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Cost of doing Business in Indonesia

Business Cost

Indonesia is one of Asia’s economic success stories, with the reforms of the reformasi period having laid strong foundations for protracted growth. This attracts many foreign entrepreneurs’ interest on investing in the country. That being said, the ultimate question that arose as to what is the actual cost of doing business in Indonesia. Before that, we should first understand that there are a few steps to set up a Limited Liability Company or Perseroan Terbatas Penanaman Modal Asing (PT PMA). 

 

Steps to Set up a Limited Liability Company in Indonesia 

  • You must first identify as to what business field you plan to invest in or set up a business in. by doing so, you would be required to refer to the Negative Investment List to identify as to how much shareholders can a foreign entity hold in relation to the company shareholdings to comply with the Indonesian regulation. 
  • The next step you would need to comply is that you would need to establish at least 1 director, 1 commissioner and 2 shareholders in the said company. Do note however that the directors and commissioner can also be a shareholder.  
  • Next, you would need to provide the following required documents. These documents are as such: 

 

No. of required documents: 

  1. Power of Attorney for submission documents sign by each shareholder (prepare by us) 
  2. Shareholder documents 
  3. Rental agreement between the company and building management 
  4. Original building domicile/statement from the building management 
  5. Building and land tax receipt (PBB) including the payment approval of current year 
  6. IMB or certificate of ownership if the building is owned 
  7. Statement for lease and use space office (if any) 
  8. Office photos (minimum 3 photos: reception, signage of the company & office room with activity in it) 
  9. Statement of domicile issued by the company and must be acknowledged by the building management 
  10. Company letterhead and copy/sample design for company stamp 

 

No. Shareholder Documents (Foreign Company) 

  1. Copy of Article of Association and its amendment should be in English or Bahasa 
  2. Business registration certificate 
  3. Board of Directors structure 

 

No. Personal documents for each director and commissioner 

  1. For foreigner: colour copy passport with validity minimum 18 months and 4 blank pages 
  2. For local: ID card (KTP and Taxpayer Identity Number (NPWP) 
  3. Family card (KK) 
  4. Indonesia visa stamp (if any) 
  5. Residence of hotel or apartment domicile letter for the director 
  6. Recent photo passport size with red background for each BoD (edited photo is unacceptable) 

 

  • The minimum investment in Indonesia to start a PT PMA company is IDR 10 billion (USD 750,000.00) or equivalent to the exchange rate. Unlike incorporating a Local PT company in Indonesia which varies accordingly to the size of the business as per Regulation 40 of Year 2007, you will need to inject the minimum amount of IDR 10 billion in your PT PMA company excluding the value of the land and buildings by the company. Other than that, you would also be required to pay a capital requirement of at least IDR 2.5 billion (USD 175,000.00) in your PT PMA company.  

 

Click here to have a further understanding on how to Register a Foreign Owned PMA Company as a Foreigner 

 

After the following steps are complied with, then you will proceed with the registration process. It will take a rough estimate of 23 days to successfully register a company in Indonesia. 

No. Description Estimate Duration 

(working days) 

1 Approval of company name at the Ministry of Law and Human Rights 2 
2 Preparation of Article of Association by Notary (Akta) 3 
3 Obtain Deed of Establishment at the Ministry of Law and Human Rights (SK Kehakiman) 4 
4 Obtain Domicile Letter at the local government office 5 
5 Obtain Tax Identification Number (NPWP) 3 
6 Register Business Identification Number (NIB = NomorIndukBerusaha) 3 
7 Register Business License (Izin Usaha) 3 

 

Cost of doing a Business in Indonesia 

There are two types of common company in which you can incorporate in Indonesia. They are: 

According to the Regulation of the Minister of Trade on Amendment to Regulation of the Minister of Trade No. 36/M-Dag/Per/9/2007, classified Trade Business License into 3 classifications, as follows: 

Small Trade Business License 

Small Trade Business License must be owned by a trading company whose the net worth (paid up capital) is more than IDR 50,000,000, up to IDR 500.000.000, excluding land and building of business premises. 

Medium Trade Business License 

Medium Trade Business License must be owned by a trading company whose the net worth (paid up capital) is more than IDR 500.000.000, up to IDR 10.000.000.000, excluding land and building of business place. 

Large Trade Business License 

Large Trade Business License shall be owned by a trading company whose net worth (paid up capital) is more than IDR 10,000,000,000 excluding land and building of business premises. 

Do note however that the main requirement to set up a PT company in Indonesia is that it must contain 100% local shareholders. In other words, this simply means that only local Indonesian entities could hold ownership in a PT company in Indonesia. 

Nevertheless, there are ways in which foreign investors can still open a PT company in Indonesia. 

 

Unlike setting up a PT company varies in cost depending on the size of the company, a PT PMA company requires a minimum investment of IDR 10 billion in Indonesia. This applies to all business sectors and the amount of minimum investment excluding the value of the land and buildings owned by the company. Besides that, foreigners would be required to pay a capital requirement of at least IDR 2.5 billion (USD 175.000.00) to form a foreign owned PMA company in Indonesia.  

Foreign investors are required to comply with the cost of setting up a PT PMA company in Indonesia, however, this can be pretty difficult for many investors as the capital requirement is no doubt expensive. Here in Paul Hype Page, we provide you with the solution to satisfy the large capital requirement to set up a PT PMA company in Indonesia.

 

Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.

Paul Hype Page & Co. have 3 physical offices in Singapore, Malaysia and Indonesia

Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.

 

How we can help you:

 

We will call you back, please click below link and make appointment with our Sales consultant:

BOOK NOW

Step 1- Listen to your Business plan and Relocation needs.

Step 2- Analysis your Tax Planning

Step 3- Recommend the most suited type of Company Incorporation, Open Bank account and Work Visa

Step 4- Arrange for your Spouse and Children Visa

Step 5- Assist as your company to hire staffs and handle all HR matters

Step 6- Every financial year end, we assist you with your yearly OSS Finanical and Tax Complianc

Step 7- Assist you to expand business to Malaysia, Indonesia, Vietnam and Thailand.

 

Get in Touch with Us Today.

Paul Hype Page

Website: https://www.paulhypepage.co.id

Posted on April 5, 2019 at 2:43 pm
Categories: Business In Indonesia

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