The business world of today has become more globalized and internationally driven than ever before. Many business owners have expanded or relocated to other countries because they believe that doing so will give them significant advantages. Even business owners who choose to remain in their own country must often conduct business activities with their foreign counterparts in order to maximize the profitability and economic viability of their business. The interactions and subsequent results of such international business activities will undoubtedly serve to improve the status of all businesses involved.

Conducting Business Activities Through Subsidiaries

Many foreign company owners in Indonesia choose to set up a subsidiary of their existing foreign company there. A subsidiary is a business entity which is controlled by a larger and more powerful foreign company. This foreign company may be referred to as either a parent company or a holding company. Foreign business owners typically set up subsidiaries in order to establish a more significant presence within the Indonesian market. A subsidiary owned by a foreigner will be set up as a foreign-owned limited liability company (PT PMA). It will also be deemed to be a tax resident company of Indonesia and therefore taxed at the standard corporate tax rate of 25%.

In certain situations, the owner of a foreign-owned subsidiary must interact with local Indonesian business owners. This is because before the subsidiary is operational, there are many tasks to be completed. These include matters such as applications for licenses, registration, hiring of employees, budgeting, management of payroll, and many others. As foreigners may sometimes find the handling of these matters somewhat complex if they are not used to the existing systems governing such important matters to be settled, they may sometimes work alongside Indonesian companies which provide services to simplify and expedite the processes of completing each required task. Furthermore, after the subsidiary has been established, local company owners may choose to engage in business dealings with the foreign owner of the subsidiary; such dealings often lead to beneficial outcomes for both parties.

If you are interested in starting a subsidiary or any other business entity in Indonesia, we at Paul Hype Page & Co are always ready and willing to assist. Our incorporation team will work with you to help you discover the most suitable ways through which you may set up your own Indonesia-based business. We will ensure that your business will be set up in such a way that future success will be likely.

Foreign Business Owners and Interaction with Outsourcing Service Providers

Another way through which foreign and local business owners in Indonesia might interact and engage with one another is through the provision of outsourcing services. Foreign business owners who intend to begin business operations in Indonesia as soon as possible often choose to outsource some of their functions. They do so because by outsourcing these functions, the owner of the business would be able to devote more time to establishing the business’s presence in Indonesia, developing a strategy to maximize the revenue of the business, and make the products provided by the foreign-owned business more marketable. When the foreign business owner attempts to have some of its business functions outsourced, it must often approach a local outsourcing company for this purpose. Local outsourcing providers will generally be more well-versed with the conditions of the current Indonesian business scene than foreign ones. Therefore, it would make more sense for the owners of such outsourcing providers and the owner of a foreign company to work together in order to cause favorable results to be received by all involved.

Incidentally, we at Paul Hype Page & Co also provide certain services which businesses require to be outsourced. We can supply companies with services ranging from corporate secretarial to accounting to payroll tasks. All you have to do is inform us which one your business requires, and we will attend to the matter as soon as possible.


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