BPJPH)

This is an agency that provides halal certifications in the country. The MUI used to handle the job until the enactment of the Halal Product Law in 2014. BPJPH formally assumed the task in October 2017.

WHY SHOULD YOU CARE?

Halal is both a big and sacred business in Indonesia. The country wants to establish itself as the ultimate halal hub in the world. Thus, all non-registered halal products in Indonesia will become non-halal in 2019.

2. BKPM (Badan Koordinasi Penanaman Modal)

BKPM is the Investment Coordinating Board of Indonesia. It is an institution responsible for anything related to the development, growth, and sustainability of foreign investments in the country. Moreover, it helps develop policies, standards, and processes that encourage a healthy investment environment for investors. It works with other institutions for marketing and creation of an investment map for the country.

WHY SHOULD YOU CARE?

While it wants foreigners to put their money in Indonesia, the agency has to make sure it is according to its investment map and that it is in accordance with the law. For this reason, BKPM is one of the first agencies you should reach out if you want to open a company here.

Speaking of opening a foreign company, Indonesia has only a few options for you. The most popular is called PT PMA. In hindsight, you need to form a corporation with certain locals who shall be part of the shareholders.

Based on Regulation No. 13/2017, the Principal License (known as Izin Prinsip) was replaced by the Investment Registration (Pendaftaran Investasi) at the beginning of the year 2018.

The regulation is a follow up of Presidential Regulation No. 91/2017 on the Acceleration the Implementation of Business Execution that aims at speeding up the bureaucratic process. The Investment Registration is valid for one year and it is renewable for five years.

3. Directorate General of Taxes (Direktorat Jenderal Pajak)

Some places have simpler taxes; others don’t. Indonesia belongs to the latter category. There are so many tax rates, conditions, and requirements for compliance. Either way, for all your concerns, you work with the Directorate General of Taxes.

WHY SHOULD YOU CARE?

The country can impose harsh penalties that include an imprisonment and/or a huge fine for any tax-related violation. These include failing to submit your returns promptly. Further, in Indonesia, it doesn’t matter whether you’re a foreign tax resident or non-resident: as long as you have business in the country, you will pay taxes.

The institution is also essential in your day-to-day labour concerns. You are responsible for withholding taxes of your employees. One of your registration requirements is a tax identification number.

Learn more about Accounting and Tax Reporting in Indonesia.

4. Directorate General of Immigration (Imigrasi)

All foreigners in Indonesia go through this government agency. It performs a variety of functions, such as the issuance of work permits, as well as business visas.

WHY SHOULD YOU CARE?

Only those who have work permits can work in the country, and only foreigners with KITAS can search for an employment. Being married to an Indonesian doesn’t mean you can get some employment. Moreover, Indonesia usually requires sponsorships for business or work visas. These can be individuals such as spouses, or companies, non-profits, and other types of organisation. It depends on the visa you wish to have.

Get to know more about Work Permit in Indonesia from A to Z.

5. National Agency of Drug and Food Control (BPOM)

Product registration is a must for quite a number of items. These include medical devices, food and beverages, beverages, and personal care. The ones who oversee their regulation, testing, and compliance is the National Agency of Drug and Food Control. This institution can implement justice, but it can work alongside with the police department.

WHY SHOULD YOU CARE?

If you’re distributing, importing, or selling any of these products in Indonesia, whether it is in Jakarta or Bali, your business license is not enough. You also need proof that they are duly registered in the country.

How to register your product in Indonesia? Read our In-Depth Look into Indonesia’s Product Registration and Regulation.

Final Thoughts

Catching up with all the regulations and dealing with multiple agencies can take a toll on any foreigner. The good news is you can simplify it.

Cekindo can help you process all your requirements and save you the hassle of dealing with these institutions. We have a dynamic team of business consultants, tax specialists, and lawyers, to name a few, who can help you.

Get in touch with us now at +62 21 3006 1585 (Jakarta office) and +62 361 209 0299 (Bali office), or simply fill in this form. You can also email us at info@cekindo.com.






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