Indonesia offers many opportunities for foreign investors to tap into the country’s growing market. If you’re considering expanding your business there, it’s essential to understand the process of company setup in Indonesia.
However, navigating Indonesia’s legal and regulatory environment can be challenging, especially for those unfamiliar with the country’s laws and regulations. We’ll provide a step-by-step guide to setting up a company in Indonesia, so you can get your business up and running quickly and smoothly.
What You Should Know about Company Setup in Indonesia
With the world’s fourth-largest population, Indonesia has plenty of business potential, and being part of the G20 group of countries makes it even more attractive. However, Indonesia is a bureaucratic country, and foreign investments are regulated by the Indonesia Investment Coordinating Board (BKPM).
To get your company up and running, you’ll need a Deed of Establishment, which you can prepare once you’ve picked and approved your company name. A registered notary public can assist you with drafting your company’s Articles of Association. This document should cover essential details like your company’s name, business objectives, capital details, and information about shareholders and directors.
According to Indonesian law, the articles of association must include the following details:
- Company name
- Company’s registered location
- Business objectives or activities
- Capital details, including authorized, paid-up, and issued capital
- Value & amount of company shares
- Minimum of two shareholders
- Minimum of one director and one commissioner (who cannot be the same person)
- Director and commissioner’s duties and responsibilities
- Location & method of shareholders’ meetings
- Procedure for distributing and using company dividends and profits
For a company set up in Indonesia, you’ll need the Deed of Establishment, the Indonesian Ministry of Law and Human Rights approval, and identification documents for all shareholders, directors, and commissioners. If a shareholder is a company, you must also show their Deed of Establishment, MOLHR approval, and any relevant amendments or business licenses.
For PT PMA, the BKPM guidelines state that you must have a minimum authorized capital of IDR 10,000,000,000, with at least 25% of that as paid-up capital. If you need to show the relevant authorities that you have enough minimum paid-up capital, there are two ways to do it:
- The first is to provide a Capital Statement Letter that confirms your shareholders have sufficient funds to inject the capital after the company is incorporated.
- The second option is to deposit the necessary funds directly into your company’s bank account.
Company Setup in Indonesia: Registration Options, Timeline, & Requirements
There are three different entity options available:
- Representative Office
- Local Company (PT)
- Limited Liability Company (PT PMA) is a Foreign Direct Investment Company.
The registration process can take one to one and a half months, but once everything is complete, you can start your business operations immediately. To open a bank account under your company’s name, you must submit your Deed of Establishment and business licenses to your preferred bank.
For most businesses in Indonesia, the OSS system has made the registration process quicker and easier. If you’re interested in setting up a PMA company, there are specific requirements you need to fulfill:
- Step 1
Check if your business name is available and help you get your Deed of Establishment certified by the Ministry of Law and Human Rights. It usually takes about three days.
- Step 2
You must also process your domicile at the local district office if your business is outside Jakarta. It takes 2-3 days and requires your Deed of Establishment, MOLHR approval, rental office agreement, and director’s ID.
- Step 3
Register for taxes and get a Tax Identification Number (NPWP). It can be done at your local tax office and usually takes two days. You’ll receive the original card based on the schedule from the Tax Dept.
- Step 4
You’ll also need a Business Identification Number (NIB) to operate in Indonesia. You must register your company with the OSS to get your NIB. It usually takes about two days.
Your NIB is your import license, Customs Identification Number (NIK), and Business Registry Number. It also registers your business under “BPJS Kesehatan dan BPJS Ketenagakerjaan” or the Health and Social Security System and LKPM (Investment Report).
- Step 5
You’ll need to get your operational and commercial license, usually issued on the same day as your NIB. Some business activities may require additional fulfillment, which can take months to approve.
Note: The timeline above is just an estimate and may vary depending on your business and location.
Company setup in Indonesia involves several steps, including obtaining necessary approvals and certifications, registering for taxes and obtaining a Business ID Number, and acquiring operational and commercial licenses. Seeking guidance and support from experienced professionals can help ensure a smoother process. If you need assistance for company setup in Indonesia, IZIN.co.id is always here for you. For more information, email us at firstname.lastname@example.org or via WhatsApp.