In recent years, Indonesia has become a growing business hub in Asia. Many investors use Indonesia as an entry point to enter Asia’s market. To launch a business in Indonesia, whether the business owners are locals or foreigners, it is compulsory for them to register their company. Company registration may seem like a complicated process, but it is straightforward once you understand the process.
To encourage business growth within Indonesia, the government is actively creating a conducive environment for foreign investors through initiatives that reduce barriers and encourage growth. To date, the company registration process is simple. It is also partly digitized. Besides the first two steps that cannot be processed online, the rest of the process can be done online through the online system known as Online Single Submission (OSS).
Approval of incorporation documents takes about 10 working days, after which you draft your articles of Association and apply for business licenses. The overall incorporation/registration period is between two and three months. And it is worth noting that Indonesia does not allow registration of branch offices.
Options for Fully Foreign-Owned Indonesian Companies
A company is considered a foreign company if there is a foreign investor or shareholder in the company. Such companies must get approval from the board coordinating capital investment before engaging in Indonesia’s business activity. The amount of capital invested in a particular business will define the business company’s size and the eligibility to sponsor foreign employee’s work permits. Indonesia allows total foreign ownership in industries that are not categorized under the Negative Investment List.
If you are a foreign business owner who wants to register your company for full ownership, you have the following options:
You can register your business company as PT (Perseroan Terbatas) PT is a local term referring to a limited liability company, and it is the most common foreign company option that incorporated in Indonesia. It exists in three categories.
Large-sized PT Company
The paid-up capitals vary depending on the category, and they are established upon the approval from the Capital Investment Coordinating Board. Most local and foreign investors with permanent residency employ this option.
This type of Business Company is easy to set up, and it offers limited liability for most foreign entities and local entities as it supports work visas. Features:
One local director
Two local shareholders
A foreign or local commissioner
You can register your company as PMA (Penanaman Modal Asing) It can be fully or partially foreign-owned. Such a company is established under the stipulated regulations of Foreign Capital Investment Law and approved by the Capital Coordinating Board of Indonesia. PMA companies can be converted into public companies later.
You can register your company as KPPA. This is a foreign representative office, and it takes 3-4 working weeks of the registration process. This company registration type is suitable for investors who want to study the Indonesia market for research and business-related development purposes. They serve as the parent company’s buying and selling agent. However, it is restricted to certain business regions such as services, banking, trading, mining, gas, and oil.
When you want to begin operations immediately, you can register a company in Indonesia using an Indonesian nominee. Registering this type of company enables you to bypass some foreign investment restrictions, close deals fast, and obtain contracts.
This type of company is required to adhere to stringent company registration regulations. It has at least 300 shareholders and a paid-up capital of IDR billion. It is a requirement to be listed under the stock exchange.
Process of Registering a Company in Indonesia
Business registration and incorporation depends on your company type, and this also determines the registration duration. The following are the procedures for one to register a company in Indonesia:
Choose Your Business Structure Decide which business structure is suitable for you. Then put in place company services such as corporate company secretary, human resources. Working days/hours, ongoing fillings and bookkeeping.
Choose a unique company name The company name contains at least three different words. You are required to provide three options for your company name in English, Indonesia or both. These three name options save you the trouble of having to go back and think of a name if the first option has been already in use. Your company can use another name to stand out as a brand. Register the company’s name at the Ministry of Law and Human Rights. Ensure your company name is approved from the Notary Public as a sign that your business is a legal entity.
Have a registered office As soon as you are confirmed with your business formation, kindly ensure that you have a registered office and a mailing address.
Register your company for a business license The process of getting a business license varies with each business type. You are required to apply for a certificate of business registration and company registration documents from the offices of the Ministry of Trade.
How to apply for a business license
To register your company, submit your duly filled application at the Investment Coordinating Board of Indonesia offices.
Obtain your company’s Deed of Establishment (DOE) The other process in incorporating your company is obtaining DOE from the ministry of Law and Human Rights using a duly filled application form. Please ensure that your company documents are notarized. The legalized documents are publicized within 14 days in the State Gazette.
Apply for SIUP (Surat Izin Usaha Perniagaan) SIUP a permanent license for trading. You will use the receipt that you had obtained while registering the company name.
Apply for Business Registration Number You will be given a Business Registration Number, import license, customs identification, and you will also get registered by the Badan Penyelenggara Jaminan Sosial (BPJS) Ketenagakerjaan and BPJS Kesehantan as part of the package.
Have your company registered with the taxation office for tax compliance purposes. You will then be issued with the company’s Tax Identification Number, which will be sent to your company’s address. You may also be issued with a domicile certification for taxation purposes, but the domicile is not mandatory. The domicile certificate is issued by the municipality or the building management in the office’s locality. You will also be issued with a registration number Value Added Tax (VAT) collector number.
Obtain work visas Both the local and foreign employees in your company will require work visas before working in your company. These visas come in the form of single-entry and multiple-entry business visas.
Set up a corporate bank account The other activity you should consider when setting up an Indonesian company is opening a corporate bank account. This is where you deposit your paid-up capital after incorporating your company. At this point, your company is considered registered, and you may operate as a registered business. However, you must still do following as part of the process:
You are required to submit the labor report and other required documents at the Ministry of Labor within 30 days.
Apply social security programs for workers. This program sensitizes employees on workplace accidents, security after retirement, security for pension, and death.
Next, be insured for healthcare and employee welfare from the Badan Penyelenggara Jaminan Sosial (BPJS).
How to Register a Company in Indonesia? FAQs
What is The Benefit of Incorporating Your Company in Indonesia?Tiwi2020-10-19T17:47:10+08:00
DOE outlines the company details and company operations.
On the other hand, Memorandum & Article of Association can be used interchangeably with DOE except that it only refers to the powers and responsibilities of the company’s directors and how members exercise control in the company directors’ governance.
What is Deed of Establishment?Tiwi2020-10-19T17:45:44+08:00
Deed of Establishment is a company registration document that obtained from the Ministry of Justice. It contains company details and articles of association. It also contains the company name, location, objective, capital amount, value and classification of company shares, incorporation period, members’ details (number, name & position), procedure and place for general meeting and distribution procedures for dividends and profits.
What is the duration of the license for a Representative Officer?Tiwi2020-10-19T17:42:32+08:00