Foreigner Company Setup in Indonesia: Things You Must Know

13 January 2023 By admin

Read More

We all have the desire of founding our own business, but you need more than an idea to get started. Keep reading to have more in-depth procedures of foreigner company setup in Indonesia.

Foreign Company in Indonesia

Employer of Record Meaning
Source: Pexels

In Indonesia, foreign investors have several options for establishing a business presence. It includes setting up a representative office, a limited liability company (PT PMA), or a branch office.

A Representative Office

A representative office is a business entity that is fully owned by a foreign company. It is only allowed to engage in market research and communication with local clients. Representative offices are not permitted to engage in any commercial activities. It doesn’t have legal status as a separate legal entity.

A Limited Liability Company (PT PMA)

A limited liability company (PT PMA) is a locally-incorporated company that foreign investors fully own. PT PMAs have the same legal status as a locally-owned company and are allowed to engage in commercial activities.

A Branch Office

A branch office is a business entity that is fully owned by a foreign company and is a separate legal entity from the parent company. Branch offices are allowed to engage in commercial activities and have the same legal status as a locally-owned company.

Company Setup in Indonesia Process

Source: Pexels

Setting up a foreign company in Indonesia can be complex and time-consuming, and generally requires the assistance of a local lawyer or professional service provider. Some of the key steps in the process include:

  • Obtaining the necessary approvals and licenses from relevant government agencies, such as the Investment Coordinating Board (BKPM) and the Ministry of Law and Human Rights.
  • Registering the company with the Ministry of Law and Human Rights and obtaining a deed of establishment.
  • Obtaining a tax ID number and registering with the tax authorities.
  • Obtaining a business license (SIUP) and other necessary permits, such as an environmental impact analysis (AMDAL) and a building permit (IMB).
  • Obtaining a business license (SIUP) and other necessary permits, such as an environmental impact analysis (AMDAL) and a building permit (IMB).

However, the specific requirements and steps involved in setting up a foreign company in Indonesia may vary depending on the type of business entity being established and the nature of the business activities being undertaken.

Regulations of Foreign Ownership in Indonesia

Source: Pexels

Several laws and regulations govern foreign ownership in Indonesia, including the Investment Law and the Negative Investment List.

Foreign investors are generally permitted to invest in most sectors of the Indonesian economy under the Investment Law, with some exceptions. Foreign ownership is prohibited in certain industries, such as banking, insurance, and telecommunications.

The Negative Investment List identifies industries where foreign ownership is restricted or prohibited. The Indonesian government updates the list regularly basis to reflect the country’s economic development needs and priorities.

Foreign investors can own up to 67% of a company in Indonesia in general, but this varies depending on the sector and the specific regulations in place. For example, foreign ownership in the banking sector is limited to a maximum of 40%.

It’s also worth noting that foreign investors must comply with Indonesian laws and regulations, including those governing business licenses, taxes, and labor.

How to Register a Company in Indonesia

Source: Pexels

There are many reasons why foreign investors may want to register a company in Indonesia. Indonesia has a relatively stable political and economic environment and it has made significant efforts to improve the business climate in recent years.

To register a company in Indonesia, you will need to follow these steps:

1. Prepare the Required Documents

To register your company in Indonesia, you’ll need to prepare several documents, including:

  • A business plan: This should outline your business goals, products or services, target market, and financial projections.
  • Articles of association: This is a document that outlines the rules and regulations governing your company, including the rights and responsibilities of shareholders, directors, and employees.
  • Identification documents: You’ll need to provide identification documents for the company’s directors and shareholders, such as passports or national ID cards.

2. Submit The Application

Once you have all the required documents, you can submit your application to the Ministry of Law and Human Rights. Registering a company in Indonesia can take several weeks, so you may need to follow up with the ministry to ensure that your application is being processed.

3. Obtain a Business License

Once your company is registered, you’ll need to obtain a business license from the local government. This process may involve obtaining additional permits and approvals from other agencies, depending on the nature of your business.

4. Register for Taxes

Finally, you’ll need to register your company for taxes, including corporate income tax, value-added tax, and employee income tax. You’ll also need to obtain your company’s tax identification number (NPWP).

Depending on where you register your business and how accurate your documents are, the registration process for a corporation might take as little as one month or as much as three months.

The requirements for local companies (PT) and foreign companies (PT PMA) differ, but the general procedure is essentially the same for both.

As you can see, the Indonesia company registration process involves several steps and can be complex. It’s a good idea to seek the help of a local lawyer or professional service provider to ensure that everything is done correctly.

Foreign Company Registration with Synergy Pro

Source: Pexels

Synergy Pro provides a full range of company services that help set up and run your new business. It includes foreign company investment set up (PMA), KITAS investors, working KITAS, and working permits.

Our team is made up of certified professionals in their respective fields. We strive to be a helping hand for our clients, supporting them from the ground up, as well as allowing them to run their businesses worry-free.

Synergy Pro emerged from our desire to simplify business setup for expatriates in Indonesia, as well as to assist all businesses with human resources and provide valuable insights into business management.

Are you looking for more information about foreigner company setup in Indonesia? Discover how Synergy Pro can streamline your business setup in Indonesia. Contact us today!