Currently, each investor has these three general options to set up a company in Indonesia:
1) Setting up a Foreign Limited Liability Company, with minimum requested capital above USD 1 million (equivalent for IDR 10 billion)
2) Setting up a Representative Office, with no minimum requested capital and 100% ownership, however with limited business activities (can only conduct activities that generate no profits)
3) Setting up a Local Company, by using a local nominee service that provides professional directors/shareholders/commissioners and without the filing requirements for foreign company
Although many foreign investors choose to establish a foreign limited liability company, also known as a PT PMA, to run a business in Indonesia, the Indonesian government restricts foreign ownership in certain business sectors, which can be found in the Negative Investment List (NIL).
Some of these restricted sectors only allow partial foreign ownership, and some of them prohibit foreign ownership entirely.
As such, foreign investors need to opt for another option in case their selected business sector is partially or fully prohibited for foreign ownership. This other option is to establish a local nominee company.
In the event of business sectors that are partially or fully closed to foreign ownership, foreign investors can always partner with an Indonesian company or individual via a strictly guarded nominee agreement.
In other words, a local nominee company allows foreign investors to run a business in a restricted business sector in Indonesia.
Despite the status of a local nominee company that can only be owned 100% by an Indonesian citizen, the foreign investor will have full control over the company – given that you find a reputable local nominee service provider, such as Cekindo, to draft an effective agreement for you.
In addition to the above benefit, establishing a local nominee company in Indonesia gives you these other benefits:
It might come as a surprise for some foreigners, but certain business sectors require foreigners to have a minimum foreign investment plan of IDR 10 billion.
What is more, you will also need to pay an initial amount of IDR 2.5 billion in the investment plan right away.
Because of the limitation, most foreigners opt for a less financially demanding choice, which is a local nominee company with no minimum investment amount.
When setting up a PT PMA, foreigners will need to go through a series of procedures that come with certain requirements. However, when setting up a local nominee company, the procedure is less complicated and the requirements are easier to satisfy.
For instance, a foreign-owned company is required to have audited financial reports in order to receive a permanent business license. Without it, it is impossible for companies to get other necessary licenses, such as an import license.
To ensure a safe local nominee company establishment that is fully in compliance with the applicable Indonesia law, the following suggestions should be taken into consideration:
Cekindo can provide you with a company setup for all of the above-mentioned options, including a full package for a local company with nominee agreements to ensure you that you will have your local company under full control.
Cekindo’s full package for Professional Shareholder and Director services through nominee agreements includes:
More about how to safely engage professional shareholder and director services by using nominee agreements in Indonesia, please read here.
Our full package includes everything you need to operate a business in Indonesia without the filing requirements for foreign company and as the local company will give you flexibility without business field limitations.
You can also request only some part of our package if you have own local nominee, director or commissioner.
Send your question by filling in this form below. Our consulting team will quickly answer you via E-mail. You can visit our office to know more details about our Indonesia Nominee Company.