A state-owned company, or ‘Badan Usaha Milik Negara’ (BUMN), is an independent body that are partially or wholly owned by the Indonesian government. There are two main types of BUMN:
A public company (PERUM) is owned by the state and are focused on maximising profits. The company’s capital is owned by the government and employees in such companies are considered civil servants.
A limited company (PERSERO) which receives its capital, usually in the form of shares or stocks, wholly or partially from separated state assets. These companies aim to gain profits while benefiting the public.
Private-owned Company (BUMS)
On the flip side, private-owned companies are companies set up by a singular founder or a group of private investors. They would earn a share of the profit that the company makes. There are three common types of private-owned companies:
1. Company Limited (Perseroan Terbatas – PT)
On the list of common types of private-owned companies, PT is top on that list. In a PT, there is a requirement of a resident director, a minimum of two shareholders and a commissioner. There are two types of PT in Indonesia noteworthy, namely:
Perseroan Terbatas Penanaman Model Dalam Negeri ( PT PMDN ) A Local Limited Liability Company
Perseroan Terbatas Penanaman Modal Asing ( PT PMA ) A Foreign Limited Liability Company
In other countries, this business entity represents a partnership between two or more individuals doing business. This entity is regarded to have greater financial capabilities as well as being efficient within the company.
3, Commanditaire Vennootschap (CV)
CV is a Limited Partnership comprising of a minimum but not limited to, one managing partner and one limited partner where the managing partner will oversee day-to-day operations of the business and the limited partner is the one that provides capital for the business.
Most Common Business Entities in Indonesia
There are three most common business entities in Indonesia, namely
Local Companies (PT PMDN)
As mentioned above, a PT PMDN is a local limited liability company with a 100% local ownership. A PT PMDN is popular as it takes 3-4 weeks to set up the company, a shorter period compared to a period of 10 weeks to set up a foreign company. It also has a smaller capital requirement compared to PT PMA.
Foreign Investment Companies (PT PMA)
A PT PMA is a foreign limited liability company that can have up to 100% foreign ownership depending on the business field. Setting up a PT PMA is a legal way for foreigners to generate revenue and operate in Indonesia.
Representative Offices (KPPA)
A KPPA is a straightforward way for foreigners to establish a presence in Indonesia. It serves as a channel for foreigners to engage in promotional activities, research, and communication with their Indonesian counterparts.
It is not allowed to generate revenue however it does not have a maximum capital it can hold nor restrictions when it comes to foreign ownership or business field.
How to Select Company Name in Indonesia
Selecting a company name would be the first step of registering a business in Indonesia. Amongst all the common words used in company names, here are some insights as to what they are.
As expected, ‘Indonesia’ is the most common word in company names, along with words like ‘Jaya’ and ‘Abadi’ which means Victorious and Eternal respectively. Similar to other countries, it is also common for companies to be named after the fo
Fun Fact: The longest Indonesian company name is ‘PT. China Twentieth Metallurgical Group Ningbo Southeast Asia Construction & Installation Engineering’
There are some requirements when it comes to selecting a PT PMA company name, which are:
Minimum of 3 words
Cannot be misleading
Cannot be similar to an existing entity name or government institution
No use of vulgarities
Use of only Roman Alphabets
No series of letters or numbers that do not form a word
How to Change Company Name in Indonesia
Changing a company name in Indonesia is not impossible. However, in the occasion that you intend to change your company name, you will be needed to obtain a new tax card.
The authorities would also have to approve changes in the local tax office, the Indonesian Investment Coordinating Board (BKPM), and Ministry of Law and Human Rights as well. This simply signifies the paper work and expenses that come with changing a company name.
Just like in any country, there are requirements and compliance that foreigners need to follow to operate business in Indonesia. This is made easy as there are numerous service providers that can assist you in these matters, be it corporate services or obtaining visas and licences. An example of these service providers is our company, here at Paul Hype Page.
What are some things to take note of Indonesia?Tiwi2021-10-27T16:27:55+08:00
Indonesia is a majority Muslim country however is not a Muslim state. Despite that, Islamic principles do influence political decisions as Indonesia has the largest Muslim population in the world.
Indonesia’s national language is Bahasa Indonesia and Javanese is also one of the most common primary languages spoken. It is only in the city of Jakarta and tourist hubs such as Bali that English is spoken as there are a myriad of tourists and foreigners alike.
Why should I incorporate my company in Indonesia?Tiwi2021-10-27T15:42:43+08:00
Indonesia has the largest economy in south east Asia. Furthermore, there is already a large foreign business community in areas such as Bali and Jakarta as they see a large number of tourists and travellers throughout the year.
Bali is a known tourist hub worldwide, known for their sunny beaches and sights to behold. Jakarta on the other hand is the country’s capital, being the economic, cultural and financial centre.
Is It beneficial to set up a company in Indonesia?Tiwi2021-10-27T15:41:44+08:00
Indonesia has a growing economy that many foreigners see as an opportunity. Despite the restricted international travel situation, Indonesia’s travel industry still has potential due to the thousands of islands Indonesia is made up of.
Furthermore, before the covid-19 pandemic, Indonesia was regarded as a popular destination for tourists, mostly in Bali and Jakarta. There are numerous foreign companies that has set up there due to the myriad amount of tourists that travel there.