Company Registration in Indonesia Types of Legal Entities for Foreign Investors in Indonesia PT PMAIf you are a foreign investor that wants full control of your business, then establishing a PT PMA is the best option you can opt for. PT PMA is the only legal entity in Indonesia that allows up to 100% foreign ownership. However, each sector has regulations on their permitted business activities as well as the maximum amount of shares foreigners can own determined by the Positive Investment List. Incorporate a PT PMA today General Representative Office (KPPA)A representative office (RO) is suitable for foreign investors and business owners that are at the early stage of expanding into Indonesia. RO’s allow foreign businesses to test the Indonesian market before establishing any commercial operations. RO’s also work best for non-sales activities, such as customer service support, approaching potential clients, as well as conducting marketing and brand awareness initiatives. Establish a KPPA now Representative Office for Business Trading (KP3A)KP3A is a representative office that is established specifically for business trading. Both general and trading RO’s are prohibited from conducting business activities that generate financial income. However, a trading RO may be established in any part of Indonesia, whereas a general RO is not able to do so. Establish a KP3A now Representative Office for Construction Company (BUJKA)Similar to KP3A, a BUJKA is a representative office specifically established for foreign construction companies. A BUJKA may engage in large-scale construction projects, but only under a joint operation with a local company known as Local PT. Despite its limitations, a BUJKA is still a good start for foreign construction companies to set their footprint in Indonesia, as they are allowed to collaborate on building projects without obtaining a construction license (SIUJK). Establish a BUJKA now The Process of Setting Up A Company in Indonesia Internal ProcessConsultationTalk to our experts about your expansion objectives in Indonesia.Collecting Required DocumentsProvide us with all the documents required for company establishment.Document ReviewWe ensure your submitted documents are aligned with the latest regulations.DraftingWe will draft your application letter addressed to related government bodies.Documents SubmissionWe file all your documents to the related government bodies on your behalf. External ProcessRegistration of Indonesian Tax ID (NPWP)An NPWP is required to secure other business licenses, open a bank account, and fulfilling tax obligations.Obtain Indonesian Business Identification Number (NIB)A NIB is required for a company to conduct immediate business operations.Deed of Incorporation (For PT PMA)A Notary should draft and legalized your Deed of Incorporation.Approval of Legal Entity (For PT PMA)After submission of Deed of Incorporation by the notary, the Ministry of Law and Human Rights will give approval.Securing Other Licenses (For PT PMA)Some sectors and business activities require more specific business licenses and permits. This process can from 7 to 20 days, depending on your business sector.*The estimated time after all the required documents are deemed eligible for submission to the related government’s bodies.Comparisons of Company Establishment Options for Foreign Investors in Indonesia PT PMA NatureAllows profit-generating business activitiesAllows up to 100% foreign ownershipIdeal for business sectors that are open for foreign investmentStructureMinimum two shareholders (corporate/individual)Minimum one local directorMust have at least one commissioner (can be a foreigner with a valid work permit)CapitalisationMinimum IDR 10 billion of investmentAt least IDR 10 billion should be provided as a paid-up capitalBenefitsFull control of businessEligible to sponsor work and stay permit for foreign employee KPPA NatureNot allowed to generate financial incomeAllows up to 100% foreign ownershipIdeal for testing the waters before setting up a fully-fledged companyWorks best for non-sales activities StructureNo shareholder or director requiredOne chief executive is sufficient CapitalisationNo capital is required BenefitsLow incorporation costEligible to sponsor work and stay permit for foreign employees KP3A NatureNot allowed to perform any sales and purchase activitiesAllows up to 100% foreign ownershipIdeal for liaising, promotional, and market survey activitiesStructureNo shareholder or director requiredOne chief executive is sufficientCapitalisationNo capital is requiredBenefitsLow incorporation costEligible to sponsor work and stay permit for foreign employeeCan open a branch office in any part of Indonesia BUJKA NaturePermitted to engage in large-scale construction projects within a joint operation with a Local PTBest suited for the larger global construction companiesStructureNo local shareholders are requiredCapitalisationNo capital is requiredBenefitsLow incorporation costAllowed to work on a construction project in a joint operation with a Local PT without acquiring a construction license (SIUJK)Eligible to sponsor work and stay permit for foreign employee NatureAllows profit-generating business activitiesAllows up to 100% foreign ownershipIdeal for business sectors that are open for foreign investmentStructureMinimum two shareholders (corporate/individual)Minimum one local directorMust have at least one commissioner (can be a foreigner with a valid work permit)CapitalisationMinimum IDR 10 billion of investmentAt least IDR 10 billion should be provided as a paid-up capitalBenefitsFull control of businessEligible to sponsor work and stay permit for foreign employee NatureNot allowed to generate financial incomeAllows up to 100% foreign ownershipIdeal for testing the waters before setting up a fully-fledged companyWorks best for non-sales activities StructureNo shareholder or director requiredOne chief executive is sufficient CapitalisationNo capital is required BenefitsLow incorporation costEligible to sponsor work and stay permit for foreign employees NatureNot allowed to perform any sales and purchase activitiesAllows up to 100% foreign ownershipIdeal for liaising, promotional, and market survey activitiesStructureNo shareholder or director requiredOne chief executive is sufficientCapitalisationNo capital is requiredBenefitsLow incorporation costEligible to sponsor work and stay permit for foreign employeeCan open a branch office in any part of Indonesia NaturePermitted to engage in large-scale construction projects within a joint operation with a Local PTBest suited for the larger global construction companiesStructureNo local shareholders are requiredCapitalisationNo capital is requiredBenefitsLow incorporation costAllowed to work on a construction project in a joint operation with a Local PT without acquiring a construction license (SIUJK)Eligible to sponsor work and stay permit for foreign employee
Registering a Representative Company in Indonesia Why Do You Need to Set Up a Representative Office in Indonesia?A representative office means market presence without large capital investment. The primary purpose of representative offices in Indonesia is testing the water before the actual company incorporation.Furthermore, a representative office might conduct market research, approach potential clients and build brand awareness of your business. However, no activities that generate profit are allowed, and this is the prominent factor that distinguishes a representative company in Indonesia from other legal entities.The Benefits of Representative Office in IndonesiaLow Incorporation CostAs mentioned, a representative office (RO) is an affordable way of how to penetrate the market in Indonesia. Whether you are not sure about your target audience or the presence of business partners, these companies will help you to understand the Indonesian market properly.Visa SponsorshipEven though representative offices are not permitted to generate revenues, they are entitled to sponsoring work and stay permits for their foreign employees. Moreover, an RO can sponsor a business visa for business partners coming to Indonesia.Organisational StructureTo establish a representative office in Indonesia might be the most feasible solution for many entrepreneurs due to its lenient corporate structure. As opposed to a foreign company no shareholder or director is required, and only one chief executive is sufficient.Registration Process of a Representative Office in Indonesia Step 1: obtaining a representative office (KPPA) license Step 2: obtaining domicile letter from the local subdistrict Step 3: applying for taxpayer registration number (NPWP) Step 4: getting a company registration certificate (TDP)Starting a Representative Office in Indonesia with CekindoCekindo is a one-stop market entry provider that will assist you throughout the whole process of representative office formation. We will not only advise you on the most suitable type of an RO but also incorporate the company on your behalf.Currently, four types of representative offices are available:KPPA: General RO of a Foreign CompanyKPPPA (known as KP3A or K3PA): RO of a Foreign Trading CompanyBUJKA: RO of a Foreign Construction Service CompanyKPPA MIGAS: RO of a Foreign Oil and Gas CompanyLet us guide you through the representative office registration process and achieve the best results promptly. Fill in the form below or visit us in one of our offices located in Jakarta, Semarang or Bali and we will provide you with a free quotation on your business.
How to Set Up a Local PT Company in Indonesia Local Company (PT) is the most common legal entity in Indonesia. Even though a local company is intended for Indonesian citizens only, there are some circumstances under which a foreign investor can incorporate a local company in Indonesia as well.Benefits of a Local PT Company in Indonesia for ForeignersEven though there are other legal entities particularly designed for foreigners — a limited liability foreign-owned company and representative office — starting a local company might bring more benefits to some foreign entrepreneurs.Not Restricted from Some Business FieldsThe Negative Investment List is a document that regulates foreign ownership of businesses based on business sectors they operate in. Thus, some business activities are fully closed to non-domestic investors, and some are partially limited. On the other hand, a local company is not a subject to this regulation, and it might be the only choice how to start a business in Indonesia in your field.Lower Incorporation CostsIn comparison with a foreign-owned company, the paid-in capital of a local company is much lower. In general, it ranges from IDR 50,000,000 up to more than IDR 10,000,000,000. The amount of the capital defines the size of the company, which further determines whether a company is eligible to sponsor a work permit for a foreign worker (and how many).Small : IDR 50,000,000 – 500,000,000Medium : IDR 500,000,001 – 10,000,000,000Large : above IDR 10,000,000,001Registration Process of a Local PTSTEP 1: COMPANY NAME APPLICATION Submit your company name to Ministry of Law & Human RightsSTEP 2: ARTICLE OF ASSOCIATION PREPARATION This requires presence of a notarySTEP 3: DEED OF ESTABLISHMENT APPROVAL Deed of Establishment is approved by Ministry of Law & Human RightsSTEP 4: CERTIFICATE OF DOMICILE ACQUISITION Obtained from local government to show business locationSTEP 5: TAXPAYER REGISTRATION NUMBER (NPWP) APPLICATION To secure other licenses, fulfill tax obligations and open a bank accountSTEP 6: BUSINESS IDENTIFICATION NUMBER (NIB) APPLICATION Application is done via Online Single Submission (OSS) systemSTEP 7: COMPANY REGISTRATION CERTIFICATE (TDP) ACQUISITION After, you can apply for additional licenses (if required)Starting a Local Company with CekindoIf you are not sure what type of company is suitable for your business, contact us via the form below or visit us in one of our offices located in Jakarta, Semarang and Bali. Cekindo will assist you to establish your local company in Indonesia based on your needs.