Company in Indonesia

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Company in Indonesia – General Information

Indonesia is a country which consists of about 17,000 islands and is located in South East Asia. The capital city of this state is located in Jakarta the biggest island within Java area. Previously Indonesia was not famous for business investment, however, currently, it’s one of the countries in the South East of part Asian continent with the fastest-growing economy. High level of corruption by the previous government is the one which made it infamous. However, the recent changes in government have transformed the country since the current leader has set up favourable regulations which encourage foreign investment.

For instance, the regulations set by the government are more lenient for foreigners who wish to invest in Indonesia. These regulations have improved the process of starting a business in Indonesia and also opened a lot of sectors for foreigners to invest. Currently, it’s very easy for you to register your company in Indonesia. Below are the steps which entrepreneurs can follow in registering their companies in Indonesia.

Types of Companies Available for Foreigners

1. Limited liability company which is locally referred to as Foreign-owned company (PT PMA) or has a foreign ownership

It’s one of the major kinds of a foreign company which is legally allowed in Indonesia. The Indonesia Law states that provided a foreign resident holds about 1% of the shares, the company will still be considered to be foreign. Before you start a business you must be approved by the capital investment Coordinating Board (CICB).

Below are the of PT PMA features:

The CICB requires the stakeholders to raise $639,140 as minimum share capital. In this case, 25% of this amount is supposed to be paid as a share capital before you start doing any business.

Have at least 2 shareholders, one commissioner and one director who be managing the company.

The company is not limited to the areas that it can operate expect those industries which are highlighted in prohibited for foreigners.

2. The representative office

This is when a foreign company is allowed to extend its market presence within the Indonesian state. However, by incorporating this kind of office you will only be allowed to do the following:
• Gather all information which is relevant for the parent company
• Conduct promotional and market research activities only.

This kind of company is usually controlled by the ministry of trade.

Or you can proceed with Construction branch office.

This kind of company is formed so that it can have a joint agreement with the local Indonesia company mainly for consultancy works or construction project. This kind of company is registered under the Ministry of Public works. Currently, the Indonesian government does not allow foreigners to operate any business as a representative office.

The process involved in registering a company in Indonesia

In case you wish to register your company in Indonesia, you must follow the steps highlighted below.

a. Obtaining approval for your company name

You can search your company name online with the Ministry of Law and Human rights. The ministry can either reject or approve your name. This process can take at least 1 business day and you will be required to pay IDR 200,000. The process is done at Notary public.

b. Company registration
The Notary public is the one which approves all relevant documents of the company. The whole process can take one day.

c. Legalizing the documents of your company
All the documents of the company must be legalized by the ministry in charge of law and rights. After that, the ministry will publish the information about your company within 2 weeks in the State Gazette.

d. Applying for the domicile company certificate

You can obtain this certificate from the building management or municipality where your company is situated. You will use your certificate in registering for tax and the whole process can take about 2 business working days.

e. Applying for a permanent trading license and a certificate at the Ministry of trade for registering your business. This process can also take about one week.

f. Registering with the Ministry of Manpower

You must submit a report of your manpower and related documents to the Ministry of manpower within one month.

g. Applying for social security program for your workers

This program is meant to cater for the welfare of the employees. It caters for the occupational accident, death and pension security. You can apply for this program at the Social security (BPJS)office.

h. Applying for health care insurance

It meant to cater to employees welfare and you can do this at the BPJS office.

i. Before you commence your business, you must obtain a VAT and tax registration number at the taxation office in Indonesia.

How can you register for your representative office in Indonesia?

To register your branch office you must have the documents listed below:

  • A letter indicating that you have been appointed by the head office to do business in Indonesia.
  • The Articles of association written or translated in English for your parent company.
  • Copy of document indicating the parent company is registered at the Chamber of commerce.
  • The national identity card for the local Indonesian and a passport copy for the foreign nationals who are supposed to work at the branch office.
  • Documents giving the Attorney power to sign your application.
  • A letter of statement or intent which confirms that the individuals who will be taking the executive position at the representative office will work only in the position he/she is appointed.

All these documents expected to be approved by the embassy of Indonesia where the foreign company is located and also a Notary public. This will prove that the company has taken a lawful process in registering its representative office in Indonesia.

In registering your company you must undertake the following steps:

  • Obtaining an approval letter from the CICB office.
  • Getting a domicile letter for the branch office.
  • Giving attorney the power to approve your application in case you have allowed a third party to represent you.
  • Obtaining tax identification from the taxation office where the parent country is located.

Private Financial Services will be happy to assist you with all processes, which relate to company registration in Indonesia!

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