Stop Making These 8 Common Mistakes When Set Up a Company in Indonesia

There are fantastic chances waiting in Indonesia if you can grab the market. However, if you make a mistake with how you set up your firm, such prospects can be beyond your grasp and much further away. 

Here are the typical mistakes that most investors make while establishing their businesses, which you should be aware of before beginning the company registration process in Indonesia. Knowing them in advance can assist you in avoiding them, ensuring that you achieve the results for which you have gone to such lengths.

1. Not Having An Office for Your Company
   

   You read it right. You can’t legally build a business in Indonesia if you don’t have an office—even though you are running a small business with a small team. One of the requirement of business registration in Indonesia is having a domicile letter for your company.

2. Not Understanding the Local Regulation Enough
   

   When you set up a business in another country, you need to deal with the law and its complexities. It’s not a good idea to keep yourself blind of the law when you’re putting the legalities of your business at stake. Gather as much knowledge as you can before beginning your market entry. Verify the information using several sources. See if you have the resources to address the legal and regulatory issues.
   

3. Confusing Business Visa, Work Permit, and Business Permit
   

   Indonesian business visas only permit you to engage in a limited range of activities. You may not do any business that involves hiring personnel or paying them a salary.
   The business visa would not be available if you planned to launch a business. Some people mistake a work permit (ITMA), which enables you to lawfully work and receive compensation in Indonesia, for a business visa.
   You should be careful about whatever visa you are holding since if you do, you will be breaking Indonesian immigration laws and could receive penalties.

4. Failing to Register Your PT PMA for 
   

   There is no way you can legally set up a business in Indonesia without administering your PT PMA. Remind you, this is not a work permit. The rights and obligations of PT PMA are on part with those of a locally held business. A limited liability corporation with a shareholder who is not an Indonesian is considered a PT PMA. The organization is qualified to apply for working visas for foreign employees and is permitted to take part in all Indonesian trades or business activities.

   You must understand the Law No. 40 Year 2007 concerning The Company Law in order to legally establish a company in Indonesia. Before you begin the process of setting up a business in Indonesia, you must have a thorough awareness of the laws and culture there.
   

5. Trying to Do the PT PMA Yourself
   

   After reviewing Indonesian Company Law No. 40 from 2007, some business owners attempt to handle the PT PMA registration process themselves, only to become frustrated by its complexities. Regardless of how skilled you are in business or how knowledgeable you are about the law, it’s important to understand that each country has its own unique legal and business culture. Even with thorough research and following the required steps to set up your business, you may still encounter challenges navigating the bureaucracy.

   The PT PMA registration involves a significant amount of paperwork, permits, and a multilayered bureaucracy, making it a lengthy and complex process. Save yourself time and frustration by leaving it to the professionals. With years of experience and in-depth knowledge of the corporate landscape, Synergy Pro can assist you in completing your PT PMA registration with minimal hassle, allowing you to focus on developing your business strategy for the Indonesian market.

6. Not Hiring Enough Local Workers
   

   Having too many foreigners than Indonesian locals in your office could result in a difficult situation with the Ministry of Manpower. You are not prohibited from hiring foreigners, but they should not dominate the office. The law requires international businesses to hire one Indonesian for every foreign worker hired in a move to increase employment opportunities for its residents. Additionally, you will need to pay a few fees and confirm that expats have the proper visa and work permit.

7. Not Obtaining the Halal Certificate (For F&B Business Outside Bali)
   

    

   With almost 87.2% of its population being Moslem, Indonesia has the largest Moslem population in the world. While in Bali, you can sell alcoholic beverages and pork delicacies without issues, if your target market is the general Indonesian population, you must obtain a halal license. In Indonesia, certain consumer goods and services require halal certification. The processing, ingredients, and certification of halal products are regulated by the Halal Law. Obtaining halal certification for your goods and services in Indonesia is essential, as it will help your business tap into the halal market, where the Muslim population exclusively consumes halal products.

8. Rushing Your Set Up
   

   Take your time. While keeping on deadline is important, you cannot rush the setup process. In Indonesia, things can take longer than you might anticipate. Even while it may be claimed that licenses would be provided in a day or that certain permission will be available in three days, the reality is quite different. Keep a schedule, but allow yourself some flexibility. Setting strict timelines and attempting to rush processes can only result in frustration.