The government of Indonesia is actively lowering obstacles for foreign investors to start a business in Indonesia. All of this is to encourage the growth of the national economy. Today, setting up a company in Indonesia is reasonably straightforward since most procedures can be conducted online.
Types of Fully Foreign-Owned Companies
There are two types of legal entities foreign entrepreneurs may select to start conducting profitable business in Indonesia. The said entities are as follows:
1. PT PMA (Penanaman Modal Asing)
PMA is a local term for foreign-owned companies; it’s a company type you may select for directly engaging in business in Indonesia. You can register PMA as partially or wholly foreign-owned.
2. KPPA (Kantor Perwakilan Perusahaan Asing)
KPPA is an Indonesian term for a representative office of foreign companies. This is the correct type of company if you wish to explore Indonesia’s business opportunities for your company without directly engaging in any commercial activities.
Procedures for Registering a Company in Indonesia
In Indonesia, registering a foreign-owned company involves 8 procedures. Also, the entire process takes 2-3 months; however, individual circumstances may affect this.
1. Register your company name
First and foremost, you will need to determine your company name and make sure it’s available prior to apply for it with Indonesia’s Ministry of Law and Human Rights. Quick tips, make sure not to select company names that:
- Are almost similar to other companies
- Are identical to any name of an international agency, a government, or a state
- Consists of letters, symbols, or numbers that don’t spell anything
- Conflicts with the company’s goals, objectives, or activities
2. Obtain the Deed of Establishment
Applying for the Deed of Establishment can be done online, along with the submission of your bank account certificate and the bank transfer advice’s authentic copy. All documents must first be notarized before submission. If your application is accepted, the Ministry of Law and Human Rights will issue the paper within 14 working days.
3. Apply for a Certificate of Company Domicile
Setting up a company in Indonesia also involves applying for the Certificate of Company Domicile. It’s legal proof of the company’s existence issued by the authorities where the company is established.
4. Acquire the Tax Registration Number
The next step is to acquire a tax registration number (Nomor Pokok Wajib Pajak/NPWP) from the local tax department. Below are the required documents for the application:
- Director’s identity card
- Deed of Establishment
- Official statement letter of the business location
5. Obtain a Business Identification Number (Nomor Induk Berusaha/NIB)
You can apply for the NIB from the OSS (Online Single Submission). NIB is like an identity card for your company. By applying for NIB, you will acquire the requirement to apply for BPJS Ketenagakerjaan (social security administrator for employment).
6. Apply for other documents and licenses
Apart from the mandatory documents above, foreign companies are also required to apply for business licenses. The types of licenses depend on the business sector. Generally, there are three main licenses most companies in Indonesia are used for, namely general business licenses, construction, and industrial business licenses.
7. Apply for work visas
Both foreign and local employees are required to apply for work visas (KITAS) before working in foreign-owned companies in Indonesia. These visas are available as business visas with a single entry and multiple entries.
8. Apply for a corporate bank account
Establishing a company in Indonesia also requires you to set up a company bank account at the local bank company. You will be using it to deposit a paid-up capital after your company is incorporated.
Your business is now officially registered, and you may start conducting business activities. However, there are a number of procedures you will still need to do, such as:
- Submit the labor report and necessary paperwork within 30 working days to the Ministry of Labor.
- Apply for social security program for employees (Jamsostek).
- Apply for healthcare insurance for employees (BPJS).
That’s a wrap! Setting up a company in Indonesia may be taxing due to all the required paperwork. However, everything is manageable so long you adhere to the existing regulations. IZIN.co.id have years of experience aiding more than 8,000 business owners in establishing companies in Indonesia. Email us at email@example.com or message us via WhatsApp for more information.